Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs 2013: Detailed Estimates of Kona Ice Franchise Costs (2013 FDD)

by Franchise Chatter on June 28, 2013

in Franchise Costs, Frozen Dessert Franchise

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Detailed Estimates of Kona Ice Franchise Costs Based on Item 7 (Estimated Initial Investment) of Kona Ice’s 2013 Franchise Disclosure Document

1.  Initial Franchise Fee:  $15,000

  • The initial fee for a franchise is $15,000 for a ten-year period. The Initial Franchise Fee is due upon signing the Franchise Agreement and is deemed fully earned upon payment.

2.  Truck and Related Equipment:  $83,900

  • Kona Ice TruckYou are required to purchase a truck with necessary equipment as designed by the company. The current price for the truck is $83,900. You will be required to pay a $5,000 deposit when you sign the Franchise Agreement and must pay the balance of $78,900 prior to taking possession of your truck.
  • The base truck shall be a new Chevrolet 3500 Express Truck, or its equivalent, with the following installed equipment:  ice shaving machine; one cold plate freezer; Kona Ice’s proprietary delivery system, music system, and Flavor Wave Self-Service System; and a fifty gallon mixing drum.
  • No other truck or vehicle may be used in the operation of your Kona Ice franchise. These items must be purchased from the franchisor or its affiliate (if any), and you are not permitted to purchase any of these items from alternate sources.

3.  Training Expense:  $200 to $500

  • Training is conducted at Kona Kollege located in the company’s corporate office in Florence, Kentucky. One owner/operator is enrolled in initial Kona Kollege training at no cost to the franchisee. Inbound travel, lodging, and meal expenses for one participant are covered by Kona Ice for the scheduled Kona Kollege training program.
  • At the conclusion of training, you would take possession of your truck. You will then be responsible for all costs (travel, lodging, meals, and other expenses) related to traveling back to your location.

4.  Optional Vehicle Delivery to Your Location:  $500 to $3,000

  • You are responsible for picking up your truck or to have your truck delivered. If you choose delivery of your truck from Elkhart, Indiana to your location, you will pay the delivery fee directly to the transportation company based on the then-current delivery rate.

5.  Vehicle Insurance for 3 Months:  $1,500 to $3,000

6.  Tax, Title, and Licensing of Truck:  $2,000 to $6,000

  • You are required to pay all federal and state tax, title, licenses, and other costs of titling the truck. The estimate above includes a sales (or usage) tax of an estimated 6% of the purchase price of the truck. The actual amount, which you are required to pay, may be more depending on the tax rate in the jurisdiction where you title your vehicle.

7.  Inventory:  $2,000 to $3,000

  • This amount covers supplies and required inventory for serving shaved ice, including but not limited to cups and flavoring. Ice cream products, related toys (such as stuffed penguins, beach balls), and merchandise (such as shirts and hats) are also included in this amount but you are not obligated to purchase them.

8.  Permits and Licenses:  $1,000 to $1,500

  • You are required to pay for local permits and licenses, usually required in each city, county, and state, where you operate.

9.  Vehicle and/or Product Storage:  $50 to $200

10.  Rent and/or Real Estate:  $500 to $1,000

  • If you do not have adequate space, you may choose to rent or lease a small office and/or storage space. It is not mandatory to own or rent office space; it is possible to do the paperwork and financial calculations at an in-home office, or store your vehicle and supplies at a home-based location.
  • However, if you do lease/rent office and/or storage space, the space typically is located in industrial areas and requires 300 to 800 square feet. Rent is estimated to range from $100 to $300 per month.

11.  Computer System and Software:  $200 to $1,000

12.  Additional Funds – 3 Months:  $5,000 to $7,000

  • This estimates your other start up expenses for your first three months in operation. These figures are estimates and it cannot be guaranteed that you will not have additional expenses starting the business.
  • Expenses include truck storage, utilities, security deposits, insurance premiums, licenses, permit costs, uniforms, as well as additional operating  capital for other variable costs such as electricity and telephone.
  • The estimate excludes payroll costs should you have any employees. The franchisor assumes that your business will be operated by the owner and that you will not have any employees or payroll costs, other than the amount paid to the owner. In the event that you intend to hire employees to operate the truck, you should add their expected salary to this figure.
  • This estimate is based on the franchisor’s experience in operating Kona Ice trucks.

13.  Total Estimated Initial Investment:  $111,850 to $125,100

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