HTeaO franchise Cost, Profit & Failure Rate 2024

Tea is one of the most popular things in the world, with billions of dollars in the market cap.

Having a specific business with tea that gives the customers special tastes and flavors might seem like a great business idea to generate profits.

HTeaO is one of those brands that make special teas with different flavors for thousands of customers every day in their over 100 stores.

Seeing their popularity and their fast growth, you might wonder if owning an HTeaO business is profitable.

This is a good idea if you want to expand your franchise portfolio or enter the franchising world.

That’s why this article will take a deep look at HTeaO’s franchise business and whether it’s worth owning one or not.

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HTeaO Franchise

About The HTeaO

HTeaO Franchise

HTeaO is a Texas-based tea franchise known for its made-to-order iced tea drinks and flavorful offerings.

The franchise offers a wide range of tea flavors, including fruit flavors, mint, herbal, and traditional tea flavors, all with the option to be served unsweetened or sweetened.

They are one of the rare big tea franchises in the United States, which helped them to grow at an extremely fast rate.

One of the unique features of HTeaO is its focus on drive-thru and walk-up service, allowing for quick and convenient service for customers on the go.

The franchise now has over 100 stores in various states after over one decade of service.

They are planning on growing bigger each year through franchising, as well as opening their own stores.


HTeaO History

HTeaO was founded in 2009 in Amarillo, Texas, by Gary and Kim Hutchens. The duo first offered premium teas at their hamburger restaurant and saw an increase in tea sales.

This led them to open their own tea stores in 2009 and started a concept that was first known as Texas Tea. Their first location was in Amarillo, and they quickly became a local favorite.

They first expanded to Midland, Texas, in 2014 as a franchise, and that’s when they started offering franchises. This was also when they renamed the concept to HTeaO.

Today, HTeaO is known for its commitment to quality and freshness, using only premium tea leaves and fresh ingredients in all of its offerings.

With a focus on convenience, quality, and community, HTeaO continues to grow as a popular destination for tea lovers across the Southwest United States. They now have over 100 locations, and most of them are franchise-owned.


Franchise Model Table

Cost or FeeAmount or Percentage
Initial Investment$235,200-$1.5 million
Franchise YES
Franchising Since2018
Franchise-Fee$40,000
Royalty-Fee6%
Liquidity$100,000-$250,000
Estimated Outlets109

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How Much Does It Cost To Open An HTeaO Franchise?

To open an HTeaO franchise, the expected average initial investment is between $235,200 and $1.5 million.

The difference is mostly because of your choice of whether to rent the building or buy it.

This initial investment also includes the franchise fee of $40,000, which you pay in a lump sum in the beginning.

All other costs, such as equipment, employment, building, rent, and other operational costs, are included in this calculation. Depending on the size of your store, the numbers will go up or down.

However, according to HTeaO, these are the numbers they mostly see on average from their franchisees.


HTeaO Franchise Requirements

HTeaO Franchise Requirements

HTeaO doesn’t require their potential franchisees to have a certain personal background. They only need to complete financial requirements.

You need to have liquid cash of between $100,000 and $250,000. This is to ensure that you can spend the necessary money when your store needs it right away.

You also need to possess a net worth of between $500,000 and $1 million. There are no certain qualifications needed on the personal side, but having some is also better.

Especially having management and leadership experience could put you ahead in your application.


HTeaO Profit & Revenue

HTeaO is a private company owned by individuals. This means that they are not obligated to share their financial information. 

That’s why we don’t know how much HTeaO makes in profit or revenue each year.

It’s very hard to make assumptions because there isn’t any kind of information about anything related to their financials.

However, one source, Zoominfo, states that HTeaO’s annual profit is less than $5M. 

This number could be true, but it’s still just an assumption, and we don’t know how accurate it is.


Payback Period Of HTeaO Franchise

With a midpoint investment of $1,082,850 and an estimated 10% profit on the average revenue, the yearly profit would be $1,012,832.7.

So, to find out how long it will take to earn back the initial investment:

Payback Period = Midpoint Investment / Yearly Profit = $1,082,850 / $1,012,832.7= 1.06 years

Based on these figures, it will take approximately 1 years to pay back the initial investment for HteaO. This time period could be longer or shorter depending on your sales, revenue, and profit figures.


Failure Rate Of HteaO Franchise

Franchised Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
2020821+13
20212136+15
20223663+27

For the Franchised outlets:

  • In 2020, the growth rate was (13)/8×100≈162.5%
  • In 2021, the growth rate was (15)/21×100≈71.42%
  • In 2022, the growth rate was (27)/36×100≈75%

According to the above-mentioned data, there is no failure rate for franchised outlets as the outlets at the end of the year increased during the span of 3 years.

Overall, we can see that the HTeaO franchise has expanded in the years 2020-2022, showing a total growth rate between 162.5% and 75%.


HTeaO Franchise Training and Support

There is both training and ongoing support that HTeaO offers to prospective franchisees.

The training is divided into two sections; one is the on-the-job training which is about 60 hours to teach you how to run the business in practice.

The second one is classroom training, where you get theoretical information about running your business from day one.

They also provide you with ongoing support both for operational and marketing needs.

In terms of operational support, you get help with your opening, newsletter, site selection, intranet platform, field operations, and other similar things.

For marketing, they help you from A to Z, meaning you get help from website development to SEO and designing the material.


HTeaO Franchise Terms of Agreement and Renewal

HTeaO Franchise Terms of Agreement

The initial franchise agreement you’ll sign with HTeaO will be for ten years. This means that once you sign the agreement, you will get to keep the HTeaO brand for ten years.

If you breach the contract or the franchisor is not satisfied with you, there might be a termination earlier than this.

Once the first ten-year period ends, you will have the option to renew your agreement.

However, the term of this agreement and how many times you can renew it is not publicly available. You can get this information by directly talking with HTeaO.


HTeaO Franchise Obligations and Restrictions

As the franchisee, you are obligated to be present in the daily operations of your branch all the time.

This means that you can’t be absent during operating hours or at least most of the time, and you have to oversee the operations.

You also can’t run your franchise branch part-time, and you have to spend your full-time in a week.

There might be additional obligations and restrictions, but HTeaO doesn’t disclose them publicly.

If you get approved by them, you will see more of the obligations and restrictions set by the franchisor.


HTeaO Franchise Financial Assistance

HTeaO doesn’t offer direct financial assistance to franchisees. Instead, they have relationships with third-party sources like financial institutions or banks to provide you with the necessary funding.

This funding comes as a loan with a certain interest rate that you can agree on beforehand.

The funding from third-party sources generally focuses on covering franchise fees, startup costs, equipment, inventory, and other operational costs.

HTeaO has no saying in getting the loan accepted for you, as it will depend on your financial situation.

Opportunities abound for entrepreneurs in beverage franchising, including brands like Tiger Sugar, Happy Lemon, Sharetea Franchise, Moge Tee, and Smoothie King.


HTeaO Comparison

CompanyFranchise FeeRoyalty FeeInitial Investment
Bee & Tea$40,0006%$147,500-$287,100
Kung Fu Tea$37,0003-4%$123,000-$422,000
HTeaO$40,0006%$235,200-$1.2 million

Conclusion

HTeaO is one of the biggest tea franchises in the United States, with over 100 stores across the country. They are growing day by day and looking to expand even further in the future.

This makes them a very viable business to put your money in if you are looking to own an HTeaO franchise.

You need to have a certain amount of liquidity and net worth to get approved for their franchise.

Once you get approved, you will get training and constant support from the company to operate your store successfully.

Even though we don’t know for sure how much the company makes each year, judging by the number of stores they have and how fast they are growing, it sure is a profitable business. The rapid successful of the franchise is partially due to the delicious HTeaO menu.


Frequently Asked Questions 

Who is the CEO of HTeaO?

Justin Howe is the current CEO of HTeaO. He is also the founder of the HTeaO. Justin has been holding that spot since January 2017, approximately six years.

Can everyone own an HTeaO franchise?

No, you have to complete some requirements if you would like to own an HTeaO franchise.

The most important things are the financial requirements, where you need to have a certain level of net worth and liquidity.

How hard is it to get approved for an HTeaO franchise?

It depends on your individual situation. If you are personal experience in management and in the retail industry, you might get approved quicker and faster.

If you don’t and you only complete the financial requirements, there might be a rejection chance.

Where is HTeaO headqaurtered?

HTeaO is headquartered in Midland, Texas, United States.

How many locations does HTeaO have?

HTeaO has 50 operating locations and 400 signed franchise agreements.

Sources

https://HTeaO.com

https://www.worldteanews.com/News/iced-tea-success-story-HTeaO-has-aggressive-expansion-plan

https://www.linkedin.com/company/HTeaO/

https://www.zoominfo.com/c/HTeaO/455281128

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