Kona Ice Franchise Cost, Profit & Failure Rate 2024

Simple businesses such as ice trucks are always attractive to entrepreneurs.

There aren’t a lot of costs involved, and it’s relatively easier to succeed, especially if you are running under a brand like Kona Ice.

It is one of the 10 Best Food Truck Franchises of 2024 that you must own. After conducting thorough research on the market, it is founded that this franchise opportunity is so excellent that it is also one of the best franchises that one must own. 

If you are considering operating a Kona Ice franchise, you are in luck because they offer franchising at low costs. We will discuss Kona Ice and its franchise system in this article.

Kona Ice Franchise

About Kona Ice and Its History

Kona Ice is a mobile shaved ice and frozen treat franchise. They started in 2007.

The owner, Tony, drove their first truck himself around Kentucky, where the company was born.

He developed the business model as he went on and found the popular flavors they have in the Kona Ice menu at affordable prices. Tony decided to franchise the brand in 2008, and they opened 15 stores in their first year.

The company grew fast, and they now have over 1,500 stores across the United States. They were one of the fastest-growing franchises in the United States over the years.


Franchise Model Table

Cost Or FeesAmount
Initial Investment       $167,115-$212,100
FranchiseYES
Franchising Since2008
Franchise-Fee$15,000
Royalty-Fee$3,000-$4,000/year
LiquidityN/A
Estimated Outlets1,515

How Much Does It Cost To Open A Kona Ice Franchise?

Kona Ice falls under the low-cost franchises because the total average initial investment is between $167,115 and $212,100.

This includes the $15,000 franchise fee and all the associated startup costs.

Startup costs could vary depending on several factors like the location, size of the store, number of employees, and so on.


Kona Ice Franchise Requirements

Kona Ice Franchise Requirements

Kona Ice has no net worth or liquidity needs from its franchisees. They only look for people who can have an active involvement in the opening and operation of the business.

Having a professional background as an owner or an operator is essential to your approval.

They also require the person in charge to promote the brand during their active involvement in the operations of the business.

Any kind of professional background about this is also a benefit for your approval procedure.


Kona Ice Franchise Profit & Revenue

Kona Ice franchise owner make estimated $175,000 in revenue on average. If we assume a profit margin of 50% as per the industry standard, then we can find out that a Kona Ice franchise owner make $87,500 in net profits on average.

Financial OverviewPercentage of RevenueAmount ($)
Individual Franchise Annual Revenue100%175000.00
Rent6.25%(10937.50)
Insurance3.13%(5468.75)
Salaries12.50%(21875.00)
Franchise Royalty Fees3.13%(5468.75)
Utilities1.25%(2187.50)
Cost of Goods Sold (COGS)15.63%(27343.75)
Labor (Variable)8.13%(14218.75)
Total (Expenses)50.00%(87500.00)
Net Profit50.00%87500.00

Note: The displayed expenses are estimates based on industry averages and standard costs. Actual expenses may vary due to factors like location, business size, and market conditions. We recommend conducting detailed research or consulting with a financial advisor for a tailored financial analysis.


Payback period Of Kona Ice

The average profit of a Kona Ice franchise owner is estimated to be $87,500, and the midpoint investment of the company is $162,275. Therefore, on the basis of these two data, we can find the payback period of Kona Ice.

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

Payback Period = Midpoint Investment / Yearly Profit = $162,275 / $87,500 = 1.8 years

Based on these figures, it will take 2-3 years to pay back the initial investment for Kona Ice. This time period could be longer or shorter depending on your sales, revenue, and profit figures.


Failure Rate Of Kona Ice

Franchised Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
20189311061+130
201910611181+120
202011811304+123

For the Franchised outlets:

  • In 2018, the growth rate was (130)/931×100≈13.96%
  • In 2019, the growth rate was (120)/1061×100≈11.31%
  • In 2020, the growth rate was (123)/1181×100≈10.41%

Company-Owned Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
20181622+6
20192214-8
20201429+15

For the Company-Owned outlets:

  • In 2018, the growth rate was (6)/16×100≈37.5%
  • In 2019, the failure rate was (8)/22×100≈36.36%
  • In 2020, the growth rate was (15)/14×100≈107.14%

Total Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
20189471,083+136
20191,0831,195+112
20201,1951,333+138

For Total outlets:

  • In 2018, the growth rate was (136)/947×100≈14.36%
  • In 2019, the growth rate was (112)/1083×100≈10.34%
  • In 2020, the growth rate was (138)/1195×100≈11.54%

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.

We can see that the franchised outlets for Kona Ice grew from 2018 to 2020, showing a growth rate between 13.96% and 10.41%.

On the other hand, for company-owned outlets, the growth rate of Kona Ice was lying in the range between 37.5% and 107.14% for 2018 and 2020. In the year, 2019 the failure rate was 36.36%.

Overall, when we combine the data of franchise and company-owned outlets, we can see that the Kona Ice franchise has expanded in the years 2018-2020, showing a total growth rate between 14.36% and 11.54%.


Kona Ice Training and Support

The owner or the designated manager of the store must complete a set of training offered by Kona Ice before the store can start operating.

The initial training program is called “Kona Kollege.” This program consists of 16 to 20 hours of on-the-job training at the headquarters in Florida. There might be additional courses if Kona Ice seems necessary.

Kona Ice has a team of staff to support the franchisees, including having conventions, marketing support, and preparing the online platform.

There is an entirely separate department to help franchisees with their marketing efforts.


Kona Ice Terms of Agreement and Renewal

The initial franchise agreement with Kona Ice is for ten years. After the initial ten years, a renewal might be possible if both of the sides are in good condition.

In addition, you must not also breach any term of the initial agreement, and the franchisor should be happy with you.

If these are in order, the franchisee has the option to apply for two terms of 10 years as a renewal.


Kona Ice Obligations and Restrictions

Kona Ice franchisees are obligated to pay between $3,000 to $4,000 each year to the franchisor as part of the royalty fee.

The franchise owner has to be present in the franchise’s daily operations for the first 60 days.

In certain cases, the owner can appoint a designated manager after these 60 days with written approval from the franchisor.


Kona Ice Financial Assistance

Kona Ice offers indirect financing through a third-party financial service. This financial service offers partial financing to cover some equipment, truck, kiosk, or the initial inventory.

Kona Ice’s website state that the term is fixed, which is 60 months at 8.99%. However, this depends on the credit approval and whether you will be eligible to get it or not.

Entrepreneurs considering a venture into the ice cream franchise sector might explore options such as Twice The Ice, Yogurtland Franchise, Twistee Treat, Sweet Frog, and La Michoacana franchises.


Kona Ice Comparison

NameFranchise FeeRoyalty FeeInitial Investment
Bahama Bucks’$34,5006%$308,700-$966,338
Rita’s Italian Ice$35,0006.5%$278,333-$624,695
Kona Ice$15,000$3,000-$4,000/year$167,115-$212,100

Conclusion

Kona Ice is one of the low-end franchises that doesn’t require a lot of investment to open.

You need between $167,115 to $212,100 to open a Kona Ice franchise which includes the $15,000 franchise fee.

Kona Ice is an attractive opportunity with over 1,500 outlets and a cheap price tag. You should definitely consider owning one if you are interested.

Also, if you are looking to own the best franchise under $50k, then the Kona Ice franchise is the best option. It is also counted in the 10 best ice cream franchises to own.


FAQs

Is Kona Ice a franchise?

Yes, Kona Ice is currently a franchise offering opportunities to those interested. You can apply to be a Kona Ice franchisee through their website easily.

How much is the franchise fee for Kona Ice?

The franchise fee is $15,000. You must pay this fee in a lump sum before you start preparing your store.

What do I need to be a Kona Ice franchisee?

If you have the finances to cover the initial investment and the franchise fee, you only need to possess the professional background they require. This includes a background as an owner or a manager.

Who owns Kona Ice?

Kona Ice is a mobile shaved ice company. The company was founded by Tony Lamb in 2007 and he is currently the CEO of the company.

How many locations does Kona Ice has?

The company has more than 1,000 franchise locations in 43 states and others across Canada.

Where is Kona Ice headqaurtered?

Kona Ice is headquartered in Florence, Kentucky, United States.

Sources

https://en.wikipedia.org/wiki/Kona_Ice

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