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Kona Ice Franchise Costs & Fees

Date of Incorporation: 2008
Franchising Since: 2008
Headquarters: Florence, Kentucky

Business Description: Kona Ice, Inc. is the franchisor. Kona Ice businesses provide flavored shaved ice, ice cream, and related products to the general public in a mobile environment.

Franchise Offer: The franchisor offers franchises for the use of its “Kona Ice” trademarks, trade names, service marks, and logos for the operation of Kona Ice Businesses.

Financial Assistance: At its sole discretion and if franchisees qualify, Element Financial, may offer them financing for the purchase of their Truck. Neither the franchisor nor any affiliate or agent receives any consideration for placing financing with this lender. Except as stated, neither Kona Ice, nor any agent or affiliate of its offers direct financing. The franchisor does not guarantee franchisees’ note, lease, or obligation.

Training and Assistance: Franchisees and any designated manager or representative that it requires must complete the training program to its reasonable satisfaction before they open their Kona Ice Franchise. Franchisees will be enrolled in the initial training program which the franchisor calls “Kona Kollege.” Franchisees that purchase existing Kona Ice Franchises as a result of a transfer are also required to attend Kona Kollege. Kona Kollege consists of 16-20 hours of on-the-job training. From time to time, the franchisor may require that franchisees, designated managers, and other employees attend system-wide refresher or additional training courses. Some of these courses may be optional, while others may be required.

Territory: The Franchise Agreement for the Kona Ice Business grants franchisees a protected territory based on the geographic area and population properties within that area and other relevant demographic characteristics. The franchisor will generally grant only 1 license to a franchisee for any area with a population up to 100,000. In certain densely populated metropolitan areas, a territory may be considerably smaller, while franchisees operating in less densely populated urban areas may have significantly larger areas. While the Franchise Agreement is in effect and franchisees are not in default, the franchisor and its affiliate generally will not, in the Protected Territory, operate a company-owned unit or grant a franchise for a similar or competitive business.

Term of Agreement and Renewal: The length of the initial franchise term is 10 years. If franchisees are in good standing and they meet other requirements, they may apply for 2 successive terms of 10 years.

Obligations and Restrictions: Franchisees are required to own their Kona Ice Franchise in a legal entity. The Kona Ice Franchise shall be managed by one of the owners who is a natural person with at least a twenty-five percent (25%) ownership interest and voting power in the entity. Because franchisees who have actually been owner/operators in the past have generally proven to have greater success than passive owners, the franchisor requires franchisees to be an active owner and operator of the Kona Ice Business for at least the first 60 days that they operate as a Kona Ice Franchisee. Franchisees are required to offer for sale only products and services that have been approved and specified by the franchisor in the Success Guide and any updates that are incorporated in the Success Guide from time to time.

Estimated Number of Units: 715

Investment Tables:
Initial Investment
Name of Fee Low High
Initial Franchise Fee $15,000 $15,000
Truck and Installed Equipment $89,650 $89,650
Training Expenses $200 $500
Truck Delivery $500 $3,000
Truck Insurance for 3 Months $450 $3,000
Tax, Title, and Licensing of Truck $2,000 $6,000
Initial Inventory $60 $120
Optional Inventory $0 $500
Permits and Licenses $250 $1,500
Real Estate or Truck Storage $0 $1,200
Computer System and Hardware $200 $1,000
Additional Funds (3 months) $1,000 $8,500
ESTIMATED TOTAL $114,125 $132,925
Other Fees
Type of Fee Amount
Royalty $3,000 annually for the first 5 years, $3,500 for the next 2 years, and $4,000 for the remaining 3 years.
Additional Equipment Royalty Varies based on the type of Additional Equipment (currently $600 to $1,000 per year).
Territory Reservation Fee $10,000 per territory.
Territory Infringement Fee $1,000 plus invoice amount for first violation; $5,000 plus invoice amount for second and subsequent violations.
Marketing Fund Currently $500 per year.
Additional Training Then current fee (currently approximately $0)
Kona E-mail Address Fee $60 per e-mail address per year.
Customer Satisfaction Reimbursement Varies under circumstances.
Non-Compliance Fee $250 for the first violation; $500 if violation is not corrected within 30 days; $100 per day if violation not corrected within 30 more days.
Misappropriated Success Guide Fee Will vary under the circumstances.
Payment Service Fees Up to 3% of total charge.
Late Fees $25 per day, plus the lesser of the daily equivalent of 12% per year simple interest or the highest rate allowed by law.
Returned Check or Insufficient Funds Fee $100
Indemnification Will vary under the circumstances.
Professional Fees and Expenses Varies under the circumstances.
Renewal Franchise Fee $5,000
Transfer Fee $5,000
Truck Remodel or Truck Upgrades $0 - $15,000 (The average in 2015 was $4,810)
Mystery Shopper Fee Up to $50 per occurrence (currently $0 per occurrence).

The above information has been taken from the FDD of Kona Ice. Year of FDD: 2016

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