CAFNR held a Spring Break get together with Kona Ice outside the Agriculture Building on March 28. Photo by Randy Mertens | © 2014 - Curators of the University of Missouri

In Brief:

  • According to Forbes, the shaved ice business grew to $125 million in sales in 2018.
  • The franchise offers an easy startup process, minimal investment with high profitability, and a “be your own boss” kind of job.
  • Kona Ice prides itself on being an affordable business opportunity, with an initial franchise fee of $15,000 and startup costs ranging between $127,750 and $151,550.
  • The franchise appeals to entrepreneurs because of its proprietary nutritional products, patented Flavorwave, unmatched corporate support, established brand and community involvement.
  • Kona Ice is one of the fastest growing franchises in the United States. Entrepreneur listed Kona Ice on their 2019 Franchise 500 List as the the 13th fastest growing franchise in the country.

Kona Ice Financial Summary

  • Initial Franchise Fee: $15,000
  • Startup Costs: $127,750 – $151,550
  • RoyaltyFirst 5 years: $3,000 | 6-7 years: $3,500 | 8+ years: $4,000

Summer has finally arrived, which means time to hit the beach, catch some sun, and enjoy the heat. And as the temperatures continue to rise, so do the number of ice cream trucks, and this summer, you may find a Kona Ice truck on your street.

Kona Ice is transforming the idea of a friendly neighborhood ice cream truck with its unique, modernized shaved ice franchise.

In this case study, we will go over the history of Kona Ice, reasons to franchise with the shaved ice company, and provide an overall Franchise Disclosure Document summary.

History of Kona Ice

In 2007, the idea started in Northern Kentucky when founder, Tony Lamb, decided he wanted to create a better ice cream truck. After a bad experience with a creepy, dirty and off-putting ice cream truck, he asked himself why these trucks were no longer inviting, clean and dedicated to giving back to the community?

With these principles in mind, Lamb drove around Boone County, Kentucky in the first Kona Truck selling shaved ice and began creating a business model. The following year, Kona Ice was awarded fifteen franchises. Each year, the number of franchises grew and millions of dollars were given back to communities. 2013 was a breakout year for the shaved ice business: they opened a franchise in Canada, launched an app for kids, began their Flavor Our World initiative, added 128 more trucks and 78 mini ones. That year, they reached $13 million in giveback. Today, Kona Ice has over 1,000 tropical-themed trucks sporting their mascot Kona, the Hawaiian shirt wearing penguin. These trucks are becoming more popular and shaved ice has become a family favorite.

Why Shaved Ice?

This history of shaved ice dates back to the Roman Empire in 27 B.C.E when Emperor Nero sent slaves to gather snow on the mountains so he could flavor it with honey and fruit. The frozen treat also traces back to Taiwan, as early as 7th century AD. The dessert was a Japanese rare delicacy reserved for royalty; a luxury item collected during the coldest, winter period. As the Japanese immigrated to Hawaii, shaved ice was brought with them and the tradition was adopted.

Over the years, shaved ice has evolved into various forms: the snow cone, Hawaiian shave ice (which commonly contains condensed milk), crush ice, and so on. The dessert has transformed internationally.

Kona Ice provides a shaved ice that is innovative and not your average snow cone. The product is healthy and vitamin-enriched, Smart Snack approved and sweetened with pure cane sugar and all-natural stevia leaf extract.

The franchise started its own proprietary flavor company called Kreations Flavoring, which ensures Kona Ice has complete control over what ingredients are going into the product. They currently have over 40 proprietary flavors and are dedicated to making their shaved ice nutritious and delicious.

Photo by Rene via Flickr/Creative Commons

Why You Should Hit the Road With Kona Ice

1. Easy Start-Up Process

Selling shaved ice sounds like it would be a simple job, but it requires more work than one would think. This is why Kona Ice strongly emphasizes training its franchisees in order to maintain their individual success and the success of the franchise. In order for franchisees to have an enjoyable experience with the business, Kona Ice’s main goal is to provide extensive training to make every franchisee feel as prepared as possible. In 2012, the company introduced an all expense paid trip to Kona Kollege, a three-day, hands-on classroom training program. Franchisees are able to meet others on the team, understand the Kona Ice brand and learn how to run the mobile business. A few of the lessons include how to properly shave ice, how to mix a batch of syrup and what to look for in a commissary. Kona Kollege attendees meet veteran franchisees, participate in a Q&A with CEO Tony Lamb and learn how to promote their new business.

2. Minimal Investment with High Profitability

The experience of the franchisee is Kona Ice’s top priority, which is why they want to ease the stress of debt and worry about making money. Since the beginning, the company wanted the franchise to be affordable for those who decide to join the team. There is an extremely low overhead because of their six percent food cost, no real estate expenses, no set-up costs, single-person operation per unit an opportunity for multi-unit expansion.

3. Mobile and Flexible

Everyone dream of being their own boss and Kona Ice makes it a reality. It is the ultimate business for self-starters and entrepreneurs; at the 2018 Kona Konvention, Tony Lamb highlighted how owning a Kona franchise appeals to retirees, seasonal employees, and millennial side hustlers. You make your own schedules and figure out what works for you.

4. Community Involvement

Being able to give back to your community and countless others makes owning a Kona Ice franchise sound even better. Kona Ice has given back over $62 million to communities across the U.S. While servicing your community with a delicious, refreshing treat, you are putting the money you earn into action. Whether it’s providing money to the local little league team can buy new uniforms or give back through an organized Kona Kan drive, you are able to see how choosing this franchise transforms into making a difference.

5. Not Driving a Random Ice Cream Truck

Kona Ice makes sure you do not have to go through any trouble when getting your truck approved by the health department in your state. They have put time, effort and research into their Kona Entertainment Vehicle, or KEV, which houses two cold plate freezers, Kona Ice’s proprietary music system, and their proprietary patented “FlavorWave Self-Service
System.” Also, the entire truck is NSF-approved, which means you will be able to hit the road even sooner.

6. Kona Ice is a Franchise Family

Owning a Kona Ice franchise means being part of a team of people who are just like you. It is a family with the same values and mindset, and there are plenty of opportunities to connect and network with each other. The annual Kona Konventions is the company’s way of celebrating the success of Kona Ice and its hard-working franchisees. Corporate events, company picnics, and other festivities are other perks of joining the team. The company provides 24/7 support to their franchisees.

FDD Summary

Initial Franchise Fee: $15,000

This fee is a payment for all pre-opening assistance when opening your Kona Ice Business. The breakdown of the fee includes a deposit for a KEV and additional equipment in the Protected Territory.

Annual Royalty Fees: $3,000 – $4,000

The Annual Royalty Fee is an ongoing payment that allows franchisees to continue using Kona Ice’s trademarks, ongoing support, and assistance from the company and intellectual property of the Kona Ice system. Each year, the fee is to be paid over a three to six month period and separated into the following installments:

  • First 5 years: $3,000 (3 installments of $1,000)
  • 6-7 years: $3,500 (3 installments of $1,166, $1,166 and $1,168)
  • 8-10 years: $4,000 (3 installments of $1,333, $1,333 and $1,334)

Other fees include an Initial Inventory Fee, which all franchisees are required to purchase an initial supply of cups and flavorings, a graphics package, and a Kona Ice welcome box that includes branded t-shirt uniforms before you starting your Kona Ice Business. In the event Kona Ice needs to modify the truck, franchisees must pay a KEV Compliance Fee.

Estimated Initial Investment Range: $127,750 – $151,550

This range is Kona Ice’s best estimate of what the startup costs for a franchisee might be. There are various factors that may affect this estimation: how well Kona Ice’s methods and procedures are followed, management skills, business experience, local economic conditions, competition in the community and more. The type of expenditures within the investment comprises of the KEV, its equipment and installation, training expenses, permits and licenses, initial inventory, computer system and software, and additional funds.

Name of Fee Low High
Initial Franchise Fee $15,000
KEV and Installed Equipment $102,650
Training Expenses $200 $500
KEV Delivery $500 $3,000
KEV Compliance Fee $0 $5,000
KEV Insurance for 3 Months $450 $1,200
Tax, Title, and Licensing of KEV $2,000 $6,000
Initial Inventory $5,500
Optional Inventory $0 $500
Permits and Licenses $250 $1,500
Real Estate or KEV Storage $0 $1,200
Computer System and Software $200 $1,000
Additional Funds – 3 Months $1,000 $8,500
Total $127,750 $151,550

The perfect entrepreneur for this opportunity is one who is not only driven but wants to have fun when building a successful career. It’s an easy, low-cost start-up with high profitability and the ideal business for side hustlers of all ages. With Kona Ice, you will not only be serving shaved iced, but smiles too. For more information about this franchise, check out their client page.

Disclaimer: The above information was derived from the year 2019 FDD of Kona Ice. This data may not reflect the most current information. AskMrFranchise and affiliates are not responsible for any act or failure to act in reliance upon this report, article, data, and/or information. None of the information mentioned above should be used to substitute or replace consultation with legal or other professionals.

 


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