There’s nothing quite like a frozen treat on a hot summer day. Whether it’s ice cream, sorbet, or shaved ice, it cools you down and gives you delicious flavors. There’s no better way to beat the heat.
Shaved ice, in all of its various forms, is incredibly popular because of the many different ways it can be served. Customers can choose their flavor from a wide variety, or even make up their own. Its simplicity coupled with its versatility make it a fan favorite.
Kona Ice likes to take the concept of shaved ice one step further by producing it on some awesome trucks and offering an astonishing number of flavor toppings to choose from. Their traveling ice stands make a hot summer day feel like a party and now you’re invited.
Kona Ice is building more trucks to take their product all across the country and they are looking for new franchisees to get behind the wheel.
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Kona Comes to Town
It was 2007 when Tony Lamb decided that the old, tired version of the ice cream truck was out and it was time for something new. So, he founded Kona Ice in Boone County, Kentucky and designed five prototype trucks to try out his creations.
By 2008, he was selling Kona Ice franchises and serving thousands of people with the shaved ice party trucks. Each truck comes equipped with a Flavorwave, which is a patented dispenser on the side of the truck that allows customers to customize their flavor choices.
In October of 2012, they introduced the Kona Mini, which is a small replica of the trucks that can be set up indoors to serve the shaved ice during the winter months. This allowed the brand to open up their market and continue to bring in revenue all through the year, instead of only being limited to warm-weather periods.
By 2013, Kona Ice was growing steadily. They were recognized as the top new franchise by Entrepreneur magazine and named the 27th fastest growing chain in the United States.
Wanting to do more, Kona Ice began looking for ways to give back to the communities that had embraced them so warmly. In 2014, they partnered with Northern Kentucky University by instituting an internship program. The internships are open to students who have a passion and desire to work in business and it allows them hand-on experience in a fast-paced corporate setting.
In addition to their work with NKU, they also partnered with the Make-A-Wish Foundation in 2015. Kona Ice’s contributions to the charity help to make wishes come true for children with terminal or chronic health conditions.
Kona Ice’s charitable efforts haven’t stopped there. Since they were founded, they have donated over $42 million dollars to community-based programs. They understand that without the communities these organizations serve, Kona Ice would not be able to prosper and flourish in the way that it is. Giving back to the people who have helped make them a success is a high priority for the franchisor.
Their profitability and philanthropic nature make them a franchise with a lot to offer. Entrepreneurs who partner with Kona Ice have the opportunity to own a successful business, while also making a difference in the communities that they serve.
Joining Kona’s Movement
Making the decision to join Kona Ice means that you are excited about the future and passionate about giving back. Since their charitable works are such a major part of the Kona Ice culture, it is important that each franchisee have the same mindset about giving back to their communities.
Stingy business people need not apply.
Prior business experience is looked upon favorably during the application process. Since owning a Kona Ice franchise is more than just driving around in the truck, peddling shaved ice, it’s important that the franchisee have the knowledge and ability to handle the business side of the venture.
Managing costs, leading a team of employees, and having strong goals are all crucial to the sustainability of the franchise. Those who have had no experience running any sort of business may quickly find themselves in over their head.
The ability to afford the start up costs is also necessary. While there is financing available, the franchisee must still demonstrate some level of financial success. They will not be able to finance the entire amount of start up costs needed, so a respectable net worth, along with at least $20,000 in liquid cash is required.
Kona Ice breaks down the start up costs to allow the candidate to see exactly where their money is going. The franchise license will cost $15,000 and is necessary to do business with Kona Ice. The truck will be the biggest expense, coming in at a price of $95,750. Kona Ice also requires the franchisees to purchase their initial inventory pack, which will contain everything the franchisee will need to make the product. This pack costs $4,875 and has the potential to produce around $50,000 in revenue.
The grand total for start up costs made payable to Kona Ice is $115,625. Additional costs may arise, such as permits to operate in your community. The franchisee will be responsible for researching and acquiring any permits necessary.
The $20,000 in liquid cash that Kona Ice requires will serve as the deposit on the franchise. This covers the cost of the $15,000 franchise license, and a $5,0000 deposit on the truck. Candidates who pay their deposit and pass a credit check will have two options available to them in regards to financing.
The first is a loan through PNC Bank. PNC will award a loan to cover the remaining costs owed to the franchisor, the balance on the truck and the initial inventory pack. They offer this loan at a 7.5 percent standard interest rate (at the time of this review, subject to change). They estimate the monthly payment on this loan to be $1,794.
For those franchisees who do not need to finance the full amount of the start up costs, Ally Bank offers partial financing up to $45,000. The interest rate for this loan is estimated between 5 and 6 percent. The average monthly payments are coming in at around $500, depending on the interest rate and how much was borrowed.
Kona Ice is aware that starting a business is an exciting and expensive time. They offer several options to make the opportunity available to as many entrepreneurs as possible.
The Ongoing Relationship with Kona Ice
The dynamics between franchisor and franchisee are an important part of the business relationship. Both parties must feel that the other is holding up their end of the bargain and that there is a mutual respect.
Kona Ice has consistently been named number one in franchisee satisfaction. They retain this title by working tirelessly to provide the best experience for their franchisees. They have a corporate team of over 30 people so that they can provide the highest level of support when it’s needed. They pride themselves on going above and beyond. Franchisees are what keeps this brand going, and Kona Ice respects that.
To simplify the process for their franchisees, Kona Ice has done away with the traditional royalty fee structure. Instead of taking a percentage of the total gross sales that each location generates, they charge a flat annual fee.
They allow the fee to be paid over a period of three to six months, giving the franchisee time to gather the funds if they happen to be going through a low sales time.The fee is also structured based on the life of the franchise.
Kona Ice is aware that it can take time for a new location to gain traction and begin turning profits, so they reduced the royalty fees at the beginning of the license period. The royalty fee for the first five years of operation will cost the franchisee $3,000 per year. For years six and seven, it goes up to $3,500, and then up to $4,000 for years eight and beyond.
Considering that the Kona Ice franchise licenses are good for a period of 10 years, the franchisee will get to pay reduced royalty fees for the majority of that period. Should they decide to renew for another 10 years, they will continue with the same $4,000 per year royalty fee.
Kona Ice is passionate about seeing their franchisees succeed and they structure their franchise system to give them the best possible chance.
Kona Ice Franchises’ Hot Performance
The fact that Kona Ice was able to sell 15 franchise licenses in the first year of their existence should have been an indicator of just how big this brand would become. Even so, they have continued to grow at a rate that is both surprising and impressive.
When thinking of the traditional ice cream truck, a giant network of professional, clean trucks serving delicious treats is not really what comes to mind. More than likely, the image that is provoked is of a dirty, noisy old van with pictures of processed freezer products on sticks plastered to the side with packing tape. That’s what makes Kona Ice different.
Their revolutionized approach to selling frozen treats has turned them into a booming business. Their franchisees are doing incredibly well and sparking demand for additional trucks. This is how Kona Ice has managed to grow at such an explosive rate.
In the last eight years, Kona Ice has gone from having 120 franchised locations around the country, to over 800 locations. During this time they also saw themselves expand into the international market by opening their first location in Canada.
Throughout all of this massive growth, they have been able to maintain a very healthy turnover rate of 4.43 percent. Franchisees are loving their Kona trucks and are not letting go of them.
The ease with which franchisees are able to make money is surprising to even the most seasoned business veterans. Kona Ice franchisees are able to maintain a food cost of approximately 6 percent. In an industry where the average is 32 percent, Kona franchisees are already starting the game with a huge advantage.
Additionally, Kona Ice franchisees don’t have the added cost of owning or renting a brick and mortar location. No monthly rent payments here.
By slashing the costs, it opens floodgates of profit margins. Kona Ice loves to see their franchisees succeed, so they like to make it easy for them to start seeing a return on investment as soon as possible. It’s just one of the reasons they stay number one in franchisee satisfaction.
Choosing Kona Ice
With low operating costs and an industry that is booming, it’s hard to find a reason not to invest with Kona Ice as a franchisee.
They have a proven business model that has made them increasingly successful for over 10 years, and they have an army of franchisees who can’t stop raving about them. On paper, they are the perfect franchisor.
Potential franchisees should still take the time to do their own research about owning a franchise, because the actual process of running a location may not be what they are looking for. Because this is a mobile unit, the day-to-day operation will be vastly different from having a brick and mortar store. Understanding the structure of what that entails is crucial before signing any paperwork.
For those that are comfortable with the process, Kona Ice is a great opportunity. They have proven themselves to be a profitable product and their corporate structure gives their franchisees unlimited potential. From a business standpoint, there’s not much else to be desired.
Kona Ice is also desirable from a cultural standpoint. It can sometimes be difficult to find a franchisor that cares this much about their franchisees and that goes to such lengths to ensure their happiness and success.
It’s even more difficult to find a franchisor with such a philanthropic nature. Their humanitarian efforts are a big part of who they are as a company.
Adjusting to a mobile business model may be difficult for some at first, but from the experience of most of their franchisees, it looks like it’s worth it. Kona Ice is continuing their climb to the top and now is the time to join them.