Since 1996, the Redneck Shop has operated in an old movie theater that, according to court records, was transferred in 1997 to Kennedy and the Baptist church he leads.
"Our ownership puts an end to that history as far as violence and hatred, racism being practiced in that place and also the recruiting of the Klan," Kennedy said. "This is the same place that we had to go up into the balcony to go to the movies before the Klan took it. So there's a lot of history there."
But legal documents also indicate that the man who runs the store, 62-year-old John Howard, is entitled to operate his business in the building until he dies. Now the dispute may go to court.
Kennedy, 54, has led protests outside the store since it opened but said he's never been able to close it because of the agreement that Howard can run the shop for life.
The reverend envisions the building as a potential future home for his New Beginnings Missionary Baptist Church, which now meets in a double-wide trailer.
Kennedy claims he can't even visit his own property because Howard won't let him in when he appears in the door. But that didn't happen during a recent visit with an Associated Press reporter and photographer.
"Reverend Kennedy, where you been hiding?" Howard shouted when the door opened.
Inside the store, hooded Klan robes hang on the same rack as the racist T-shirts. Pictures of men, women and children in Klan clothing and pamphlets tell a partial history of the organization.
Howard used to own the whole building. When his store first opened, he said, people threw rocks at his windows, spit in his doorway and picketed. A month later, a man intentionally crashed his van through the front windows.
"If anything turns people off, they shouldn't come in here. It's not a thing in here that's against the law," Howard said, adding that he was once the KKK's grand dragon for South Carolina and North Carolina.
To blacks, Kennedy said, the store is a reminder of this region's painful past, which includes the lynching of his great, great uncle by a white mob.
The town of Laurens, about 30 miles southeast of Greenville, was named after 18th century slave trader Henry Laurens.
Some street addresses are still marked with the letter "C" that once designated black homes as "colored." Racial tension was heightened in recent years when two white female teachers were sentenced for having sex with male students - all of them black.
Kennedy has a long history of fighting racial injustice. He protested when a South Carolina county refused to observe the Martin Luther King Jr. holiday, and he helped lobby to remove the Confederate flag from the Statehouse dome.
When people in the region allege racism, he rallies attention to the cause. A walk through the neighborhood where he was born shows that he seems a stranger to no one.
"Hey Rev," one man says as he strolls by.
"Pump it up," Kennedy responds with the phrase he uses at his protests.
Mary Redd, who lives across from the house where Kennedy was born, said blacks know to contact the pastor with their problems.
"And he helps them out," added neighbor Deborah Cheeks.
Kennedy said progress has always been slow to come to Laurens.
"There are two powers in the world: the mind and the sword," he said. "In the long run, the sword is defeated by the mind. I want to destroy the concept of hatred."