In this FDD Talk 2016 post, you’ll learn the following:

• Section I – Background information on the Auntie Anne’s franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for an Auntie Anne’s franchise, based on Item 7 of the company’s 2016 FDD

• Section III – Presentation and analysis of Auntie Anne’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:

• 2014 average, median, high, and low sales for Auntie Anne’s venues in Enclosed Malls, Airports, Outlet Centers, Walmarts, Alternative Locations, and Train Stations, that were open for business under the same ownership for the entire 2014 fiscal year

• 2014 average net sales, cost of goods sold, gross profit, labor, rent, other expenses, total expenses, and net operating income for Auntie Anne’s Enclosed Mall franchises, system-wide and by region (Mid-Atlantic, Northeast, Southeast, Midwest, and West), that were open for business under the same ownership for the entire 2014 fiscal year, and submitted complete data

• 2015 average net sales per transaction experienced by Auntie Anne’s Enclosed Mall franchises that were open and reported sales for the entire 2015 fiscal year

Section I – Background Information

Auntie Anne’s Continues Growth, Expansion

Auntie Anne’s, which originated in a farmer’s market stand, has grown to more than 1,600 locations in 48 states and 30 countries. These locations come in different shapes and sizes, as they can be found in malls, airports, train stations, Walmart stores, amusement parks, military bases, colleges and universities, and travel plazas.

The chain, which sells a variety of fresh-baked soft pretzels and lemonades, reached its highest spot at No. 31 on Entrepreneur’s Franchise 500 list for 2016 after steadily rising for the previous few years.

Auntie Anne’s added 101 locations in 2015 for 6.2 percent unit growth; its three-year unit growth percentage was 20.1 with 325 new stores. The chain finished 2015 with 1,149 U.S. locations, broke the 500 mark in international locations with 516, and had 14 corporate stores.

Franchisees Sought in Fast-Growing Markets

In the U.S., Auntie Anne’s is seeking franchisees in the following fast-growing markets (with opportunities in supporting markets as well):

• Northeast:  Florence, Alabama; Hadley, Massachusetts; Lee, Maine; Burlington, Vermont.

• Mid-Atlantic:  Kingston, New York; and Colonial Heights and Glen Allen, Virginia.

• Midwest:  Williamsburg, Iowa; Topeka, Kansas; St. Cloud, Minnesota; Manchester, Missouri; Grand Forks, North Dakota; Courtland, Ohio; Sioux Falls, South Dakota; Cleveland, Tennessee; and Fond du Lac, La Crosse, Pleasant Prairie and Appleton, Wisconsin.

• Southeast:  Little Rock, Arkansas; Florida City and Melbourne (North), Florida; Fort Oglethorpe, Georgia; Gonzales and Harahan, Louisiana; Burlington, Greenville and Jacksonville, North Carolina; and Anderson, South Carolina.

• West:  Tucson, Arizona; Carlsbad, Eureka and Los Angeles, California; Colorado Springs, Durango, Fountain and Greeley, Colorado; Chubbuck and Idaho Falls, Idaho; Shreveport and Bossier City, Louisiana; Billings, Montana; Hobbs, New Mexico; Midland, Amarillo and New Braunfels, Texas; and Casper and Gillette, Wyoming.

International opportunities are available in more than two dozen countries in the Americas, Europe, Africa, Asia and Australia.

The company is headquartered in Lancaster, Pennsylvania, and is part of FOCUS Brands, which also franchises and operates Cinnabon, Moe’s Southwest Grill, Carvel, Schlotzsky’s, McAlister’s Deli and Seattle’s Best Coffee.

Farmers Market Was Home for Pretzel Chain

Auntie Anne’s got its start in 1988 when “Auntie” Anne and Jonas Beiler starting selling food in a farmers market in Downington, Pennsylvania. They sold a number of food items, but eventually settled on the same Original Pretzel and lemonade that the current brand is known for today.

The first store opened in 1989 in Middletown, Pennsylvania, which started the company’s franchising efforts. By 1992, Auntie Anne’s celebrated 100 stores with an opening in Media, Pennsylvania. The founders, following their original vision of starting a family counseling center, sold the company in 2005, and FOCUS Brands added Auntie Anne’s to its family of brands in 2010.

Different Looks, Tastes for Pretzels

The menu has changed over the years, but pretzels and lemonade have remained the stars.

More tastes were added over time, including Pretzel Stix in 2003, Pretzel Dogs (featuring an Auntie Anne’s pretzel baked around a Nathan’s Famous hot dog) in 2004, Pepperoni Pretzels in 2009, Pretzel Nuggets in 2010, and Mini Pretzel Dogs in 2013, the same year the company started selling from food trucks and within amusement parks.

In May 2016, Auntie Anne’s added Bacon Cheddar Stuffed Pretzel Nuggets to its limited-time menu through Sept. 11. Also added was the Wild Berry Lemonade Mixer, which combines strawberries, raspberries and blackberries with lemonade.

In addition to sales of fresh-baked pretzels and beverages, Auntie Anne’s also sells frozen pretzels and pretzel baking mix in large stores, and manufactures gourmet fundraising products for sale by schools and nonprofit community organizations.

Section II – Estimated Costs

• Please click here for detailed estimates of Auntie Anne’s franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis