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FDD Talk 2016: The Pretzelmaker Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on November 8, 2016

in FDD Talk 2017: Food Franchises, Franchise Earnings, Pretzel Franchise

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Pretzelmaker Photo by Julie Chan

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

  • Section I – Background information on the Pretzelmaker franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Pretzelmaker franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Pretzelmaker’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • 2015 average net sales, same-store sales growth, cost of goods sold, labor costs, and rent for the 125 franchised traditional stores that had been continuously in operation for the entire calendar year of 2015, that were not co-branded with another concept or supplemented with a satellite, and that provided the franchisor with the presented financial information for the full calendar year 2015
  • 2015 average net sales and same-store sales growth for Pretzelmaker franchisees in the sample that operated 1-2 stores, 3-5 stores, and more than 5 stores, respectively

Section I – Background Information

It was back in 1991 when Jeffrey Trip started his first soft pretzel joint, which he named Pretzelvania. He could see the concept was ripe for franchising but thought a different name would be better, so when franchising began in 1992, it was under the name Pretzelmaker. It grew quickly and became especially popular in mall locations on the West Coast.

Meanwhile, also in 1991, another pretzel operation had gotten underway in the northeast. Originally called Mr. Pretzel at its first location in Trumbull, CT, it also changed its name for franchising purposes to Pretzel Time.

In 2007, NexCen Franchise Management acquired both the Pretzelmaker and Pretzel Time brands, which continued to operate as separate chains until 2010 when Global Franchise Group (GFG) bought out NexCen and combined both pretzel chains under the single brand of Pretzelmaker, making it the second-largest seller of fresh-baked, hand-rolled and twisted pretzels in the nation. Other GFG brands include Great American Cookies, MaggieMoo’s and Marble Slab Creamery.

The number of Pretzelmaker locations peaked in 2009 at 363 and has steadily declined since then to the current number of 277, 53 of which are located outside the U.S. Here’s how Pretzelmaker keeps things rolling (and twisting) in the competitive soft pretzel segment:

The Pretzel Menu

There are nine base pretzels to enjoy, including the basic Salted Pretzel, Paremesan Pretzel, Ranch Pretzel, Garlic Pretzel, Cinnamon Sugar Pretzel, Jalapeño Pretzel, Cinnamon Raisin Pretzel, Almond Crunch Pretzel, and the Everything Pretzel. There is also a Pepperoni Pretzel roll.

Customers have a choice of eight different dipping sauces, including Cheddar Cheese, Pizza, Mustard, Honey Mustard, Cream Cheese, Caramel, Icing, and Nacho Cheese.

There are six flavors of smaller pretzel bites, including Salted, Paremsan, Ranch, Garlic, Cinnamon Sugar, and Sweet n’ Salty, and also hot dogs wrapped in pretzel rolls, including the basic Pretzel Dog, Mini Pretzel Dogs, and Jalapeño Pretzel Dogs.

An Array of Beverages

Prezelmaker also offers six different blended frozen drinks such as Strawberry Bonanza, Orange Dream, Power Pomegranate, Mango Madness, Mocha Mania, and Cool Cappuccino. Other beverages include Coke products and six different lemonades (Original, Strawberry, Raspberry, Limeade, Cherry Limeade, and Frozen Lemonade).

National Pretzel Day

It was Pretzelmaker who established and owns the concept of National Pretzel Day, which is observed each year on April 26. The chain celebrates by giving away thousands of free pretzels, typically based on a themed call-to-action, such as sharing messages of kindness on social media using the hashtag #warmthoughts, which was the 2016 theme.

The 2015 theme challenged customers to recite difficult tongue-twisters such as the one the company made up (“Pretzelmaker prepares perfectly pleasing pretzels for National Pretzel Day”), or one that customers made up themselves.

A Franchisee-Focused Blog

Pretzelmaker does a fantastic job with their franchisee-focused blog, publishing lots of articles about various aspects of franchising in the fast-food segment. It’s rare to see a chain put that much effort into a blog that is entirely focused on helping franchisees succeed.

Section II – Estimated Costs

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

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

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