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Considering a Pretzelmaker Franchise? Don’t Overlook These 31 Important Franchise Fees

by Franchise Chatter on September 20, 2017

in Franchise Fees, Pretzel Franchise



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Don't Invest in a Franchise Until You Check Out This List

If you are considering a Pretzelmaker franchise, don’t get blindsided by these 31 important franchise fees (from the initial franchise fee, to the royalty fee, to 29 other fees found in Items 5 and 6 of Pretzelmaker’s 2017 FDD).

1.  Initial Franchise Fee:  $10,000 (see No. 3 below) to $25,000



  • If Pretzelmaker grants you a franchise for a Traditional Store, then when you sign the Franchise Agreement, you must pay an initial franchise fee (“Franchise Fee”) of $25,000. The Franchise Fee for a Non-Traditional Store is $15,000.
  • Pretzelmaker does not offer financing for the Franchise Fee. Except for any special programs or periodic discounts Pretzelmaker may offer or as otherwise described in this Item 5, the Franchise Fee is uniform for all franchisees.
  • Pretzelmaker participates in the International Franchise Association’s Veterans Transition Franchise Initiative (“VetFran”) program to provide franchise opportunities to qualifying veterans. The Pretzelmaker Patriot Program incentive provides a 25% reduction in the initial Franchise Fee due under the single unit Franchise Agreement for Traditional Stores only.

2.  Development Fee:  $5,000 per Store to be opened under the Area Development Agreement

  • If Pretzelmaker grants you development rights, you will pay Pretzelmaker a Development Fee of $5,000 per Store to be opened under the Area Development Agreement when you sign the Area Development Agreement.
  • The Development Fee will vary based on the number of Stores that you agree to develop (with a minimum of 3 Stores).
  • For each Store, you must sign Pretzelmaker’s then-current form of Franchise Agreement to govern the operation of that Store.
  • The Franchise Fees for Stores opened under a Development Agreement (with a minimum of 3 Stores) will be $20,000 for the first Store and $10,000 for each additional Store thereafter.
  • The Development Fee is fully earned by Pretzelmaker when paid and is not refundable.

3.  Site Selection Assistance:  varies

  • Pretzelmaker will review your submittal package for your proposed site and determine whether to accept your proposed site. Pretzelmaker will conduct an on-site evaluation if it considers it necessary and appropriate as part of its evaluation of your submittal package.
  • If Pretzelmaker determines that on site evaluation is necessary and appropriate (on its own initiative), it will provide the evaluations (up to 2 days, unless you and Pretzelmaker agree otherwise) at its own expense, although it reserves the right to charge you an additional fee for this service if more than 2 days are necessary to complete the review.
  • If Pretzelmaker charges this fee, the fee will be its actual out-of-pocket expenses for each proposed site for which it conducts an on-site evaluation. Pretzelmaker expects this additional fee to be $300 per employee or agent for each full or partial day after the second day, not to exceed 5 days.
  • The site selection assistance fee is not refundable.

4.  Initial Inventory:  $1,000 to $5,000

  • Before your franchise opens, you must buy an initial inventory of Dough Ingredients from GAC Supply. This inventory costs from $1,000 to $5,000 and is in addition to the Franchise Fee.
  • You must continue to purchase Dough Ingredients from GAC Supply through the term of your Franchise Agreement. The amount charged for Dough Ingredients is uniform to all franchisees and not refundable under any circumstances. Discounts may apply depending on your payment arrangements.

5.  Grand Opening Marketing Fee:  $3,000

  • Pretzelmaker reserves the right to collect the grand opening marketing fee of $3,000 when you sign your Franchise Agreement. If it collects this fee, Pretzelmaker will either (i) reimburse you for your documented  grand opening marketing expenditures that it has pre-approved, up to the $3,000; or (ii) directly pay your vendors for your grand opening marketing expenditures that it has pre-approved, up to the $3,000.
  • The grand opening marketing fee is not refundable.

6.  Royalty Fee:  7% of your Net Sales for the preceding week

  • Due Date:  Currently, 8:00 P.M. Eastern Time on the following Wednesday of each week.

7.  Marketing Fee:  1.5% of your Net Sales for the preceding week



  • Due Date:  Currently, 8:00 P.M. Eastern Time on the following Wednesday of each week.

8.  Local Marketing Requirement:  2% of your Net Sales

  • Due Date:  Annually.

9.  Continuing Inventory:  cost plus a reasonable mark-up

  • Due Date:  Within 15 days of demand.
  • Payable to GAC Supply for your purchase of Dough Ingredients.

10.  Interest:  18% per year (or maximum legal rate, if less)

  • Due Date:  On demand.
  • If you fail to make a payment due to Pretzelmaker on time, you must pay it interest on the amount owed from the due date until paid in full.

11.  Late Fee:  $25 per week

  • Due Date:  On demand.
  • If you fail to make a payment due to Pretzelmaker on time, you must pay it the Late Fee. Pretzelmaker may increase the Late Fee on 60 days written notice. However, Pretzelmaker may not increase the Late Fee more than once in any 12-month period.

12.  ACH and Check NSF Fee:  Pretzelmaker’s out-of-pocket costs and an administrative fee (currently $30 to $50)

  • Due Date:  On demand.
  • If Pretzelmaker drafts money from your account under its electronic funds system or under your check, and there are insufficient funds to cover the draft, Pretzelmaker will charge you the return costs charged by its bank and an administrative fee to cover its costs of addressing the nonpayment.
  • This fee is in addition to interest on the amount due.

13.  Additional Training:  currently, $300 per employee or agent for each full or partial day



  • Due Date:  Before training begins.
  • Pretzelmaker may charge for additional training for (i) training persons repeating a course or replacing a person who did not pass, (ii) training new employees, and (iii) optional training it provides.
  • You must pay for any travel and living expenses, wages, and other expenses your trainees incur.

14.  Additional Consulting Services:  currently, $300 per employee or agent for each full or partial day, plus their travel and living expenses

  • Due Date:  Within 15 days after services are rendered.
  • Payable if Pretzelmaker provides requested consulting services in person at a place other than its offices.

15.  Assigned Trainers:  Pretzelmaker’s actual costs and expenses, including travel and living expenses for its trainers

  • Due Date:  Within 10 days of invoice.
  • If you fail to maintain Pretzelmaker’s quality and service standards, it may, in its sole judgment, assign trainers to the Store to retrain your employees and restore service levels.

16.  Product, Service, Supplier, and Service Provider Review:  Pretzelmaker’s reasonable cost of inspecting the supplier, testing the proposed product, or evaluating the service provider or proposed service, including personnel and travel costs; this cost will not exceed $5,000

  • Due Date:  On demand.
  • Payable if you wish to offer products or use any supplies, equipment, or services that Pretzelmaker has not approved or wish to purchase from a supplier or service provider that Pretzelmaker has not approved, whether or not it approves the item, service, supplier, or service provider.

17.  Relocation Charge:  $2,000

  • Due Date:  On demand.
  • Payable if you ask Pretzelmaker to review a new proposed Site, whether or not Pretzelmaker approves the Site.

18.  Transfer Fee:  $10,000 for a transfer of your Store or Franchise Agreement

  • Due Date:  At or before transfer.
  • Payable only on transfer of Franchise.
  • Upon the submission of the proposal to transfer, you must pay Pretzelmaker a non-refundable deposit of $2,000 in connection with the costs it will incur in evaluating that transfer.
  • If you move forward with the transfer, the deposit will be applied toward the transfer fee.

19.  Transfer Fee for  Entity Change:  $1,000

  • Due Date:  At or before transfer.
  • Payable only on transfer of the Franchise Agreement to an entity.

20.  Transfer Referral Fee:  $15,000

  • Due Date:  At closing of the transfer.
  • Under the Transfer Referral Fee Agreement, you may engage Pretzelmaker to identify qualified persons who may be interested in purchasing your Franchise.

21.  Successor Fee (Renewal) for Traditional Store and Co-Brand Store:  20% of Pretzelmaker’s then-current Franchise Fee

  • Due Date:  On signing a successor Franchise Agreement.
  • You may enter into a successor Franchise Agreement for one additional 10-year term, if you meet certain conditions.

22.  Successor Fee (Renewal) for Satellite Store:  $2,500

  • Due Date:  On signing a successor Franchise Agreement.
  • You may enter into a successor Franchise Agreement for one additional 10-year term, if you meet certain conditions.

23.  Insurance:  cost of the premium (usually $2,500 to $5,000), plus a reasonable fee ($50 per hour) for Pretzelmaker’s services in procuring the insurance

  • Due Date:  On demand.
  • Payable only if you fail to maintain the minimum insurance Pretzelmaker requires and it chooses to procure the required insurance for you.

24.  Audit:  cost of audit, plus travel and living expenses, plus interest on the amount of the underpayment at an annual rate of the lesser of 18% or the maximum interest rate permitted by law

  • Due Date:  Within 15 days of demand.
  • Payable if audit or review shows an understatement of 3% or more of your Net Sales for any period.

25.  Inspection:  Pretzelmaker’s reasonable expenses incurred in inspecting your business, including travel and living expenses, wages, and other expenses for its employees; this cost will not exceed $5,000

  • Due Date:  On demand.
  • Payable if inspection is needed due to your repeated or continuing failure to comply with any provision of the Franchise Agreement.

26.  Convention or Meeting Attendance:  as Pretzelmaker determines based on its costs of holding the convention or meeting

  • Due Date:  On demand.
  • Pretzelmaker does not currently charge an attendance fee, but it reserves the right to do so.

27.  Remedial Expenses:  Pretzelmaker’s reasonable expenses incurred in correcting your operational deficiencies; this cost will not exceed $10,000 per deficiency

  • Due Date:  On demand.
  • Payable if Pretzelmaker corrects deficiencies that it has identified during a Site inspection and that you failed to correct within a reasonable time after notice from Pretzelmaker.

28.  Enforcement Expenses:  Pretzelmaker’s reasonable cost of de-identifying your Store; this cost will not exceed $10,000

  • Due Date:  On demand.
  • Payable if your Franchise Agreement expires or is terminated, you fail to de-identify Store, and Pretzelmaker takes steps to do so.

29.  Indemnification:  Pretzelmaker’s liabilities, fines, losses, damages, costs, and expenses (including reasonable attorneys’ fees) (“Losses”)

  • Due Date:  On demand.
  • Payable if Pretzelmaker incurs Losses due to your activities under the Franchise Agreement or your activities relating to the Store.

30.  Liquidated Damages:  varies

  • Due Date:  On demand.
  • Payable if Pretzelmaker terminates your Franchise Agreement based on your default or if you terminate the Franchise Agreement in violation of its terms.

31.  Test Products:  $50 to $500

  • Due Date:  On demand.
  • If Pretzelmaker requires, you must participate in market research programs or test marketing of new products and services and must purchase a reasonable quantity of the test products.

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