In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Ben’s Soft Pretzels franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Ben’s Soft Pretzels franchise, based on Item 7 of the company’s 2018 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Ben’s Soft Pretzels franchise, based on Items 5 and 6 of the company’s 2018 FDD
- Section IV – Number of franchised and company-owned Ben’s Soft Pretzels outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD
- Section V – Presentation and analysis of Ben’s Soft Pretzels’ financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 average, highest, and lowest gross sales for the 50 franchised Ben’s Soft Pretzels stores that were open and operated for at least one year as of the end of 2017, by venue type (mall, standalone, Walmart, Meijer)
- 2017 average, highest, and lowest gross sales for the 12 company-owned Ben’s Soft Pretzels stores that were open and operated for at least one year as of the end of 2017, by venue type (mall, standalone, Walmart, Meijer)
Section I – Background Information
17 Things You Need to Know About the Ben’s Soft Pretzels Franchise
Becomes First Pretzel Company to Offer Mobile Ordering
1. In early April 2018, Ben’s Soft Pretzels became the first soft pretzel company in the United States to offer customers the ability to order on-the-go via their mobile device. Through the Ben’s Soft Pretzels mobile application, customers can skip standing in line and quickly place their order and then pick up their pretzels at the closest Ben’s Soft Pretzels bakery.
2. To celebrate the launch of its mobile ordering feature, Ben’s Soft Pretzels offered an introductory 5% discount on all orders placed on the mobile app. Ben’s Soft Pretzels’ real estate partnerships with retail giants such as Walmart, Meijer, Simon Properties, and others mean that customers can order a fresh baked pretzel while they are browsing in their favorite stores.
3. In addition to mobile ordering, the Ben’s Soft Pretzels mobile app gives guests more ways to engage with the brand. Customers can locate their nearest bakery, take advantage of special deals and coupons, send a gift card to a friend, and earn a 6% loyalty reward for future purchases. Customers can also get a free pretzel when they download the Ben’s Soft Pretzels mobile app for the first time. The mobile app can be downloaded by texting the word “Bens” to 555888.
4. Brian Krider, co-founder of Ben’s Soft Pretzels, said, “We couldn’t be more excited to help our raving pretzel fans order on-the-go. One of the best parts about being in this business is the ability to connect with our guests through our product. Now with the addition of mobile online ordering, we can foster those connections outside of the bakery and show our gratitude through the loyalty rewards program.”
Forms Advisory Board
5. At the beginning of October 2017, Ben’s Soft Pretzels formed a new advisory board, leveraging the knowledge and experience of Winmark Franchise Partners and Faegre Baker Daniels law firm. The advisory board is tasked with assisting the Goshen, Indiana-based soft pretzel franchise in establishing overall strategy and direction, enhancing brand marketing, and maximizing system performance.
6. The engagement involves Winmark Franchise Partners participating as a member on the Ben’s Soft Pretzels advisory board. Winmark Franchise Partners is a division of Winmark Corporation, a multi-brand franchisor based in Minneapolis, Minnesota. Also joining the board is Brian Schnell, partner at Faegre Baker Daniels law firm, who will be bringing with him more than 30 years of franchise experience.
7. According to Brian Krider, co-founder of Ben’s Soft Pretzels, “All great leaders have mentors and advisors, and we are blessed to have access and leadership direction from the executive team at Winmark Franchise Partners and Faegre Baker Daniels. This will allow Ben’s to continue our tremendous growth while making sure our system is functioning at its peak.”
8. Co-founder Scott Jones added, “Winmark operates a number of outstanding brands, and their expertise combined with the Faegre Baker Daniels franchise team will be able to enhance and refine Ben’s Soft Pretzels’ business model and overall system performance, allowing us to stay on track with our goal of World Pretzel Domination.”
9. The advisory board is charged with working with Jones, Krider, and the rest of the Ben’s Soft Pretzels team to enhance system performance, refine brand marketing, and strengthen the franchise operation overall. Long-term goals for Ben’s Soft Pretzels include opening 20-25 new stores in 2018 and 2019, opening 30-40 new stores in 2020, and opening 50 or more new stores annually from 2021 and beyond.
10. Steve Murphy, president of franchising at Winmark Corporation and Winmark Franchise Partners, said, “At Winmark Franchise Partners, we strive to work with outstanding brands that meet our highly selective criteria. Ben’s Soft Pretzels is led by a dedicated management team that is smart in its approach to franchising and how to grow the brand and their system the right way. We are honored and privileged to be working with Scott and Brian and their group of fantastic franchisees.”
11. In addition to unit growth, Ben’s Soft Pretzels will be looking toward Winmark Franchise Partners and Faegre Baker Daniels to harness the potential of their Master Lease agreements with Walmart and Meijer, move into non-traditional real estate including airports and travel stations, and continue their already impressive stadium growth. At the time of the announcement, Ben’s Soft Pretzels had 64 locations in malls and Walmart and Meijer stores, and a thriving stadium presence at the University of Notre Dame, the University of Michigan, Auburn University, University of Wisconsin, and other collegiate and professional sports arenas.
12. Schnell said, “Working in franchising as long as I have, you understand the importance of collaborative leadership and recognize when leaders understand the importance of unit level economics, delivery on the brand promise and empowering franchisees. The team at Ben’s Soft Pretzels exemplifies that type of collaborative leadership and the brand has exceptional products. Pair that with the expertise Winmark Franchise Partners brings; I am excited about the opportunity to make a meaningful difference to Scott and Brian and the rest of the Ben’s Soft Pretzels team.”
13. The first Ben’s Soft Pretzels brick and mortar store was opened in 2008 by Scott Jones, Ben and Liz Miller, and Brian Krider in the Concord Mall in Elkhart, Indiana. Ben’s Soft Pretzels grew from a farmer’s market stand operated by the Millers. Jones had met the Millers when he got lost in Amish Country, Indiana and a life-long friendship was born. The Millers introduced Jones to their Amish baked goods, which they made from scratch.
14. A few years earlier, the Millers had started making pretzels after the owner of the small pretzel company booth next to theirs convinced them to buy his business. Unfortunately, the Millers did not realize that they were only receiving the pretzel making equipment and not a recipe. The Millers turned to their Amish cookbooks and after a lot of trial and error, developed the pretzel recipe that is still used by Ben’s Soft Pretzels today.
15. The pretzel booth began to grow, and eventually outpaced the sales of the previous owner. Around this time, the Millers shared their soft pretzel with Jones for the first time, who then shared the soft pretzel with his co-worker and friend, Brian Krider. Both Jones and Krider loved the Millers’ soft pretzel so much that Krider felt that they could build a business solely around these soft pretzels. Krider approached Jones and the Millers with his idea and they all immediately jumped on board.
16. After the success of the first Ben’s Soft Pretzels store, more opened in the area and franchising started in 2013. Today, there are Ben’s Soft Pretzels locations across eight states and the company has Master Lease agreements with Walmart and Meijer.
Entrepreneur’s Franchise 500
17. Ben’s Soft Pretzels ranked No. 379 on Entrepreneur’s 2018 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Ben’s Soft Pretzels franchise costs, based on Item 7 of the company’s 2018 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Ben’s Soft Pretzels’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 25
- Outlets at the End of the Year: 37
- Net Change: +12
- Outlets at the Start of the Year: 37
- Outlets at the End of the Year: 54
- Net Change: +17
- Outlets at the Start of the Year: 54
- Outlets at the End of the Year: 57
- Net Change: +3
- Outlets at the Start of the Year: 6
- Outlets at the End of the Year: 10
- Net Change: +4
- Outlets at the Start of the Year: 10
- Outlets at the End of the Year: 16
- Net Change: +6
- Outlets at the Start of the Year: 16
- Outlets at the End of the Year: 14
- Net Change: -2
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
- This financial performance representation discloses historical information regarding the actual annual Gross Sales (defined below) for the stores that were open and operated for at least one year as of the end of 2017 (the “Operating Stores”).
- Operating Stores do not include Mobile Stores, the two franchises which are for just baseball parks which only sell pretzels when a game is played at the park, nor for the one franchise for just a farmers market, nor for the one franchise for just a flea market.
- If a store is transferred as between a company-owned store and a franchisee-owned store in the course of a year, its results are not included for such year.
- The term “Gross Sales” means all sales or revenues, derived directly or indirectly from the business, including on-premises sales and monies derived at or away from the business, whether from cash, check, credit and debit card, trade credit or credit transactions, including without limitation business interruption insurance proceeds and service charges in lieu of gratuity, but excluding (i) sales taxes collected from customers and paid to the appropriate taxing authority and (ii) the amount of all coupons redeemed.
- “Company-Owned store” means a store owned by the franchisor or any of its affiliates who are related to it by common ownership.
- “Franchisee-Owned store” means a store operated under a franchise agreement that is not a Company-Owned store.
Part 1 – Franchisee-Owned Operating Stores
- As of the end of 2017, 50 out of 57 (88%) Franchisee-Owned stores were Operating Stores.
- The historical Gross Sales for the Franchisee-Owned Operating Stores is provided in the following table: