FDD Talk 2019: Ben’s Soft Pretzels Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

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 2019 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 2019 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 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of Ben’s Soft Pretzels financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 average, highest, and lowest gross sales for the 45 franchised Ben’s Soft Pretzels stores that were open and operated for at least one year as of the end of 2018, by venue type (mall, standalone, Walmart, Meijer)

• 2018 average, highest, and lowest gross sales for the 13 company-owned Ben’s Soft Pretzels stores that were open and operated for at least one year as of the end of 2018, by venue type (mall, standalone, Walmart, Meijer)

Section I – Background Information

13 Things You Need to Know About the Ben’s Soft Pretzels Franchise

Opens Two New Airport Locations

1.  In mid-March 2019, Ben’s Soft Pretzels announced that it was expanding through two new locations in the Indianapolis International Airport (IND). Ben’s Soft Pretzels at the Indianapolis International Airport will be operated by global restaurateur HMSHost and will fill a total of 804 square feet with locations in Concourse A and Concourse B.

2.  Scott Jones, co-founder and CEO of Ben’s Soft Pretzels, said, “We are thrilled to bring fresh pretzels to the 9+ million travelers who pass through IND each year. People deserve excellent food that’s handcrafted right in front of them, as is the case with Ben’s Soft Pretzels. By partnering with HMSHost, a true leader in travel venue dining, we get to share our famous pretzels with IND travelers and the world beyond.”

Signs Deal with Ohio State University

3.  In early August 2019, Ben’s Soft Pretzels announced that multi-unit franchisees Matt and Amy Seedorf have inked a deal with Levy Restaurants to provide fresh pretzels at all Buckeye home football games at Ohio Stadium in Columbus. Hungry football fans can choose between a Ben’s Block “O” Pretzel or a traditional Jumbo Ben’s Soft Pretzel during game time. All of the pretzel dough is made from scratch at every game and each pretzel is handcrafted and served hot and fresh by professional pretzel twisters.

4.  The location at Ohio Stadium will be operated by multi-unit Ben’s Soft Pretzels franchisees Matt and Amy Seedorf of Toledo. The Seedorfs own and operate four other Ben’s Soft Pretzels bakeries in the Detroit and Toledo areas, including an additional Big Ten university location.

5.  Amy Seedorf said, “We are excited to bring our fresh baked, Amish inspired pretzel to Ohio Stadium this year. In addition to our regular, nearly half-pound Jumbo Pretzel, our new Block ‘O’ Pretzel is the perfect complement to Buckeye Nation! We are thankful to be a part of such an amazing game day experience.”

6.  Ohio State University is the Amish-inspired pretzel brand’s sixth university location in the Big Ten, with additional locations at many other prominent collegiate venues. The new location at Ohio Stadium with Levy Restaurants, a wholly-owned subsidiary of Britain’s Compass Group, adds to the growing pretzel brand’s roster with the prime concessionaire. Ben’s Soft Pretzels can also be found at professional football, basketball, and baseball stadiums throughout the country.

Gives Away Free Pretzels on National Pretzel Day with Donation to Intrepid Fallen Heroes Fund

7.  At the beginning of April 2019, Ben’s Soft Pretzels announced that it was once again celebrating National Pretzel Day on April 26, by giving giving away a free Jumbo Soft Pretzel with a minimum $1 donation to the Intrepid Fallen Heroes Fund.

8.  100 percent of the donations collected for the Intrepid Fallen Heroes Fund on National Pretzel Day will go toward building new Intrepid Spirit centers for military personnel who suffer from traumatic
brain injury or psychological health conditions. All of the administrative costs of the Intrepid Fallen Heroes Fund are underwritten by the Fund’s Board of Directors. In total, Ben’s Soft Pretzels customers have raised more than $130,000 for the Intrepid Fallen Heroes Fund.

Company History

9.  Ben’s Soft Pretzels was founded in 2008 by Scott Jones, Ben and Liz Miller, and Brian Krider in the Concord Mall in Elkhart, Indiana. The inspiration behind Ben’s Soft Pretzels was the Millers’ homemade baked goods that they had been selling for years at farmer’s markets in Northern Indiana and Southern Michigan. Jones first met the Millers in 2003 when he got lost in Amish Country, Indiana. The Millers gave Jones directions, offered him some food, and started what would become a lifelong friendship.

10.  Sometime after becoming friends with Jones, the Millers had the opportunity to buy a small pretzel company that had a booth at one of the farmer’s markets they sold at. Despite not having much experience making soft pretzels, the Millers took a chance and bought the business. However, the pretzel recipe and equipment were not part of the deal and the Millers had to look through all of their Amish cookbooks to develop the best soft pretzel that they could.

11.  After much trial and error, the Millers created a delicious soft pretzel that Jones fell in love with. Jones then introduced the pretzel to Krider and they both decided that they needed to help the Millers develop a business to sell their new treat.

12.  After opening the first brick and mortar Ben’s Soft Pretzels in 2008, the team began franchising the concept in 2013. The company has grown steadily over the past few years and has master lease agreements with Wal-Mart and Meijer. Ben’s Soft Pretzels also has deals with athletic teams such as the University of Notre Dame, Auburn University, Purdue, Wisconsin, Indiana University, University of Wisconsin, Indiana Pacers, and South Bend Cubs.

Entrepreneur’s Franchise 500

13.  Ben’s Soft Pretzels ranked No. 421 on Entrepreneur’s 2019 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 2019 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 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

• Outlets at the Start of the Year:  37
• Outlets at the End of the Year:  54
• Net Change:  +17

2017

• Outlets at the Start of the Year:  54
• Outlets at the End of the Year:  57
• Net Change:  +3

2018

• Outlets at the Start of the Year:  57
• Outlets at the End of the Year:  50
• Net Change:  -7

Company-Owned

2016

• Outlets at the Start of the Year:  10
• Outlets at the End of the Year:  16
• Net Change:  +6

2017

• Outlets at the Start of the Year:  16
• Outlets at the End of the Year:  14
• Net Change:  -2

2018

• Outlets at the Start of the Year:  14
• Outlets at the End of the Year:  13
• Net Change:  -1

Section V – Financial Performance Representations (Item 19, 2019 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 at least one year as of the end of 2018 (the “Operating Stores”). Ben’s Soft Pretzels has included the 2018 Gross Sales for the period January 1, 2018 to December 31, 2018 (the “Measurement Period”).

• Operating Stores do not include the 25 Mobile Stores operating as of December 31, 2018, as those Mobile Stores have materially different characteristics, including the period of operation, cost structure, and other factors.

• Operating Stores also do not include the two franchises which are for baseball parks and only sell pretzels when a game is played at the park, nor the one franchise for a farmers’ market only (with very limited hours), the one franchise for a flea market only (with very limited hours), and the one store that opened during 2018 but was not open for the entire Measurement Period.

• Ben’s Soft Pretzels also has not included the 5 franchised stores that closed during 2018, although none of those 5 opened and closed during the 12-month period.

• If a store transferred as between two franchisees in 2018, the results are included for that store.

• 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.

• “Stand Alone” store as used in the table below means a store operated at a street front or similar location rather than a location within a mall or a Walmart or Meijer store.

Part 1 – Franchisee-Owned Operating Stores

• The historical Gross Sales for the Measurement Period for the 45 Franchisee-Owned Operating Stores is provided in the following table:

Mall