In this FDD Talk 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 2020 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for an Auntie Anne’s franchise, based on Items 5 and 6 of the company’s 2020 FDD

• Section IV – Number of franchised and company-owned Auntie Anne’s outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD

• Section V – Presentation and analysis of Auntie Anne’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• 2019 average, median, high, and low net sales for Auntie Anne’s venues in Enclosed Malls, Airports, Outlet Centers, and Amusement Parks, that were open for business under the same ownership for the entire 2019 fiscal year

• 2019 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 2019 fiscal year, and submitted complete data

Section I – Background Information

18 Things You Need to Know About the Auntie Anne’s Franchise

Introduces New Mobile Ordering Platform in the Pretzel Perks App

1.  At the beginning of August 2020, Auntie Anne’s announced the launch of contactless mobile ordering in the Pretzel Perks app, along with the creation of their “Recline-To-Dine” Chair that actually orders pretzels with just the pull of a lever.

2.  Auntie Anne’s teamed up with innovation experts to develop a breakthrough in snacking technology: the Recline-To-Dine Chair. It’s a one-of-a-kind, limited-edition chair that places pretzel delivery orders with the pull of a lever. The more you kick back, the more you get to snack. No need to pick up the phone – just relax and let the chair handle the ordering. The chair uses motion sensors to detect when users pull the lever, which then connects to the Auntie Anne’s mobile ordering system and places the order for delivery. It even talks to confirm that the order is on the way.

3.  According to Heather Neary, president of Auntie Anne’s, “Over the last several months, we heard from our fans that they missed Auntie Anne’s. As we launched our new contactless mobile ordering and pickup options, we wanted to truly celebrate by developing a fun and unique way for fans to fulfill their pretzel cravings. So, we got creative and developed a pretzel-lovers dream recliner.”

4.  Neary added, “The Recline-To-Dine chair actually places an Auntie Anne’s order with just the pull of a lever for the ultimate delivery experience. A few fans were lucky enough to try it out and we received rave reviews! But more importantly, even without this super cool chair, anyone with a smartphone can now order freshly baked pretzels for contactless delivery, curbside pickup, or in-store pickup.”

5.  Since all fans won’t have a chance to try out the one-of-a-kind chair themselves, the same incredible experience is available right in the Pretzel Perks app. Simply open the app, place an order and then kick back while fresh-baked pretzels are delivered. And with every order placed online or in-store, app users can also earn points toward free pretzels and redeem exclusive rewards.

6.  To celebrate the launch, Auntie Anne’s hosted the Recline-To-Dine Sweepstakes. From August 4 to 25, fans could visit the ReclineToDine website to enter to win exclusive pretzel prizes, including:

• Grand Prize: One lucky pretzel fan would receive an entire year of free pretzels (valued at $1,300), $1,200 to purchase their very own dream recliner, one year of streaming services, and a Kick Back care package including an Auntie Anne’s blanket, pillow, and pretzel-inspired socks.

• Pretzel-Lover Pack: 24 lucky runner ups would win a $25 Auntie Anne’s gift card and a Kick Back care package, including an Auntie Anne’s blanket, pillow, and pretzel-inspired socks.

Brings Back DIY At-Home Pretzel Kit

7.  In early May 2020, Auntie Anne’s brought back its exclusive DIY At-Home Pretzel Kit. While the DIY At-Home Pretzel Kit was originally a limited-time special for National Pretzel Day, it received such fanfare that Auntie Anne’s brought it back to meet the demands of fans. A fun, unique, and tasty at-home activity, each kit includes all of the ingredients and directions to make 10 freshly-baked pretzels. Simply mix, twist, bake, and enjoy 10 Auntie Anne’s Original or Cinnamon Sugar Pretzels right in the comfort of home.

8.  Heather Neary, president of Auntie Anne’s, said, “We heard from our guests loud and clear that they are missing our hand-rolled, golden brown pretzel snacks, and quite frankly, we’re missing our guests, too! The DIY At-Home Pretzel Kit is not only a great way to satisfy those pretzel cravings, but also creates a fun activity for families to enjoy together while remaining at home. It was originally available exclusively to celebrate National Pretzel Day, but it brought such joy to pretzel lovers that we decided we absolutely had to bring it back again. And it’s available for order online, so you don’t even have to leave your house! I recommend you order two – make pretzels with one kit and then get creative with the other. Wrap up hot dogs, chocolate, and more!”

9.  The DIY At-Home Pretzel Kit was available exclusively in the United States and could be ordered online. Fans could share their baking experiences and unique pretzel creations by tagging @AuntieAnnes and using hashtag #QuarantineCooking on social media channels.

Released Game Day Pretzel Pack with Limited-Edition Snack Stadium

10.  At the end of January 2020, Auntie Anne’s released the Game Day Pretzel Pack, which included fresh-baked Pretzel Nuggets or Mini Pretzel Dogs, assorted dips, and most importantly – a free Snack Stadium holder to display the winning combo. The Snack Stadium, a mini-football field display, was designed to hold the bite-size pretzels. It was the perfect functional table display for any Super Bowl party.

11.  The Game Day Pretzel Pack included two Pretzel Buckets of any variety, 10 assorted dips, and a free Snack Stadium holder with every purchase (while supplies lasted). The deal was available at participating stores nationwide and online through select delivery vendors through February 2, 2020.

12.  Danika Brown, Auntie Anne’s director of growth initiatives, said, “We know that for many people, game day is as much about the food as the football. That’s why we’re excited to offer our Game Day Pretzel Pack featuring our limited-edition Snack Stadium, which creates a fun way for everyone to enjoy watching the game with their favorite pretzel snacks.”

Company History

13.  Auntie Anne’s was founded in 1988 by Anne F. Beiler and her husband Jonas in Downingtown, Pennsylvania. Beiler, who grew up in the Amish community, had grown up making baked goods that her family could sell. As a young adult, Beiler and her husband left the Amish community and struck out on their own.

14.  Beiler ended up getting a part-time job managing a concession stand at a farmer’s market in Maryland and it was here that she started selling pretzels. Beiler saw that the pretzels sold fast and brought in a lot of profit. Within a year, Beiler had raised enough money to buy her own pretzel stand, which she dubbed Auntie Anne’s in honor of the fact that she had 30 nieces and nephews at the time.

15.  After perfecting her recipe and raising more money, Beiler opened a second stand in Harrisburg, Pennsylvania later in 1988. By 1989, Beiler was ready to start franchising the Auntie Anne’s concept. Beiler agreed to license the first franchise to her brother, construction manager Jake Smucker, who opened a shop in Middletown, Pennsylvania.

16.  In November 1989, Beiler opened the first mall location. Over the next few years, Auntie Anne’s grew rapidly and by 1992, there were 100 locations. In the mid-1990s, Auntie Anne’s opened its first international location in Jakarta, Indonesia. Auntie Anne’s continued its worldwide expansion over the next few decades.

17.  In November 2010, Atlanta franchisor Focus Brands, a portfolio company of private equity firm Roark Capital, acquired Auntie Anne’s. Today, there are Auntie Anne’s stores around the world in shopping malls and other non-traditional retail spaces such as universities, parking/rest areas, airports, train stations, travel plazas, amusement parks, and military bases.

Entrepreneur’s Franchise 500

18.  Auntie Anne’s ranked No. 400 on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Auntie Anne’s franchise costs, based on Item 7 of the company’s 2020 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Auntie Anne’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

• Outlets at the Start of the Year:  1,191
• Outlets at the End of the Year:  1,225
• Net Change:  +35

2018

• Outlets at the Start of the Year:  1,225
• Outlets at the End of the Year:  1,219
• Net Change:  -6

2019

• Outlets at the Start of the Year:  1,219
• Outlets at the End of the Year:  1,200
• Net Change:  -19

Company-Owned

2017

• Outlets at the Start of the Year:  15
• Outlets at the End of the Year:  13
• Net Change:  -2

2018

• Outlets at the Start of the Year:  13
• Outlets at the End of the Year:  12
• Net Change:  -1

2019

• Outlets at the Start of the Year:  12
• Outlets at the End of the Year:  11
• Net Change:  -1

Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis

• Tables 1 through 2 present Net Sales data in certain types of venues for Auntie Anne’s fiscal year ended December 29, 2019 (“fiscal year 2019”) obtained from sales reports polled from Auntie Anne’s franchisees.

• Tables 3 through 8 present Net Sales or average Net Sales, average expenses, and average Net Operating Income figures for the fiscal year ended December 29, 2019, obtained from the unaudited profit and loss statements submitted by Auntie Anne’s franchisees based upon a uniform reporting system.

• No certified public accountant has audited these figures, expressed his or her opinion concerning their content or form, or attempted to independently verify their accuracy.

• The information presented in Item 19 excludes sales information from (a) affiliate-owned Shops, (b) Shops that are co-branded with Subway, (c) Shops that were not continuously open and operating throughout the entire applicable fiscal year (with the exception of the amusement parks included in Part 1), (d) Shops that were not operated by the same owner throughout the entire applicable fiscal year, and (e) Shops that submitted late, incomplete, or illegible financial information, experienced hardware or software technical issues that inhibited proper reporting, or submitted such information in an unacceptable format (“Incomplete Information”).

Definition of Terms for Auntie Anne’s Profit and Loss Statements

• As used throughout Item 19, the following definitions apply:

• Net Sales – Net Sales includes, without limitation, monies, gift card redemptions, or credit received from the sale of food, beverages, and merchandise, from tangible property of every kind and nature, promotional or otherwise, and for services performed from or at the Shop, including, without limitation, off-premises services such as catering and delivery.

• Net Sales will not include the initial sales or reloading of gift cards, coupon discounts, the sale of food or merchandise for which refunds have been made in good faith to customers, the discounted portion of employee meals, the sale of equipment used in the operation of the Shop, nor will it include sales, meals, use, or excise tax imposed by a governmental authority directly on sales and collected from customers; provided that the amount for the tax is added to the selling price or absorbed therein, and is actually paid by you to a governmental authority.

• Cost of Goods Sold – Cost of Goods Sold is a figure which reflects the cost of materials used to produce the products that are sold to customers. It includes the cost of food ingredients (pretzel mix, butter, beverages, etc.), paper products (cups, napkins, bags, straws, etc.), and retail items (Auntie Anne’s At Home pretzel kits, etc.).

• Gross Profit – Gross Profit is Net Sales minus Cost of Goods Sold.

• Operating Expenses – Operating Expenses are the day-to-day costs incurred in conducting normal business operations.

• Labor – Labor includes wages paid to employees and payroll taxes paid for employees. Labor does not include actual wages and related expenses a franchisee pays to itself.

• Rent – Rent includes the base rent for a franchisee’s lease including extra charges, such as common area maintenance (CAM) charges, real estate taxes, percentage rents, etc.

• Other Expenses – Other expenses include such things as utilities (electric, telephone), Royalty Fees, Advertising Contributions, advertising, insurance (Workers’ Comp, property, casualty, liability, health, etc.), licenses, permits, repairs, uniforms, store supplies, etc.

• Total Expenses – The total of Labor, Rent, and Other Expenses.

• Net Operating Income – Gross Profit minus Total Expenses.

• Other Locations – A franchised Shop that is located anywhere other than in an enclosed mall. Other Locations include alternative locations, big box stores, entertainment venues, farmer’s markets, military bases, lifestyle centers, power centers, strip malls, Subways, street locations, train stations, transportation centers, travel plazas, truck stops, Walmarts, Concession Shops, airports, casinos, outlet centers, transportation centers, and amusement parks.

• Enclosed Mall Franchises – A franchised Shop that is located in an enclosed mall, including sales from related non-baking SRUs (Satellite Retail Units). Enclosed Mall Franchises do not include (a) company-owned Shops, (b) Shops that are co-branded with Subway, or (c) Shops located in Alternative Locations.

Auntie Anne’s Stores By Region

• Auntie Anne’s includes the following Regions, and their respective states, in the information presented in Item 19:

• Mid-Atlantic Region: (i) West Virginia; (ii) District of Columbia; (iii) Virginia; (iv) Maryland; (v) Pennsylvania; and (vi) Delaware.

• Northeast Region:  (i) New York; (ii) Connecticut; (iii) New Hampshire; (iv) Massachusetts; (v) New Jersey; (vi) Vermont; (vii) Rhode Island; and (viii) Maine.

• Southeast Region:  (i) North Carolina; (ii) Georgia; (iii) Alabama; (iv) Arkansas; (v) Tennessee; (vi) Florida; (vii) South Carolina; (viii) Louisiana; and (ix) Mississippi.

• Midwest Region:  (i) Kansas; (ii) North Dakota; (iii) Iowa; (iv) Kentucky; (v) Michigan; (vi) Illinois; (vii) Indiana; (viii) Missouri; (ix) Nebraska; (x) Ohio; (xi) Minnesota; (xii) Wisconsin; and (xiii) South Dakota.

• Western Region:  (i) Nevada; (ii) Oregon; (iii) Texas; (iv) Oklahoma; (v) California; (vi) Washington; (vii) New Mexico; (viii) Colorado; (ix) Arizona; (x) Idaho; (xi) Utah; and (xii) Alaska.

Table 1 – Net Sales Range for 2019 Fiscal Year – Various Venues (All Regions)

Enclosed Mall Franchises

• The sales information for Enclosed Mall, Outlet Center, and Amusement Park Franchises include sales from 36 non-baking SRUs. Approximately 65% of Auntie Anne’s franchises are located in these venues.

• The sales information for Amusement Parks includes sales from locations having at least 34 weeks of sales data, due to the seasonal nature of amusement parks.