FDD Talk: Pretzelmaker 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 Pretzelmaker franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Pretzelmaker franchise, based on Item 7 of the company’s 2020 FDD

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

• Section IV – Number of franchised and company-owned Pretzelmaker 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 Pretzelmaker’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• 2019 average and median net sales and average same-store sales growth for the 107 franchised traditional Pretzelmaker stores that continuously operated over the entire Measurement Period (December 30, 2018 to December 28, 2019) and were not co-branded with another concept or supplemented with a satellite

• 2019 average cost of goods sold, labor costs, and rent for the 2 franchised traditional Pretzelmaker stores that continuously operated over the entire Measurement Period, were not co-branded with another concept or supplemented with a satellite, and reported their respective cost information to Pretzelmaker in time for such information to be included in Item 19

• 2019 average and median net sales and average 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

13 Things You Need to Know About the Pretzelmaker Franchise

Announces Opening of First Fresh Twist Location

1.  In mid-January 2020, Pretzelmaker announced the opening of the first Fresh Twist by Pretzelmaker location at Troy University in Alabama. Fresh Twist by Pretzelmaker takes the brand’s fresh, hand-rolled pretzels, pretzel bites, and pretzel dogs and adds breakfast and late-night menu options. The menu offers breakfast sandwiches on pretzel buns, pretzel flatbread pizzas, and pepperoni pretzel rolls in addition to its all-natural lemonades and smoothies. Global Franchise Group, the parent company of Pretzelmaker, worked with longtime franchisee, Geri Fields, to open the location.

2.  Chris Cheek, chief development officer of Global Franchise Group, said, “Fresh Twist is a concept that cuts across all three day parts making it perfect for non-traditional venues like colleges, universities and airports. A lot of hard work and menu innovation was put into creating Fresh Twist and only the finest quality ingredients are used, making the offerings incredibly delicious and craveable. The location at Troy University is proving to be very popular and our thanks and appreciation go out to Geri Fields for helping us pioneer the Fresh Twist concept.”

3.  Global Franchise Group is growing the Fresh Twist concept and is seeking additional franchisees for non-traditional locations on campuses and in airports. It can operate in a space as little as 250 square feet and is scalable to fit the needs of most venues. The concept features premium pricing with competitive food costs, simple operation, and Pretzelmaker’s signature “fresh theater action” for customers and best-in-class pretzel dough.

4.  Geri Fields, franchisee of 10 Great American Cookies, Marble Slab Creamery, and Pretzelmaker locations, added, “The versatility of the Fresh Twist menu, ease of operation, and demand for on the go food items on college campuses attracted me to the Fresh Twist concept. Global Franchise Group was tremendously supportive throughout the process. They’ve always helped champion my business and have been with me every step of the way.”

Parent Company Introduces New E-Commerce Program

5.  In mid-November 2020, Global Franchise Group, the parent company of Pretzelmaker and Great American Cookies, introduced a new e-commerce program for Pretzelmaker featuring bake-at-home pretzel breads in Pumpkin Cranberry and Everything seasonings. The Great American Cookies e-commerce program was also expanded with festive offerings including holiday cookie gift boxes, gingerbread house decorating kits, and cookie subscriptions.

6.  A corporate gifting program is also now available offering customizable logos and packaging. Products ship nationwide from the Pretzelmaker and Great American Cookies innovation facility in Atlanta and can be ordered from the brands’ websites.

7.  According to Lisa Cheatham, vice president of e-commerce for Global Franchise Group, “The anticipation for our new Pretzelmaker E-Commerce program has been building and we are thrilled to launch bake-at-home Pretzel Breads just in time for the holiday season. All products offered on our E-Commerce channels are crafted with life’s moments and simple pleasures top of mind. From the smell of fresh baked bread filling your home, to decorating a classic Gingerbread House, our products are about creating memories and sharing love. They make thoughtful gifts that can be shipped anywhere in the U.S. and are proving to be very popular.”

8.  The new products launched in the e-commerce program include:

• Bake-At-Home Pretzelmaker Pretzel Bread – Using the same dough as Pretzelmaker’s popular pretzels, you can enjoy artisan bake-at-home bread shipped straight to your door. Working in small batches, the breads are formed by hand using high-quality ingredients, proofed for a perfect texture, and frozen to preserve quality. Available in Pumpkin Cranberry and Everything.

• Gingerbread House Decorating Kit – Gingerbread house making simplified! The kit includes 6 gingerbread house cutouts, red, white and green icing, M&M candies, sprinkles and colored sugar for decorating.

• Gingerbread Cookie Gift Box – 12 fresh-baked Great American Cookies gingerbread cookies in a festive decorative box.

• Holiday M&M Candies Cookie Box – 12 Great American Cookies famous chocolate chip cookies with red and green M&M candies in a holiday box.

• Holiday Cookie Decorating Kit – A fun, family-friendly kit featuring 6 cookie cutouts shaped like trees and Gingerbread men, red, white and green icing, and a bag of M&M candies and sprinkles for customization.

• Cookie Subscriptions – 12-month, 6-month, 3-month, and re-occurring monthly subscriptions are available and will ship the first Wednesday of each month. Flavors change monthly and are seasonal. Choose from 1 or 2 dozen cookies each shipment.

• Great American Cookies Corporate Gifting – Cookie boxes are the perfect way to show employee recognition, client appreciation, or celebrate a milestone. Customization with company logo packaging available.

Company History

9.  Pretzelmaker was founded in 1991 by Jeffrey Tripp, who wanted to sell fresh-baked, handcrafted soft pretzels. Tripp’s concept was an immediate success and a year later, he started franchising. The brand quickly sold 100 franchises and by 1995, 40 stores were in operation around the United States.

10.  Don Cox, Marc Geman, Tony Joseph, and Dale Fowler bought the company in 1995 with a small group of investors. Under the new ownership, Pretzelmaker pushed its expansion around the U.S. as well as in Canada and South Korea. Although Pretzelmaker was successful under this leadership team, the company was sold to Mrs. Fields Famous Brands in 1999.

11.  Mrs. Fields Famous Brands had also acquired Pretzel Time – which was founded in 1991 in Trumbull, Connecticut – and Hot Sams Pretzels, founded way back in 1966, in the mid-1990s. Most Hot Sams Pretzels locations were converted to Pretzel Time following Mrs. Fields’ acquisition. In 2007, Mrs. Fields Famous Brands sold all three pretzel chains to NexCen Franchise Management.

12.  Global Franchise Group purchased NexCen in 2010 and Pretzel Time and Pretzelmaker were merged under the Pretzelmaker brand. Today, Pretzelmaker is one of the largest soft pretzel franchises in the country, with locations all across the U.S., as well as in Canada, Guam, Mexico, the Philippines, Saudi Arabia, and Qatar.

Entrepreneur’s Franchise 500

13.  Pretzelmaker did not rank on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Pretzelmaker 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 Pretzelmaker’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:  214
• Outlets at the End of the Year:  204
• Net Change:  -10

2018

• Outlets at the Start of the Year:  204
• Outlets at the End of the Year:  190
• Net Change:  -14

2019

• Outlets at the Start of the Year:  190
• Outlets at the End of the Year:  177
• Net Change:  -15

Company-Owned

2017

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2018

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2019

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

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

• In the chart below, Pretzelmaker discloses the average and median Net Sales generated during the period beginning December 30, 2018, and ending December 28, 2019 (the “Measurement Period”) for the 107 Traditional Stores that (a) continuously operated over the entire Measurement Period, and (b) are not co-branded with another concept or supplemented with a Satellite.

• In addition to this Net Sales data, the table below discloses the average and median of certain costs incurred over the Measurement Period by the 2 Traditional Stores that: (i) met the conditions discussed in subparts (a) and (b) of the prior paragraph; and (ii) reported their respective cost information to Pretzelmaker in time for such information to be included in this Item.

• There were 177 franchised Stores open and operating as of December 31, 2019. Of these, 107 were Traditional Stores that operated for the entire Measurement Period.

Overall Sample