Detailed Information on Wetzel’s Pretzels’ Initial Franchise Fee, Royalty Fee + 26 Other Fees (Items 5 and 6, 2022 FDD)

1.  Initial Franchise Fee:  $40,000

• When you sign a Franchise Agreement for a Bakery, you will pay Wetzel’s Pretzels the initial franchise fee in cash or other form of payment that will make the funds immediately available to Wetzel’s Pretzels (such as wire transfer or cashier’s check).

• The initial franchise fee for a Bakery is $40,000.

• The initial franchise fee is generally uniform to all franchisees, except that Wetzel’s Pretzels may waive or reduce the initial franchise fee for appropriate business reasons, in its sole discretion, including for franchisees who operate their franchises in non-traditional locations such as convenience stores, travel plazas, or Walmart locations.

• For example, Wetzel’s Pretzels is testing the viability of Bakeries operating from colleges, universities, and airports where the franchise fee and agreement terms may vary. Wetzel’s Pretzels may change or withdraw these programs at any time.

• In the past, Wetzel’s Pretzels has offered franchises at lower and varying initial fees and may continue to do so in the future. Typically, for franchises in non-traditional locations, the initial franchise fee has been $10,000 or higher.

• If you provide acceptable documentation that you have received an honorable discharge from the U.S. Army, U.S. Navy, U.S. Marine Corps., U.S. Air Force, or U.S. Coast Guard or if you are currently serving in any of the U.S. armed forces, and if you meet Wetzel’s Pretzels program requirements, Wetzel’s Pretzels offers a discount of 25% off the initial franchise fee.

• If you are currently employed as a police officer, fire fighter, or emergency medical technician/paramedic or was employed in that role and honorably discharged within the previous five years, and if you meet Wetzel’s Pretzels program requirements and provide acceptable documentation, Wetzel’s Pretzels offers a discount of 25% off the initial franchise fee.

• If you are a current franchisee of Wetzel’s Pretzels, are in good standing with it, and meet its program requirements, it offers a discount of 25% off the initial franchise fee.

• For eligible women and minority owners, Wetzel’s Pretzels offers a discount of 25% off the initial franchisee fee. To qualify for the discount, you must meet Wetzel’s Pretzels’ then-current criteria, which currently include: being a U.S. citizen; owning not less than 51% of the franchise-entity; holding 100% of the voting interest in the franchise-entity, and actively managing the day-to-day business of the franchise.

• The above discounts apply to certain purchases, as described above, and cannot be combined. If a discount applies, only one will applied to the initial franchise fee, even if you qualify for more than one discount (Veteran’s and Active-Duty Military Discount, First Responder’s Discount, Existing Franchisee Discount, and Minority and Women’s Ownership Discount).

2.  Initial Development Fee:  $20,000 multiplied by the number of Wetzel’s Pretzels Bakeries (excluding the first Bakery) which you must open

• When you sign Wetzel’s Pretzels’ current form of Multi-Unit Development Agreement, you must pay Wetzel’s Pretzels an initial development fee equal to $20,000 multiplied by the number of Wetzel’s Pretzels Bakeries which you must open, plus the balance of the initial franchise fee ($20,000) for your first Franchise Agreement.

• When Wetzel’s Pretzels accepts the site for each Bakery, you will sign a separate Franchise Agreement and pay Wetzel’s Pretzels an initial franchise fee of $40,000 (or $25,000 for a second Bakery in the same mall). However, Wetzel’s Pretzels will credit the development fee against the initial franchise fees (at the rate of $20,000 for the second and each subsequent Franchise Agreement until the development fee is exhausted).

• If you signed a form of Multi-Unit Development Agreement which differs from the current form, your initial franchise fees will be determined in accordance with your Multi-Unit Development Agreement.

• The development fee is fully earned by Wetzel’s Pretzels when paid, is uniform for franchises currently being offered in the state, and is not refundable under any circumstances.

3.  Lease Review Fee:  $3,500 to $7,000

• When you sign a Franchise Agreement for a Bakery, you will pay Wetzel’s Pretzels a fee ranging between $3,500 and $7,000 for the review of your lease; the fee will depend on the complexity of the lease and will be determined in Wetzel’s Pretzels’ sole discretion.

4.  Pre-Opening Purchases:  up to $1,500

• Before opening your Franchised Business, you will purchase items such as grand opening banners and balloons, pan liners, name tags, and job application forms from Wetzel’s Pretzels. The total cost of all such items is unlikely to exceed $1,500.

5.  Remote Mobile Unit Fee:  $5,000

• If you and your landlord agree that you may operate a Remote Mobile Unit within the shopping mall or shopping center where your Bakery is located, Wetzel’s Pretzels will grant you a license to operate the Remote Mobile Unit under a Remote Mobile Unit Addendum.

• The Remote Mobile Unit Fee, payable when you sign the Addendum, is $5,000.

• This fee is not refundable, and is not necessarily uniform in all cases, as Wetzel’s Pretzels may negotiate the amount of the fee in certain instances in its discretion.

6.  Deposit on Sublease:  two months’ rent

• Upon rare occasion, Wetzel’s Pretzels must lease real property to secure a desirable location for a Bakery and sublease it to the franchisee because the landlord is reluctant to rent to the franchisee, with which the landlord is not familiar.

• Wetzel’s Pretzels’ policy is to obtain a fully refundable deposit equal to two months’ rent when a franchisee leases from it. The amount is not uniform and the average amount of two months’ rent is $12,680.

• In some cases, Wetzel’s Pretzels may also require you to obtain a letter of credit to secure your sublease, in an amount, on terms, and on a form it prescribes, from a bank acceptable to it.

7.  Royalties:  7% of Adjusted Gross Revenue

• Due Date:  On Wednesday (or any other weekday designated by Wetzel’s Pretzels) of each week.

• “Adjusted Gross Revenue” means the total amount of income of any type or nature received by you and your Related Parties, directly or indirectly, from, by or on account of the operation of the Franchised Business.

• However, the definition of Adjusted Gross Revenue does not include sales tax that is collected from customers and actually transmitted to the appropriate taxing authorities; proceeds from insurance with respect to your property damage or liability; proceeds from civil forfeiture, condemnation, or seizure by governmental entities; or the amount of any returns, discounts, credits, allowances, or adjustments, within an accounting period.

8.  Advertising Fund Contributions:  1% of Adjusted Gross Revenue

• Due Date:  On Wednesday (or any other weekday designated by Wetzel’s Pretzels) of each week.

9.  Secret Shopper Fee:  $50 per shop

• Due Date:  Monthly.

• Reimburses Wetzel’s Pretzels for cost of service.

10.  Repeat Inspection Fee:  $500

• Due Date:  On invoice.

• Only assessed if previous inspection revealed material default.

11.  Bi-Annual Convention Registration:  $1,000, plus incidental costs to attend

• Due Date:  Before convention.

• Wetzel’s Pretzels will debit your account for this fee whether or not you attend.

12.  Ongoing Training Fees and Initial Training for New Managers:  cost, plus 20%

• Due Date:  When class begins.

13.  Audit:  all expenses of audit, if underpayment exceeds 3% or if audit was undertaken because you did not submit annual financial statements in a timely manner

• Due Date:  On invoice.

• Wetzel’s Pretzels may audit your records at your place of business or require you to send copies of specified records to it at your own expense.

• If the underpayment exceeds 3% of the money owed, Wetzel’s Pretzels may require that from then on your annual financial statements be audited and certified at your own expense.

• Audit costs are not refundable.

14.  Relocation Fee:  $7,500

• Due Date:  Before relocation.

• Not applicable for concession trucks or trailers.

15.  Renewal Fee:  for a renewal term between five and ten years, the renewal fee will be 50% of (a) Wetzel’s Pretzels’ then-current initial franchise fee for a single Bakery (without any applicable discount) or (b) Wetzel’s Pretzels’ then-current remote mobile fee for a Remote Mobile Unit, as applicable. For a Bakery or Remote Mobile Unit with a renewal term of less than five years, but at least one year, Wetzel’s Pretzels will pro-rate the renewal fee by 20% each year. For a concession truck or trailer: $3,750.

• Due Date:  On signing new Franchise Agreement, or an amendment in the case of a 1-year extension.

• For each and all Franchised Businesses, including Remote Mobile Units.

• You will be required to remit to Wetzel’s Pretzels a monthly fee of $500 per month until such time as you have entered into a new lease (or sublease) or a renewal of your lease (or sublease).

16.  Transfer Fee:  for a Bakery: $35,000 during the first 12 months, $20,000 from then on; for a concession truck or trailer: $3,750.

• Due Date:  With notice of intention to transfer.

• Will be partially refunded if transfer is denied.

17.  Remote Mobile Unit Transfer Fee:  1/2 of current Remote Mobile Unit Fee

• Due Date:  Before transfer completes.

• Not applicable for concession trucks or trailers.

18.  Interest on Late Payments:  lower of 18% per year or highest rate allowed by law

• Due Date:  As accrued.

• Compensation for loss of use of money.

19.  Base Rent:  monthly rent

• Due Date:  Per your Sublease Agreement, if applicable; usually the first of each month.

• Upon occasion, Wetzel’s Pretzels must lease real property to secure a desirable location and sublease it to the franchisee because the landlord is reluctant to rent to the franchisee.

• The amount of your rent is not uniform and generally it is a pass through of the rent Wetzel’s Pretzels owes under the master lease, though Wetzel’s Pretzels may mark-up the rent to account for its risks.

20.  Sublease Fee:  the initial Sublease Fee will be $200 monthly or as agreed by Parties, in addition to the Base Rent

• Due Date:  As incurred.

• The Sublease Fee compensates Wetzel’s Pretzels for administrative expenses.

• Wetzel’s Pretzels may increase the Sublease Fee, from time to time, upon written notice to you, but not by more than $100 per month in a 12-month period.

21.  Late Fee for Financial Statements:  $100 per week, per store

• Due Date:  On invoice.

• For failure to submit year-end Financial Statements according to the timeline communicated.

22.  Lease Review Fee:  $3,500 to $7,000, depending on complexity of lease, as determined by Wetzel’s Pretzels

• Due Date:  Due upon landlord execution of new lease.

• Wetzel’s Pretzels must review the terms of an initial lease, a renewal of a lease, or a material amendment to a lease.

• Fee is incurred only if lease is finalized.

• In the event of a store sale or transfer, fee is responsibility of the buyer.

23.  Lease Negotiation Fee:  $3,500 to $7,000, depending on complexity of lease, as determined by Wetzel’s Pretzels

• Due Date:  As incurred.

• The fee is payable to Wetzel’s Pretzels if it or a third party it hires represents you in connection with negotiating an extension or renewal of your lease.

24.  Loyalty Program:  a scanner is required for each POS terminal and the cost of each scanner is not expected to exceed $500. In addition, monthly service fees for Loyalty Program are currently up to $55 per store.

• Due Date:  Scanner costs paid as incurred. Loyalty Program fees paid to Wetzel’s Pretzels or designated third party.

25.  Supplier Fee:  you must reimburse Wetzel’s Pretzels for its costs and expenses in inspecting a proposed supplier. Wetzel’s Pretzels estimates that its costs and expenses are unlikely to exceed $500.

• Due Date:  As incurred.

26.  Private Offering Fee:  $5,000

• Due Date:  As incurred.

27.  Technology Fee:  currently, approximately $150, but Wetzel’s Pretzels may increase this fee as necessary

• Due Date:  The fee may be charged monthly or as incurred.

28.  Additional Concession Truck or Trailer Fee:  $5,000 per each additional concession truck or trailer

• Due Date:  As incurred.

• The Additional Concession Truck or Trailer Fee is paid to Wetzel’s Pretzels if it agrees to you operating an additional concession truck or trailer in the Mobile Area assigned to you.