In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Wetzel’s Pretzels franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Wetzel’s Pretzels franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Wetzel’s Pretzels franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Wetzel’s Pretzels outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Wetzel’s Pretzels’ financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• average, median, highest, and lowest gross sales by calendar month (from January 2020 through March 2021) for all Wetzel’s Pretzels bakeries that were open for sales during the applicable month, even if not for the full month

• comparable sales by calendar month (from January 2020 through March 2021, versus the same month in 2019) for all Wetzel’s Pretzels bakeries that had a full month of sales in 2020/2021 as well as a full month of sales in the same month in 2019

Section I – Background Information

19 Things You Need to Know About the Wetzel’s Pretzels Franchise

Appoints New Chief Marketing Officer

1.  In early September 2021, Wetzel’s Pretzels announced the appointment of Kim Freer as its new chief marketing officer. Recognized as a proven leader in the restaurant industry, Freer brings a wealth of franchise marketing experience across a portfolio of nationally recognized brands. In her new role with the iconic pretzel brand, Freer will support its continued growth, with enhancements to its menu, ease of ordering, and digital infrastructure.

2.  Freer said, “I’ve always admired Wetzel’s Pretzels for its crazy good food and distinctive voice. It’s a beloved, established brand that continues to innovate and iterate. We’re making our fresh made and fresh squeezed menu items available in a variety of flavors, and adapting our concept into various formats. Fans continue to rave about their Wetzel’s experience, so we’re on a mission to make enjoying a hot pretzel even easier and more convenient than ever before.”

3.  Freer joins an experienced leadership team at Wetzel’s Pretzels, bringing her skills in managing marketing for thousands of Subway restaurants during its height. She led brand marketing for Blaze Fast-Fire’d Pizza during a period of immense growth, from store 26 to 345, including 41 states and six countries. Most recently, she served as CMO at Yoshinoya Japanese Kitchen, where she launched off-premise sales channels, including the brand’s first mobile app and loyalty program, resulting in record sales.

4.  Jennifer Schuler, CEO of Wetzel’s Pretzels, added, “As a former Chief Marketing Officer at Wetzel’s Pretzels, this role has a special place in my heart, and I know that we can expect big things from Kim. Not only is Kim joining Wetzel’s during a time of great growth, but we’re excited to tap her experience and continue to bring pretzels to the people in inventive new ways.”

Now Offering Franchise Opportunity with Phillips 66

5.  In mid-September 2021, Wetzel’s Pretzels announced it is offering a unique franchise opportunity with the Phillips 66 family of brands. Operators now have the opportunity to open a Wetzel’s at Phillips 66, Conoco, and 76® branded convenience stores.

6.  Frank Gonzales, director of non-traditional development for Wetzel’s Pretzels, said, “We’ve been impressed with the early success of Wetzel’s Pretzels locations at the 76® convenience stores and the benefit this initiative will provide for both brands’ growth. Our team is excited to provide the convenience and ease of operations to even more franchise investors, and we’re determined to ‘Bring Pretzels to the People’ on a larger scale.”

7.  Radiating its signature Southern California vibe, Wetzel’s was founded in Redondo Beach, California 25 years ago. It has grown a cult-like following in the communities it serves. The brand inspires a fanatical following with its colorful presence, “gram-worthy” snacks, and the small moments of pure pretzel bliss that it creates with friends, family, and colleagues.

8.  The store-within-a-store operational model follows the recent success of Ron Reger and Alfred Daher opening three Wetzel’s locations in their 76® convenience stores within 10 months.

9.  Lou Burke, manager of branded sales at Phillips 66, said, “Phillips 66 is committed to helping owners grow. Wetzel’s has a proven franchise business model, so we recognize this opportunity as a great way to drive traffic into stores and generate additional revenue.”

Launches Unique Food Truck Partnership in Utah

10.  At the end of October 2021, Wetzel’s Pretzels announced that it has teamed up with Thirst, which has inked a franchise agreement to co-brand within a newly-launched Wetzel’s Pretzels food truck. The Wetzel’s and Thirst mobile unit has quickly leveraged its local fandom, becoming a must-have at events and group gatherings.

11.  Thirst has built a loyal fan base with five Salt Lake Valley locations, and sought to bring its food and beverage snacking experience to a mobile platform. The rapidly expanding Wetzel’s food truck model fit perfectly with what Thirst founder Ethan Cisneros wanted for the next evolution of his brand. Now, Wetzel’s Pretzels powered by Thirst has hit the road and it has become a celebrated addition to the community, as can be seen on the truck’s Instagram channel.

12.  Cisneros, who co-founded Thirst with his business partner Sierra McCleve, said, “Both Thirst and Wetzel’s Pretzels set out to channel unfettered happiness – it’s a beautiful marriage of brands. Plus, when you match our sweet treats and refreshing drinks with Wetzel’s, we can satisfy just about everybody’s snack cravings with speed and convenience. And, the Wetzel’s food truck format made it a breeze to hit the road. The simplicity of operations, flexibility, lower cost and supportive team have helped our truck quickly become a prized part of events around the Valley and beyond. We’ve even gone four hours southwest of Salt Lake to St. George with it!”

13.  According to Jon Fischer, chief development officer of Wetzel’s Pretzels, “Ethan impressed us from the moment he expressed interest in launching a Wetzel’s food truck. He prioritizes exactly what our food truck owners need to in order to engrain their trucks into their communities. He’s engaging fans, eager to get out in front of local residents, events, groups and businesses, and he’s savvy, especially when it comes to social media. His ambitious nature has helped formulate a blueprint for building meaningful community ties with our food truck model. And with a strong future ahead for Wetzel’s food trucks, Ethan’s remarkably innovative use of social media to drive excitement and sales for his mobile unit will be a great source of inspiration for us.”

Company History

14.  Wetzel’s Pretzels was founded in 1994 by Rick Wetzel and Bill Phelps in the South Bay Galleria mall in Redondo Beach, California. Wetzel and Phelps’ little soft pretzel stand was a hit and they began opening more stores around the area.

15.  Building on this early success, Wetzel and Phelps begin franchising Wetzel’s Pretzels in 1996. The first standalone Wetzel’s Pretzels store opened that year and the famous Wetzel Dog, a pretzel wrapped hot dog, was added to the menu.

16.  Over the next few years, Wetzel’s Pretzels expanded rapidly around the United States and by 2001, there were over 100 locations in operation. A few years earlier, in 1998, Wetzel’s Pretzels opened its first international store in Puerto Rico. As Wetzel’s Pretzels continued to grow, the brand expanded to stadiums, airports, and theme parks like Disneyland and Disneyworld.

17.  In 2007, Los Angeles private equity firm Levine Leichtman Capital Partners Inc. bought a majority stake in Wetzel’s Pretzels. Phelps still owns a 20% share, while Wetzel holds a smaller stake. A decade later, in 2016, Levine Leichtman Capital sold its majority stake to Dallas-based private equity firm CenterOak Partners LLC.

18.  In 2019, Bill Phelps stepped down as CEO of Wetzel’s Pretzels after serving in the role for 25 years. Today, Wetzel’s Pretzels has locations in more than 28 states and six countries.

Entrepreneur’s Franchise 500

19.  Wetzel’s Pretzels did not rank on Entrepreneur’s 2022 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of Wetzel’s Pretzels franchise costs, based on Item 7 of the company’s 2021 FDD.

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

• Detailed information on Wetzel’s Pretzels initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year:  318
• Outlets at the End of the Year:  313
• Net Change:  -5

2019

• Outlets at the Start of the Year:  313
• Outlets at the End of the Year:  313
• Net Change:  0

2020

• Outlets at the Start of the Year:  313
• Outlets at the End of the Year:  306
• Net Change:  -7

Company-Owned

2018

• Outlets at the Start of the Year:  17
• Outlets at the End of the Year:  23
• Net Change:  +6

2019

• Outlets at the Start of the Year:  23
• Outlets at the End of the Year:  26
• Net Change:  +3

2020

• Outlets at the Start of the Year:  26
• Outlets at the End of the Year:  30
• Net Change:  +4

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

2020 and 2021 Adjusted Monthly Gross Revenues vs. 2019 Adjusted Monthly Gross Revenues – Impact of COVID-19 Closure Period

• “Adjusted Gross Revenue” means the total amount of income of any type or nature generated by you and your Related Parties, directly or indirectly, from, by, or on account of the operation of the Franchised Business, including but not limited to for all goods (including gift cards) sold and services rendered from the Approved Location or in connection with the Trade Name or Marks, in whatever form and from whatever source (including revenues from special or promotional programs, delivery services and fees, other revenues associated with delivering and/or selling products or services off-premises, or any other revenue-generating activity).

• 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.

• Comp Bakeries represent any location that had a full month of sales in 2020 as well as a full month of sales in the same month in 2019.

• Open Bakeries represent any location that was open for sales during the fiscal month, even if not for the full month.

• During the peak of the initial COVID outbreak from March 2020 through June 2020, the vast majority of Bakeries were closed for business due to government and/or landlord mandated closures.

• California indoor malls were forced to close a second time in mid-July, with most reopening in late August, with the exception of indoor malls in Los Angeles County, which were reopened in October.

• While most Bakeries have re-opened as of September 2020 and comp sales of open Bakeries have recovered, some Bakeries have not yet reopened, including many Bakeries in arenas or stadiums (i.e. rely on large crowds or events).

• The table also provides the adjusted monthly gross revenues for the first three months of fiscal year 2021 with comp sales of the same locations from 2019.

January 2020

• 2020 Comp Sales:  $10,586,009
• 2019 Comp Sales:  $10,003,454
• Comp:  5.8%
• Number of Comp Units:  275
• Number of Open Units:  292
• Maximum Unit Sales:  $159,181
• Minimum Unit Sales:  $639
• Median Unit Sales:  $36,100
• Average Unit Sales:  $38,495

February 2020

• 2020 Comp Sales:  $9,632,639
• 2019 Comp Sales:  $9,477,374
• Comp:  1.6%
• Number of Comp Units:  273
• Number of Open Units:  287
• Maximum Unit Sales:  $66,665
• Minimum Unit Sales:  $5,201
• Median Unit Sales:  $32,117
• Average Unit Sales:  $35,284

March 2020

• 2020 Comp Sales:  $525,590
• 2019 Comp Sales:  $663,628
• Comp:  -20.8%
• Number of Comp Units:  12
• Number of Open Units:  284
• Maximum Unit Sales:  $132,020
• Minimum Unit Sales:  $12,622
• Median Unit Sales:  $34,951
• Average Unit Sales:  $43,799

April 2020

• 2020 Comp Sales:  $142,423
• 2019 Comp Sales:  $311,413
• Comp:  -54.3%
• Number of Comp Units:  7
• Number of Open Units:  14
• Maximum Unit Sales:  $44,160
• Minimum Unit Sales:  $7,551
• Median Unit Sales:  $20,749
• Average Unit Sales:  $20,346

May 2020

• 2020 Comp Sales:  $168,578
• 2019 Comp Sales:  $293,607
• Comp:  -42.6%
• Number of Comp Units:  6
• Number of Open Units:  73
• Maximum Unit Sales:  $53,667
• Minimum Unit Sales:  $12,489
• Median Unit Sales:  $23,794
• Average Unit Sales:  $28,096

June 2020

• 2020 Comp Sales:  $2,136,041
• 2019 Comp Sales:  $2,287,649
• Comp:  -6.6%
• Number of Comp Units:  44
• Number of Open Units:  230
• Maximum Unit Sales:  $119,838
• Minimum Unit Sales:  $8,696
• Median Unit Sales:  $46,912
• Average Unit Sales:  $48,546

July 2020

• 2020 Comp Sales:  $4,201,974
• 2019 Comp Sales:  $5,309,040
• Comp:  -20.9%
• Number of Comp Units:  116
• Number of Open Units:  251
• Maximum Unit Sales:  $101,221
• Minimum Unit Sales:  $11,250
• Median Unit Sales:  $31,858
• Average Unit Sales:  $36,224

August 2020

• 2020 Comp Sales:  $4,528,868
• 2019 Comp Sales:  $5,493,356
• Comp:  -17.6%
• Number of Comp Units:  119
• Number of Open Units:  173
• Maximum Unit Sales:  $110,634
• Minimum Unit Sales:  $7,417
• Median Unit Sales:  $32,217
• Average Unit Sales:  $38,058

September 2020

• 2020 Comp Sales:  $6,270,757
• 2019 Comp Sales:  $5,792,600
• Comp:  8.3%
• Number of Comp Units:  132
• Number of Open Units:  230
• Maximum Unit Sales:  $136,199
• Minimum Unit Sales:  $9,551
• Median Unit Sales:  $38,204
• Average Unit Sales:  $47,506

October 2020

• 2020 Comp Sales:  $7,859,027
• 2019 Comp Sales:  $7,241,921
• Comp:  8.5%
• Number of Comp Units:  197
• Number of Open Units:  256
• Maximum Unit Sales:  $111,865
• Minimum Unit Sales:  $6,798
• Median Unit Sales:  $35,333
• Average Unit Sales:  $39,894

November 2020

• 2020 Comp Sales:  $8,901,866
• 2019 Comp Sales:  $8,546,384
• Comp:  4.2%
• Number of Comp Units:  210
• Number of Open Units:  272
• Maximum Unit Sales:  $119,130
• Minimum Unit Sales:  $6,402
• Median Unit Sales:  $37,466
• Average Unit Sales:  $42,390

December 2020

• 2020 Comp Sales:  $15,271,055
• 2019 Comp Sales:  $17,520,735
• Comp:  -12.8%
• Number of Comp Units:  198
• Number of Open Units:  275
• Maximum Unit Sales:  $225,778
• Minimum Unit Sales:  $7,718
• Median Unit Sales:  $70,141
• Average Unit Sales:  $77,127

Full Year 2020

• Average Annual Unit Sales:  $495,765
• Average Monthly Unit Sales:  $41,314

January 2021

• 2021 Comp Sales:  $8,725,483
• 2019 Comp Sales:  $7,788,708
• Comp:  12.0%
• Number of Comp Units:  203
• Number of Open Units:  276
• Maximum Unit Sales:  $132,969
• Minimum Unit Sales:  $10,228
• Median Unit Sales:  $39,956
• Average Unit Sales:  $42,983

February 2021

• 2021 Comp Sales:  $7,830,008
• 2019 Comp Sales:  $7,344,086
• Comp:  6.6%
• Number of Comp Units:  190
• Number of Open Units:  277
• Maximum Unit Sales:  $108,122
• Minimum Unit Sales:  $10,702
• Median Unit Sales:  $38,940
• Average Unit Sales:  $41,211

March 2021

• 2021 Comp Sales:  $13,736,372
• 2019 Comp Sales:  $11,655,847
• Comp:  17.8%
• Number of Comp Units:  217
• Number of Open Units:  277
• Maximum Unit Sales:  $189,457
• Minimum Unit Sales:  $13,388
• Median Unit Sales:  $58,224
• Average Unit Sales:  $63,301

First Quarter 2021

• Average Quarterly Unit Sales:  $147,495
• Average Monthly Unit Sales:  $49,165

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