Do you want to open a Philly Pretzel Factory franchise and get started in the industry? Philly Pretzel Factory is one of the most popular soft pretzel companies in the United States, and being a part of this brand could prove to be very lucrative. Compared to its competitors, its costs and fees are pretty moderate, and it seems profitable.
But is it really a good idea to own a Philly Pretzel Factory franchise? In this article, we will go over the company and its franchise system, give you the details of the associated costs, and other things about Philly Pretzel Factory.
About Philly Pretzel Factory And Philly Pretzel Factory History
The story of Philly Pretzel Factory goes back to the founder, Dan DiZio’s history of selling pretzels in his school when he was 11. He kept his ambition until after college, and when he graduated, he teamed up with his business partner and founded the company in 1998.
Philly Pretzel Factory is famous for its pretzels, but they also offer pretzel dogs, sausages, pretzels stuffed with various flavors and products, dipping sauce, and even lemonade.
They started franchising in 2004, and they have been franchising ever since. They have an established business model for new entrepreneurs. Philly Pretzel currently owns over 150 outlets across the United States with a high brand recognition.
Franchise Model Table
| Cost Or Fees | Amount |
|---|---|
| Initial Investment | $133,999-$351,193 |
| Franchise | YES |
| Franchising Since | 2004 |
| Franchise-Fee | $35,000 |
| Royalty-Fee | 6% |
| Liquidity | $40,000-$100,000 |
| Estimated Outlets | 175+ |
How Much Does It Cost To Open A Philly Pretzel Factory Franchise?
The total cost to open and operate a Philly Pretzel Factory franchise varies between $133,999 and $351,193. This is the initial average startup cost per franchised store, and it includes all the expected startup costs, including the $35,000 franchise fee.
This number comes from Philly Pretzel Factory’s franchise disclosure document, which is averaged from the existing franchisees’ costs.
Your individual spending might be outside of this range depending on several factors, such as the type of Philly Pretzel Factory.
Franchise Requirements
The requirement to open a Philly Pretzel Factory for franchisees is primarily financial. They do not look for a professional background in the industry or as a business manager. However, it can significantly help your application if you have these experiences.
You need a minimum of $300,000 in net worth and liquidity of at least between $40,000 and $100,000.
Profit & Revenue Of Philly Pretzel Factory
According to the latest available report published in 2021, the company made $5.4 million in operating revenue. Of this $5.4 million, the company managed to make a net profit of $719,959 annually.
Profit & Revenue Of Philly Pretzel Factory Franchise
Overall average gross sales per Philly Pretzel Factory franchise was $431,351 annually per the franchise disclosure document. The highest earnings were $1.2 million, and the lowest was $118,951.
If we assume a profit margin of 15% as per the industry standard, then we can calculate that a Philly Pretzel Factory franchise owner makes estimated annual profits of $64,702 on average.
| Financial Overview | Percentage of Revenue | Amount ($) |
|---|---|---|
| Individual Franchise Annual Revenue | 100% | 431351.00 |
| Rent | 10.63% | (45831.04) |
| Insurance | 5.31% | (22915.52) |
| Salaries | 21.25% | (91662.09) |
| Franchise Royalty Fees | 5.31% | (22915.52) |
| Utilities | 2.13% | (9166.21) |
| Cost of Goods Sold (COGS) | 26.56% | (114577.61) |
| Labor (Variable) | 13.81% | (59580.36) |
| Total (Expenses) | 85.00% | (366648.35) |
| Net Profit | 15.00% | 64702.65 |
Note: The displayed expenses are estimates based on industry averages and standard costs. Actual expenses may vary due to factors like location, business size, and market conditions. We recommend conducting detailed research or consulting with a financial advisor for a tailored financial analysis.
Payback Period Of Philly Pretzel Factory Franchise
With an investment of $351,193 and an estimated 15% profit on the average net sales from 2020, the yearly profit would be $64,702.
So, to find out how long it will take to earn back the initial investment:
Payback Period = Investment / Yearly Profit = $351,193/ $64,702= 5.4 years
Based on these figures, it will take approximately 5-6 years to pay back the initial investment for Philly Pretzel Factory. This time period could be longer or shorter depending on your sales, revenue, and profit figures.
Failure Rate Of Philly Pretzel Factory
Franchised Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2016 | 138 | 149 | +11 |
| 2017 | 149 | 159 | +10 |
| 2018 | 159 | 159 | 0 |
For the Franchised outlets:
- In 2016, the growth rate was (11)/138×100≈7.91%
- In 2017, the growth rate was (10)/149×100≈6.71%
- In 2018, the failure rate was (0)/159×100≈0.00%
Company-Owned Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2016 | 10 | 8 | -2 |
| 2017 | 8 | 4 | -4 |
| 2018 | 4 | 4 | 0 |
For the Company-Owned outlets:
- In 2016, the failure rate was (2)/10×100≈20%
- In 2017, the failure rate was (4)/8×100≈50%
- In 2018, the failure rate was (0)/4×100≈0.00%
Total Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2016 | 148 | 157 | +9 |
| 2017 | 157 | 163 | +6 |
| 2018 | 163 | 148 | 0 |
For Total outlets:
- In 2016, the growth rate was (9)/148×100≈6.08%
- In 2017, the growth rate was (6)/157×100≈3.82%
- In 2018, the failure rate was (0)/163×100≈0.00%
According to the above-mentioned data, we can see that the franchised outlets for Philly Pretzel Factory grew from 2016 to 2017, showing a growth rate between 7.91% and 6.71%. In 2018, the the number of outlets didn’t grew showing a failure rate of 0%.
On the other hand, for company-owned outlets, the failure rate of Philly Pretzel Factory was lying in the range between20% and 0% for the same period of time.
Overall, when we combine the data of franchise and company-owned outlets, we can see that the Philly Pretzel Factory franchise has expanded in the years 2016-2017, showing a total growth rate between 6.08% and 3.82%. But later in 2018, the company showed afailure rate of 0%.
Training and Support Of Philly Pretzel Factory
The initial training consists of both on-the-job and classroom training for the franchisee and managers.
It lasts for one week and happens at the franchisor’s corporate office in Philadelphia and one another week in your own location before you start opening the store. You receive a total of 30 hours of classroom and 40 hours of onsite training.
There is both pre and post-opening support from the franchisor. For pre-opening, they help with site selection, lease negotiation, preparing the store, and similar things.
For post-opening, they give you periodic onsite assistance with personnel on request.
Terms of Agreement and Renewal
The length of the initial agreement is ten years. A renewal is possible at the end of this ten-year term for an additional term of ten years.
You must meet specific requirements to be eligible for this renewal, and the franchisor must approve your request. The renewal fee is half of the current franchise fee.
Obligations and Restrictions
The franchisee must operate the franchised location per the mentioned methods and standards in the franchise manual.
The franchisee can also only offer approved products that are indicated in the operation manual by Philly Pretzel Factory. These products must also meet all the qualifications and standard measurements of the franchisor.
Additionally, if the franchisee would like to purchase a product from an unapproved supplier, the franchisee must first get written approval from the franchisor.
In the case that the franchisor revokes the approval of a supplier, the franchisee must stop buying products from them within 60 days.
Financial Assistance
Philly Pretzel Factory does not offer direct financing, but they might offer indirect financing.
They will work together with you to find the most suitable financing option and introduce you to their third-party financial lenders if needed.
It doesn’t mean that you will get the loan 100%, but they will give you help in the process.
For those looking to open a franchise in the restaurant industry, possibilities include Firehouse Subs, Applebee’s Franchise, Qdoba Mexican Eats Franchise, Del Taco Franchise, and Applebee’s Franchise.
Philly Pretzel Factory Comparison
| Name | Franchise Fee | Royalty Fee | Initial Investment |
|---|---|---|---|
| Wetzel’s Pretzels | $10,000-$40,000 | 7% | $162,600-$585,350 |
| Auntie Anne’s Pretzels | $35,500 | 7% | $148,575-$572,100 |
| Philly Pretzel Factory | $35,000 | 6% | $133,999-$351,193 |
Conclusion
Philly Pretzel Factory is one of the most popular pretzel stores in the United States, with a variety of flavors and pretzel products. With over 175 outlets across the country, they have good brand awareness, which presents a very good opportunity for entrepreneurs looking to own a franchise with Philly Pretzel Factory.
Their entry costs are relatively moderate, and, in some cases, they could even be cheaper than the competitors. It also projects an annual revenue of close to half a million, which is an amazing number compared to what you are investing. So, if you are thinking about entering the industry with the Philly Pretzel Franchise, the numbers show that you could have a lucrative opportunity with them.
FAQs
Is Philly Pretzel Factory a franchise?
Yes, Philly Pretzel Factory is an active franchise. They have been actively franchising since 2004.
How much money does Philly Pretzel Factory make?
The company made a revenue of $5.4 million and a net profit of $719,959 annually, according to the latest franchise disclosure document by the company.
Where is Philly Pretzel Factory headquartered?
The headquarters of Philly Pretzel Factory is located in Bensalem, Pennsylvania, United States.
How many locations does Philly Pretzel Factory has?
There are 165 total Philly Pretzel factory locations in the United States. It operates with a strong focus on customer service.
Who founded Philly Pretzel Factory?
Dan Dizio founded Philly Pretzel Factory. He started his journey at the age of 11 when he, along with his neighborhood friends, were selling pretzels in Philadelphia.
Sources