Everyone knows that smell when they walk into the mall: the pretzel stand. It’s delicious. Your mouth starts to water instantly. You need a pretzel.
Wetzel’s Pretzels is certainly not the only pretzel stand in the many shopping malls of the United States, but it’s one of the biggest. They have over 300 locations and a name that is recognizable instantly by most Americans. They’re a staple.
Wetzel’s doesn’t only serve up delicious, soft pretzels, they also offer great franchising opportunities. There are still some areas of the country that have yet to experience the goodness of a Wetzel’s Pretzel and they are trying to change that by bringing more locations to more places. They need help from new franchisees to get there.
Contents
A Wetzel’s History Lesson
It was 1994 and a great time to introduce the world to a new brand of soft pretzels. Together, Bill Phelps and Rick Wetzel opened the first Wetzel’s Pretzels location. It was located in the South Bay Galleria mall in Redondo Beach, California. Using their delicious, signature recipe, they began serving their superior pretzels to hungry mall shoppers in large quantities. They knew they had something special.
After a large amount of success in their first two years, Wetzel’s Pretzels began selling franchise licenses to other entrepreneurs in 1996. Since that time, Wetzel’s has continued to grow and expand, bringing their hot, fresh pretzels to thousands of people around the world.
The growth was not only happening in the United States. In 1998, the first international location would open in Puerto Rico. After only six years in the pretzel game, Wetzel’s was really starting to heat up.
Soon after going international, they would push beyond the mall borders and start opening locations in other places, such as airports and sports stadiums. The Staples Center in Los Angeles was the first major sports arena to boast a Wetzel’s location, undoubtedly making the competition more than a little jealous.
By 2001, Wetzel’s would reach the pinnacle of restaurant locations: The Disneyland Resort in Anaheim, California. Being on Disney property gave them access to thousands upon thousands of hungry customers every day. It worked out so well that two years later, in 2003, another Wetzel’s location was opened across the country at the Walt Disney World Resort. Wetzel’s Pretzels was now firmly planted on both Disney coasts and ready to feed the lively theme park guests.
Today, there are 310 Wetzel locations operating around the world. They have several co-branding agreements with companies like Cold Stone Creamery and Juice It Up!, allowing them to draw in more customers by appealing to those who are loyal to the branding partners.
Wetzel has changed the pretzel game and they are eager to add even more achievements to their already long list.
Joining Team Wetzel
Wetzel’s Pretzels is currently the third fastest growing snack concept franchise in the world. That’s pretty big, but it’s not enough for them. They want to be the best, the biggest, the place to get a pretzel.
To begin the process of becoming a Wetzel’s Pretzels franchisee, the applicant will need to contact the franchisor to express their interest. They will be asked a series of preliminary questions to allow Wetzel’s to gauge both their level on interest, as well as their qualifications.
The application questions will consist of those pertaining to the applicant’s prior business experience, as well as their financial ability.
Wetzel’s is seeking candidates who can demonstrate a strong background in either business ownership or management. The skills learned through this type of experience will allow the future franchisee to handle the pressures that accompany owning a Wetzel’s location. Those who can provide evidence of their ability will score higher as a desirable candidate in the franchisor’s eyes.
Financial strength is also important because of the cost of opening a location. Even with financing options that are available through Wetzel’s themselves or third party lenders, the franchisee still has to be able to put up some of the cost and the franchisor likes to make sure they are capable of doing that before diving too deep into the application process.
Wetzel’s Pretzels requires each of their franchisees to have a net worth of at least $240,000, with $60,000 available in liquid cash. This is the bare minimum to be approved, but anything higher will be looked upon favorably.
After the application is received, the candidate will be contacted for an interview over the phone with a member of the franchise Development Team to further examine the possibility of a business relationship.
Those that pass this pre-qualifying stage will be sent a copy of the franchise disclosure document, which will provide an in-depth look at the franchise relationship. The candidate will be expected to read the document thoroughly and seek clarification on any parts that are not understood fully. The candidate should not move forward until the contents of the document have been read and accepted. It will outline the entire agreement, so they should be on board with everything in it before proceeding.
Moving forward, the candidate will be invited to a Discovery Day event at the Wetzel’s Pretzels headquarters in Pasadena, California. At this time, the applicant will meet with the franchise Development Team and present their business plan for review. The Development Team likes to see well thought out, detailed business plans to prove that the applicant has what it takes to run a business. Having a clear vision will help the location run smoothly and put a lot of confidence in the applicant as an owner.
While at Discovery Day, the applicant will also meet with the Real Estate Department to discuss possibilities for the location. Wetzel’s provides assistance with location selection to ensure that each pretzel stand is being placed in a location where it can thrive. Being placed in an area that is not conducive to high sales, or where it will be in direct competition with another Wetzel’s location should be avoided, and the Real Estate Department can help to move the franchisee in the right direction.
Once the business plan is approved and the site has been selected, it’s time for the franchisee to begin their training. They will return to Pasadena for a one-week training session to learn the ins and outs of Wetzel’s Pretzels. This is important because it ensures the franchisee knows the company culture and what is expected of them as a franchisee. Even though the location will be owned and operated by the franchisee, it must still match the Wetzel’s brand.
In addition to the week in Pasadena, the franchisor will also provide a week of training at the new location. This is the hands-on portion of the training, where the franchisee learns how to actually run the store. How to make the product, how to deliver good customer service, and how to manage the location to ensure profitability are all essential to the life of the location.
For the actual building of the location, Wetzel’s Construction Team will be on site to guide the process and ensure that the location meets the specifications required to run a Wetzel’s Pretzels location.
A Field Business Manager will also come to the location in the days before the grand opening to ensure that everything is ready and that the team is prepared to execute. Any last minute details that need to be addressed will get attention at this time, and the Field Business Manager will ensure the location is up to par and ready to start serving delicious pretzels.
At every stage of the game, Wetzel’s Pretzels is there to assist the franchisee and to guide them toward opening a successful location. It’s just one of the perks of owning a franchise instead of a stand alone business.
The Cost of a Pretzel
Starting any business is an expensive endeavor. Knowing how much it is likely to cost before signing paperwork can help the franchisee decide if the business venture will be worth it or not. Wetzel’s Pretzels does their best to outline the estimated cost to ensure the franchise applicant is making the best possible decision.
The franchise license fee will cost $35,000, which is pretty typical for a fast-casual or snack food location. It’s right in line with many of the competitors, and lower than a lot of other franchises in various industries.
The startup costs will range between $165,000 and $406,000. Because most Wetzel’s Pretzels locations require less physical space than a lot of other franchise opportunities, this estimated range starts at a lower price. Smaller spaces are typically less expensive to lease than larger ones.
Wetzel’s also requires less equipment because they have a smaller offering of items. For the most part, the pretzel ovens, hot dog grill, and drink dispensers are the only kitchen equipment that will be required, which helps to the keep the costs down.
Startup costs are not the only costs that are associated with running a franchised location. On top of the regular costs such as inventory, rent, and staffing, a franchisee is also responsible for paying any and all ongoing fees charged by the franchisor.
Wetzel’s Pretzels charges each franchised location royalty and advertising fees. The royalty fees are used to pay Wetzel’s for the use of their name and the support provided by the franchisor. The franchisee pays Wetzel’s 7 percent of their gross total sales in royalties.
The advertising fees are charged at 1 percent of gross total sales and are used to help cover the cost of the advertising campaigns and materials that are produced by the franchisor.
These fees are to be paid according to the fee schedule that will be outlined in the franchise agreement. The franchisee is responsible for paying these fees on time throughout the life of the 10-year license period. If the license is renewed for an additional 10 years, the fees will need to be paid according to the new agreement that is signed. The franchisor reserves the right to amend fee rates at each new contract signing, if they so choose.
Pretzel Performance
Even though Wetzel’s Pretzels is a household name, it does not guarantee that they are a good choice as a franchise opportunity. To determine their viability, the franchise applicant should evaluate several different facets of their organization.
One of the first areas that should be examined is the growth pattern that the franchisor has experienced over the last few years. Positive growth can indicate a healthy franchise system that is capable of supporting new locations. Negative growth points to a system that is failing on some level or another and that is having problems sustaining the locations they already have. If they are having trouble there, it’s unlikely they will be able to support additional units.
Wetzel’s Pretzels has experienced steady, consistent franchise growth over the last 10 years. This shows that not only are their current stores thriving and staying open, but they are adding additional units to their list. Most of Wetzel’s franchisees own multiple units, meaning they are making enough money with their first locations that they are able to open additional spaces. This is good news for potential franchisees.
That is the next piece of information that should be analyzed to determine a franchise’s performance: how well are the individual franchisees doing? Clearly, Wetzel’s Pretzels is lucrative enough for their franchisees that many of them are expanding and adding additional units. If they were not making good profits off of their first locations, they would not, and some could not, pump more money into a brand that wasn’t producing good results.
It appears that after more than 20 years of franchising, Wetzel’s Pretzels is still raking in the dough.
Choosing Wetzel
There are countless food service franchise opportunities to choose from. There’s casual dining, fast casual, and even snack food options, each of which have their own unique twist to the franchising experience. Deciding on a food service sub-genre can be difficult.
Wetzel’s Pretzels has a lot of things going for it. As a snack food restaurant, they offer lower startup costs because of the lack of need for bigger space and more equipment. They have over 20 years of experience with franchising and know how to make the most of any situation. It’s what’s kept them afloat all these years. There ability to be located in just about any space is also a plus, because it makes the real estate selection process much easier.
Easy and cheap startup do not always equate to a good opportunity, though. The business still has to make money for the owner and be a viable, self-sustaining entity. Wetzel’s Pretzels has proven continually that they meet those requirements. By continuing to turn profits and to grow, they have cemented themselves as a top runner in the snack food game.
Partnering with Wetzel’s Pretzels would be a great opportunity for just about any investor. Low costs and high potential make this one an easy bet.