Philly Pretzel Factory Franchise Cost, Revenue & Review 2026
- Investment
- $325K – $496K
- Disclosed sales
- $612K
- gross sales, not profit
- SBA charge-off
- 24.5%
- on 123 loans
Data from FDD filing + SBA 7(a) records
Analysis by FranchiseVerdict Research · Methodology
Philly Pretzel Factory is a snack franchise serving fresh-baked Philadelphia-style soft pretzels and dips. Franchisees run shops and kiosks managing baking, counter service, and staffing in high-traffic locations.
FranchiseVerdict summary · 2026
A Philly Pretzel Factory franchise requires a total initial investment of $325K – $496K, including a $40K franchise fee and an ongoing 6.0% royalty[2]. Per the 2025 FDD, average unit revenue was $612K[2]. SBA 7(a) loans show a 24.5% charge-off rate across 123 loans[1]. FranchiseVerdict grade: B (Above average), an editorial assessment, not investment advice. Run a live ROI scan →
Sources, dates and evidence
FDD issued: 2025 filing · Data extracted: · Last cited check: · Staleness risk: medium - a newer filing may exist
Evidence: strong✓ Investment (Item 7)✓ Item 19 status✓ Units and owners (Item 20)✓ SBA loan coverage✓ Litigation (Item 3)✓ Financial statements (Item 21)✓ Franchisor identityhow this is scored7 of 8 headline figures on this page cite a page of the filing; the rest are marked “Not cited” beside the figure.
Overview
- Investment
- $325K – $496K
- 53rd pct Service Resta…
- Avg gross sales
- $612K
- 8th pct Service Resta…
- Royalty
- 6.0%
- 48th pct Service Resta…
- Units
- 162
- 81st pct Service Resta…
- SBA charge-off
- 24.5%
- % of SBA 7(a) loans not repaid · median varies by category
Quick verdict · Quick-Service Restaurants · color = vs category peers
Green = favorable by >10% vs Quick-Service Restaurants median · No shading = within ±10% · Red = unfavorable by >10% · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Bottom line
- COSTTotal investment $325K – $496K including a $40K franchise fee, 6.0% ongoing royalty.
- RETURNSAverage unit revenue of $612K/year (median $513K).
- RISKVerdict B (Above average), verdict score 56/100 (higher is better). SBA loan charge-off rate of 24.5% across 123 loans (well above the 16% franchise average, based on all SBA 7(a) franchise lending, 2010–2025).
- GROWTHPositive: net +9 franchised outlets in the latest year (14 opened, 5 closed); 17 signed but not yet open (Item 20).
Item 1 · who you're contracting with
The Franchisor
Corporate structure & franchisor financials
- Legal entity
- Soft Pretzel Franchise Systems, Inc.
- CEO title
- Chief Executive Officer
- Daniel Dizio
- Founder active
- Yes
- Original founder still leading the business
- Incorporated in
- PA
- HQ
- 1525 Ford Road, Bensalem, Pennsylvania 19020
- Auditor
- Herbein + Company Inc.
- Audited financials
- Franchisor revenue
- $7.5M
- vs $7.3M prior year
- Management churn noted
- Frequent turnover
- Item 2 disclosed frequent executive changes
Overview
About
- CEO
- Daniel Dizio
- Headquarters
- PA
- Founded
- 2004
- FDD year
- 2025
- States available
- 14
Can you afford it, and what does the money buy?
Entry cost runs 15% below the typical quick-service restaurants franchise.
Source: FDD 2025 · Items 5–7
Full Item 7 breakdown18 line items
Initial investment breakdown
| Line item | Low | High | |
|---|---|---|---|
| Initial Franchise Fee | $40K | $40K | |
| Rent | $1K | $8K | |
| Lease Deposit | $1K | $15K | |
| Architect Fees | $13K | $16K | |
| Construction/Leasehold Improvements | $90K | $150K | |
| Equipment | $150K | $200K | |
| Computer System, Office Supplies & Miscellaneous Equipment | $2K | $2K | |
| Promotional Materials | $500 | $3K | |
| Grand Opening Advertising Requirement | $5K | $5K | |
| Permits and Licenses | $400 | $4K | |
| Training Expenses | $100 | $2K | |
| Signage | $3K | $10K | |
| In-Store Camera Surveillance System | $500 | $1K | |
| Prepaid Insurance Premium | $3K | $5K | |
| Utility and Telephone Deposits | $500 | $2K | |
| Legal Costs | $500 | $2K | |
| Initial Inventory | $5K | $8K | |
| Additional Funds | $10K | $25K | |
| Total initial investment | $325K | $496K |
Line items extracted from FDD Item 7. Ranges reflect the franchisor's stated low and high per line. Total is the sum of line-item lows / highs — actual costs may fall outside this range depending on market and build-out scope.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $325K – $496K
- Middle of category vs category
- Liquid capital req'd
- $10K – $25K
- Top 40% of category vs category
- Franchise fee
- $40K – $40K
- Middle of category vs category
- Royalty
- 6.0%
- typical 6–8%
- Ad fund
- 2.0%
- typical 3–5%
- Total fee load
- 8.0%
- vs 9–13% typical
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty | 6.0% of gross sales |
| Marketing / ad fund | 2.0% of gross sales |
| Technology fee | $0 |
| Transfer fee | $20K |
| Renewal fee | $20K |
| Inventory (initial) | $5K – $8K |
| Total fee load | 8.0% of rev |
What do units actually make?
Average unit sales run 37% below the quick-service restaurants norm.
Source: FDD 2025 · Item 19
Single-unit · not modelled
Returns at a glance
An FDD discloses gross sales, not profit, and the operating costs that turn one into the other are in no filing. We publish no modelled return for Philly Pretzel Factory until someone supplies them — yours, in the models below.
—
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
Total invested capital · disclosed
$428K
Item 7 initial investment plus working capital, as filed — the one figure here that needs no assumption.
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
What one unit earns on your invested capital
Model A · Single-Unit Return
Computes unlevered return on invested capital (ROIC) for a single franchise unit, read against the 30–60% reference band · Yale SOM, Post-MBA Path Exhibit 2 (2023). Below that band a passive index fund likely outperforms; above it the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses, and it is the top line only — gross sales are not profit. No FDD discloses the operating costs that turn one into the other, so those fields start empty and nothing is modelled until you supply them from your own lease quote, labor market and build-out budget.
Returns model · single-unit ROIC
What would one Philly Pretzel Factory unit return on the cash you put in?
Illustrative category typicals — not sourced to any filing, survey or sample. Replace them with figures from franchisee validation calls before you rely on the output.
Unlevered ROIC · per unit
Your modelled return on total invested capital, before any debt financing.
—
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
What 25 units return when you use SBA financing
Model B · Return on Equity: Debt-Financed Acquisition
Models a 25-unit portfolio acquisition financed with an SBA 7(a) loan. Shows equity IRR (your return on cash invested), DSCR (how safely the cash flow covers debt service), and the capital stack (SBA + seller + equity breakdown).
This is the “search fund” or “entrepreneurship through acquisition” scenario: you buy an existing multi-unit operator, use leverage to amplify returns, and either operate or hire management. The 25-unit size is the typical minimum for an SBA-backed franchise portfolio acquisition to pencil as a full-time income.
What “return on equity” means here: if you put in $500K of your own cash and the business generates enough EBITDA to pay down debt and grow, your equity IRR is the annual return on that $500K, including the value created when you eventually sell. Target IRR for a search fund is typically 25–35%.
Not modelled yet
An FDD discloses gross sales, not profit. We hold no sourced figure for COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
A 25-unit return is built on a per-unit EBITDA. Fill in the operating costs in Model A above and this model runs on that figure, or take the whole scenario to the full ROI workbench, where the portfolio and LBO models accept your own per-unit economics directly.
These models are for research and scenario planning only. Not investment advice. Actual results depend on your specific location, management, and market conditions. Consult a franchise attorney and accountant before signing any franchise agreement.
Item 19 · Source: 2025 FDD
Financial Performance
- Avg gross sales
- $612K
- Per unit, per year
- Median gross sales
- $513K
Gross sales are revenue before expenses — not profit. Actual owner earnings depend on rent, labor, royalties, marketing fees, and debt service.
- Item 19 type
- Gross Sales by tier + Non-Traditional avg
- Sample size
- 111 outlets
- vs category median 19 · large
- Range (low → high)
- $136K→$1.9MCited, not corroborated — printed on page 51 of the 2025 FDD. Nothing else in our record independently restates or re-derives it.
- Cohort dispersion (min → max)
- Quartile band
- $336K→$961K
- Bottom 25% → top 25%
- Reporting year
- 2024
- Fiscal year the figures cover
- Source filing
- FDD 2025
- Disclosed in the 2025 filing, covering 2024
- Transparency
- 10 / 10
- vs category median 4 / 10 · above
Compared against 781 Quick-Service Restaurants brands
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Unit economics
Average unit generates $612K/year in gross sales. Median is $513K — top performers pull the average up, so a typical unit earns less. Revenue-to-investment ratio: 1.5x.
Fee burden
Total ongoing fee load of 8.0% (near the Quick-Service Restaurants median).
Disclosure
Transparency score 10/10 — this franchisor discloses detailed breakdowns (quartiles, segments, or cohort data). Buyers can model unit economics with higher confidence.
Operator retention
System expanding at 8.4% CAGR over 3 years across 162 units — operators are staying and new ones are joining.
Source: FDD Item 19 financial performance representations and publicly filed FDD data. Past performance is not indicative of future results. Verify all figures with the franchisor and current franchisees before making any investment decision.
vs Quick-Service Restaurants medians
How Philly Pretzel Factory Compares
Category median of published Quick-Service Restaurants brands that report the figure; the middle half spans the 25th to 75th percentile and n counts the brands behind it. Medians are used because a few very large systems pull an average far from the typical brand. Revenue is disclosed gross sales, not profit.
Is the system healthy?
Source: FDD 2025 · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 162
- Opened
- 14
- Last reporting year
- Closed
- 5
- Terminated
- 1
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- 3.1%
- Company-owned
- 7
- Corporate units in the system
- % franchised
- 96%
- vs corporate-owned
- Net growth (3-yr)
- +8.4%
- Net unit change over 3 years
- 3-yr CAGR
- +8.4%
- Compounded over last 3 years
Last fiscal year · Item 20 exits and transfers
- Terminated
- 1
- Not renewed
- 0
- Signed, not yet open
- 17
- 0.10 per open outlet · Item 20 Table 5
- Projected new
- 22
- Franchisor's next-year forecast
- Transfer rate
- 6.8%
- Owners selling to other franchisees
- Termination rate
- 0.6%
- Franchisor-initiated terminations
- Ceased ops
- 3.1%
- Units that stopped operating
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 12 · 14 states reported
The Territory Map
FDD Item 12 reports the state count, but the specific list isn't in our current data. The map will appear once we re-extract from the FDD or enough franchisee contacts are available.
14
states with franchisees (per FDD Item 12)
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA 7(a) and 504 loan disclosures, public data unique to FranchiseVerdict.
- Total loans
- 123
- Loan volume
- $21.6M
- Median loan
- $222K
- 50th percentile
- Charge-off rate
- 24.5%
- on 123 loans · rates vary by category · see methodology
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- 75.5%
- 5-yr charge-off
- 10.0%
- Loans approved 2021+
- Active lenders
- 34
- Defaults
- 23
- Typical loan rate
- 8.2%
- avg rate to borrowers
- Franchised industry avg
- 10.8%
- brand above franchise avg ↑
- Jobs supported
- 305
- 3.5 per loan
- Lender concentration
- 16%
- top lender's share
Borrower mix: 49% went to startups / new businesses, 51% to established operators
Franchise vs independent — in limited-service restaurants, franchised businesses charge off at 10.8% vs 10.0% for independents — franchising is associated with 8% higher SBA default risk in this category.
Vintage analysis
Philly Pretzel Factory charge-off rate by loan vintage
Top lenders financing Philly Pretzel Factory franchisees
Showing 3 of 34 lenders. The full breakdown — every lender, state distribution, interest rates & risk ratings — is in the SBA Lending Report below.
Explore lender portfolios on Bank Reports or regional data on State Reports.
Lender network · 7(a) + 504
SBA Lending Report
Full lending analysis for Philly Pretzel Factory from SBA 7(a) FOIA data.
- Principal loss rate
- 2.8%
- Avg SBA guarantee
- 73%
- Avg interest rate
- 8.23%
- Avg chargeoff amount
- $123K
- Lender concentration
- 16.2%
- Job velocity
- 3.5 per $100K
- Startup risk premium
- +18.2pp
- NAICS benchmark
- 8.7%
- NAICS 722513
- Jobs supported
- 305
Top SBA lendersTop lender holds 16% of loans
| # | Lender | Loans | Volume | Default % |
|---|---|---|---|---|
| 1 | TD Bank, National Association | 6 | $315K | 0.0% |
| 2 | Stearns Bank National Association | 4 | $866K | 50.0% |
| 3 | CRF Small Business Loan Company, LLC | 2 | $756K | N/A |
| 4 | KeyBank National Association | 2 | $465K | 0.0% |
| 5 | Hanover Community Bank | 2 | $500K | N/A |
| 6 | Cadence Bank | 2 | $458K | 0.0% |
| 7 | Citizens Bank | 2 | $713K | 0.0% |
| 8 | Valley National Bank | 1 | $225K | 0.0% |
| 9 | Provident Bank | 1 | $180K | N/A |
| 10 | Trenton Business Assistance Corporation | 1 | $200K | N/A |
Geographic failure vector
| State | Loans | Defaults | Rate |
|---|---|---|---|
| NJNew Jersey | 13 | 0 | 0.0% |
| PAPennsylvania | 13 | 0 | 0.0% |
| NYNew York | 5 | 0 | 0.0% |
| NCNorth Carolina | 2 | 0 | 0.0% |
| AZArizona | 1 | 1 | 100.0% |
| DEDelaware | 1 | 0 | -- |
| FLFlorida | 1 | 1 | 100.0% |
| SCSouth Carolina | 1 | 0 | 0.0% |
SBA 7(a) lending trend
Borrower profile
Source: SBA 7(a) + 504 FOIA loan-level data, matched by FranchiseVerdict
A 24.5% charge-off rate means roughly 1 in 4 franchisees failed to repay their SBA loan. Investigate what changed.
What could kill this investment?
SBA loans charge off at 24.5% — 53% above the 16.0% national norm, i.e. higher lender-observed risk.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
Risk & Legal
Philly Pretzel Factory presents moderate-to-cautious risk due to unverified financial claims, past litigation involving the founder, modest unit growth, and lack of disclosed Item 19 data to validate franchisee profitability.
Litigation (Item 3)
Subject: the franchisor is a named party (defendant).
1 concluded case: UC Twister LLC v. Soft Pretzel Franchise Systems, Inc. (PA, 2017) - franchisee claims re escrow agent misconduct; settled 2018 for $97,000 (asset purchase).
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Herbein + Company Inc.
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Item 21 audited financials of Soft Pretzel Franchise Systems, Inc. (the franchisor; PA S corporation), balance sheets as of Dec 31, 2024 and 2023, audited (opinion dated April 18, 2025, Spring House, PA). 2024 total revenues $7,534,564 comprised of franchise fees $497,919, royalties $4,550,382, marketing fees $1,588,110, vendor rebates $768,529, conversion funds $108,643, gift card breakage $20,981. Net income $1,497,691 includes $1,278,965 of other income (incl. $561,601 unrealized gain on securities, $493,514 sublease income). All figures in whole US dollars; balance sheet reconciles (assets 7,842,810 = liabilities 5,189,200 + stockholders' equity 2,653,610). Auditor firm name not captured in text (signature block shows location/date only).
Supplier relationship · Items 8 & 16
- Franchisor sells you products: Yes
- Kickbacks from required suppliers: No
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: No
Score breakdown · what drove the 56 / 100 verdict
- 01HIGHPast litigation involving founder Ron Heil for conversion of funds, breach of fiduciary duty, and fraud — even though settled, raises governance concerns about corporate oversight and financial controls
- 02MINORModest unit growth of 6.2% YoY in a mature 162-unit system suggests market saturation or execution challenges; unclear if growth is accelerating or decelerating
- 03MINORWide investment range ($149.5k–$495.7k) indicates highly variable unit economics depending on location, format, or build-out scope — suggests inconsistent support or unclear path to profitability
- 04MINORSuspiciously high claimed net income ($611k) nearly equals average revenue ($612k), implying ~99% net margins — mathematically implausible and a red flag for data accuracy or cherry-picked locations
Severity inferred from the FDD text · not a regulatory classification
What are you signing up for?
Ongoing fees run about 8.0% of sales (royalty + ad fund), before rent and labor.
Source: FDD 2025 · Items 11, 12, 17
FDD Items 12, 15, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 10 years |
|---|---|
| Renewal term | 10 years |
| Allowed renewalsℹ | 1 |
| Territory type | Protected territory |
| Protected territory | Yes |
| Exclusive territoryℹ | No |
| Territory radius | 2 mi |
| Online sales rightsℹ | Restricted |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Required |
| Non-compete (years)ℹ | 2 years |
| Non-compete (miles)ℹ | 10 mi |
| Right of first refusalℹ | Yes |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Mandatory arbitration | Yes |
| Arbitration location | Philadelphia, Pennsylvania |
| Jury trial waiver | Yes |
| Governing law | PA |
| Litigation count | 1 |
View Item 3 litigation summary
1 concluded case: UC Twister LLC v. Soft Pretzel Franchise Systems, Inc. (PA, 2017) - franchisee claims re escrow agent misconduct; settled 2018 for $97,000 (asset purchase).
Items 10, 11
Training & Operations
- Classroom training
- 40 hrs
- On-the-job training
- 45 hrs
- Training location
- 1525 Ford Road, Bensalem, PA (headquarters) and on-site at franchisee's Factory
- Ongoing training
- Required
- Field support
- 55 hrs/yr
- On-site visits per year
- Time to open
- 12 mo
- From signing to launch
- Site selection
- Franchisor must approve site; franchisee selects
- Franchisor financing
- Not offered
- Item 10
Items 5 & 11
Franchisor Support
Item 20 · call current owners
Franchisee Contacts
174 owners to call
Name · phone · city · state. Extracted from FDD Item 20
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a Philly Pretzel Factory franchise?
The total investment to open a Philly Pretzel Factory franchise ranges from $325K – $496K, with an initial franchise fee of $40K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do Philly Pretzel Factory franchise owners earn?
According to Item 19 of the Philly Pretzel Factory FDD, the average gross sales per unit is $612K. The median is $513K. Note: this is gross revenue, not profit. Actual owner earnings vary based on location, operating costs, and management.
Who owns Philly Pretzel Factory?
Philly Pretzel Factory is franchised by Soft Pretzel Franchise Systems, Inc.. Source: FDD Item 1, 2025 filing.
What is Item 19 in the Philly Pretzel Factory FDD?
The FDD section where a franchisor may disclose financial performance of its outlets. Disclosure is optional and formats vary; figures are typically gross sales, which is revenue before expenses, not profit. FranchiseVerdict extracts these figures directly from the Philly Pretzel Factory FDD and qualifies whose outlets they describe.
What is Philly Pretzel Factory's franchise failure rate?
Based on SBA 7(a) loan data, Philly Pretzel Factory has a charge-off rate of 24.5% across 123 loans, meaning 24.5% of franchise loans were charged off. Charge-off rates are one proxy for franchise risk, though they do not capture all closures. This data comes from FOIA-sourced SBA lending records.
How many Philly Pretzel Factory franchise locations are there?
As of their most recent FDD filing, Philly Pretzel Factory has 162 total units in the United States, including 155 franchised units and 7 company-owned units. 14 new units were opened in the latest reporting year.
Is Philly Pretzel Factory a good franchise to buy?
FranchiseVerdict rates Philly Pretzel Factory as a B-grade franchise with a verdict score of 56 out of 100 (higher is better). The grade is a deterministic score built from six weighted dimensions — financial health, unit economics, unit growth, scale, legal, and transparency — then calibrated against SBA loan charge-off rates and FDD age. Transparency is one of the six, so a filing that discloses less scores lower on that dimension than one that discloses more. Our rating is based solely on publicly available FDD and government data; we recommend speaking with current franchisees before making any investment decision. This is not investment advice.
Data sourced from public FDD filings and SBA 7(a) FOIA records. Not financial advice.
For franchisors
Are you the franchisor?
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Data extracted from public FDD filings and SBA 7(a) loan disclosures (FOIA). This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.