Philly Pretzel Factory Franchise Cost, Revenue & Review 2026
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 $175K – $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 →
Data last verified · figures per the 2025 FDD issuance
Overview
- Investment
- $175K – $496K
- 17th pct Service Resta…
- Avg gross sales
- $612K
- 6th pct Service Resta…
- Royalty
- 6.0%
- 46th pct Service Resta…
- Units
- 162
- 82nd 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 avg · 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 $175K – $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).
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 49% 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 Feenot refundable | $40K | $40K | |
| Rentnot refundable | $1K | $8K | |
| Lease Depositnot refundable | $1K | $15K | |
| Architect Feesnot refundable | $5K | $16K | |
| Construction/Leasehold Improvementsnot refundable | $51K | $150K | |
| Equipmentnot refundable | $48K | $200K | |
| Computer System, Office Supplies & Miscellaneous Equipmentnot refundable | $2K | $2K | |
| Promotional Materialsnot refundable | $500 | $3K | |
| Grand Opening Advertising Requirementnot refundable | $5K | $5K | |
| Permits and Licensesnot refundable | $400 | $4K | |
| Training Expensesnot refundable | $100 | $2K | |
| Signagenot refundable | $3K | $10K | |
| In-Store Camera Surveillance Systemnot refundable | $500 | $1K | |
| Prepaid Insurance Premiumnot refundable | $3K | $5K | |
| Utility and Telephone Depositsnot refundable | $500 | $2K | |
| Legal Costsnot refundable | $500 | $2K | |
| Initial Inventorynot refundable | $4K | $8K | |
| Additional Fundsnot refundable | $10K | $25K | |
| Total initial investment | $175K | $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
- $175K – $496K
- Top 40% 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%
- percentage · 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) | $4K – $8K |
| Total fee load | 8.0% of rev |
What do units actually make?
Average unit sales run 49% below the quick-service restaurants norm.
Source: FDD 2025 · Item 19
Single-unit · estimated
Returns at a glance
Indicative numbers using FDD Item 7 / Item 19 inputs and category-benchmarked cost ratios. Full single-unit, 25-unit portfolio, and LBO models (with every input editable to stress-test your own scenario) live on the financials page.
Store EBITDA · annual
$86K
14.0% margin
Unlevered ROIC
24%
EBITDA / total invested capital
Payback
4.1 yrs
cash-on-cash, unlevered
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. The target band for an attractive franchise is 30–60% ROIC. Below that and a passive index fund likely outperforms; above that and the franchisor has pricing power you're subsidizing.
Note: Item 19 revenue is what the franchisor discloses. It's the top line only. Operating costs below are category estimates. Override them to match your real 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?
Unlevered ROIC · per unit
Estimated return on your total franchise investment, before any debt financing.
24%
Below the 30–60% attractive-franchise band
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%.
Levered LBO scenario · Yale Crease Capital framing
What would 25 Philly Pretzel Factory units return on equity?
Equity IRR · 5-yr
49.9%
7.57× MOIC
Year-1 DSCR
1.88×
EBITDA ÷ debt service
Equity required
$857K
on $4.3M purchase
Total debt
$3.4M
SBA $2.1M + senior + seller note
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 20 · large
- Range (low → high)
- $136K→$1.9M
- 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 782 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: 1.8x.
Fee burden
Total ongoing fee load of 8.0% (near the Quick-Service Restaurants average).
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 averages
How Philly Pretzel Factory Compares
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
- 4
- Terminated
- 1
- Franchisor ended the franchise (per Item 20)
- Non-renewed
- 0
- Term expired, not renewed (per Item 20)
- Turnover rate
- 3.2%
- 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
3-year detail · Item 20
- Opened (3yr)
- 14
- Closed (3yr)
- 4
- Terminated (3yr)
- 1
- Non-renewed (3yr)
- 0
- Transfers (3yr)
- 11
- Reacquired (3yr)
- 0
- Franchisor bought back
- 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%
- 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.
Premium insight
SBA Lending Report
Deep-dive into Philly Pretzel Factory's SBA lending history: lender network, geographic footprint, interest rates, and more.
SBA Lending Report
- Principal loss rate and NAICS industry benchmark
- 10 lenders with concentration factor
- Per-state charge-off rates across 8 states
- Startup risk premium and job creation velocity
- 10-year lending trend
- SBA 504 real estate/equipment data
Instant access. No subscription.
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)
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).
Largest disclosed settlement: $97,000
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes · Herbein + Company Inc.
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
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
- 02MEDNo Item 19 (Financial Performance Representations) disclosed — the claimed $611k average net income cannot be independently verified and may not be representative of typical franchisee experience
- 03MINORModest 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
- 04MINORWide 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
- 05MINORSuspiciously 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 |
| 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
FDD download
Philly Pretzel Factory · FDD (2025) PDF
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 $175K – $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.
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), based on our analysis of investment costs, revenue data, SBA loan performance, and growth trends. 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.