Philly Pretzel Factory
Bottom line
- Total investment $150K – $496K including a $40K franchise fee, 6.0% ongoing royalty.
- Average unit revenue of $612K/year (median $513K). Estimated payback in 0.5 years.
- Rated STRONG with a risk score of 44/100. SBA loan default rate of 0.0% across 56 loans (below the industry average).
Item 1 · who you're contracting with
The Franchisor
Yale framework · single-unit ROIC
Returns Analysis
Pulls Item 7 (investment) and Item 19 (revenue) from this brand's FDD into the Yale unlevered-ROIC formula. Override any input to stress-test it against your own assumptions.
The model · Yale framework
What would one Philly Pretzel Factory unit return on the cash you put in?
Unlevered ROIC · per unit
18%
Below typical band (30–60%)
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
$367K
on $1.8M purchase
Total debt
$1.5M
SBA $0.9M + senior + seller note
Overview
About
Franchisees operate quick-service pretzel shops, typically in high-traffic retail locations (malls, street-front, transit hubs) and kiosks. Daily operations include preparing and baking soft pretzels, managing inventory, staffing, customer service, and managing point-of-sale systems. The model emphasizes impulse-purchase food items with relatively simple preparation, allowing for smaller footprint locations.
Item 7 · what it costs
The Vitals
Item 19
Financial Performance
Item 20 · unit dynamics
The Growth Chart
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
Item 20 · 4 states with active franchisees
The Territory Map
Derived from franchisee contact records. Shows states with at least one current operator — not where the franchisor is registered to sell new units (that data is re-extracting in a future refresh).
States derived from franchisee phone area codes (Item 20). Approximate — ported numbers may show the original state, not the franchisee's current location.
Government records
SBA Loan Data
Aggregated from SBA 7(a) loan disclosures, public data unique to FranchiseVerdict.
FranchiseVerdict rating + FDD Items 3, 5, 6, 12, 17
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.
Score breakdown · what drove the 44 / 100 rating
- 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
FDD Items 5, 6, 12, 17 · continued from Risk & Legal
Contract & Territory Detail
Item 11
Training & Operations
Item 20
Franchisee Contacts
Phone numbers extracted directly from this brand's FDD Item 20. After purchase, you'll also receive a list of validation questions tailored to this brand.
Franchisee contacts
63 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Philly Pretzel Factory · FDD (2025) PDF