Philly Pretzel Factory Franchise Cost & 2025 FDD Data
56/100
Second tier
56 this brand51 Quick-Service Restaurants medianlikely 52–60 (high confidence)
Higher is better · an editorial assessment, not investment advice
#1,232 of 3,068 graded brands
Why a B: Helped by financial health, unit growth, scale, legal record and transparency. Held back by unit economics. See all six factors
- Total investment
- $325K – $496K
- Avg gross sales
- $612K
- “All Representative Traditional Franchised Factories (Overall)”, 111 outlets; not profit
- SBA charge-off
- 24.5%
1 in 4 SBA 7(a) loans to Philly Pretzel Factory owners charged off (23 of 94 resolved loans, approved since FY1991); Quick-Service Restaurants median 17.6%. Loans approved FY2014–FY2020: 3 of 34 resolved loans charged off (8.8%); newer loans have not had time to default, so this is not a trend.
Data from the FDD filing + SBA 7(a) records. Analysis by FranchiseVerdict · Methodology · Website · Report an error · Franchisor? Claim this listing
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 · 2025 FDD
Per the 2025 FDD, a Philly Pretzel Factory franchise requires a total initial investment of $325K – $496K, including a $40K franchise fee. Once open, the ongoing royalty is 6.0%. Per the 2025 FDD, average gross sales were $612K (Item 19 group “All Representative Traditional Franchised Factories (Overall)”, 111 outlets; gross sales, not profit). SBA 7(a) loans show a 24.5% charge-off rate on 94 resolved loans. Verdict grade: B (Second tier), an editorial assessment, not investment advice.
Sources: 2025 FDD · SBA 7(a) loan records (FOIA) · What one unit could make and lose →
Sources, dates and evidence
FDD issued: · Data extracted: · Last cited check: · Staleness risk: medium (issued 12 to 24 months ago; a newer filing is likely on file)
Evidence for the headline figures: 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 scored8 of 8 headline figures on this page cite a page of the filing.
Overview
Quick verdict · vs Quick-Service Restaurants median
Top edge: green = better than the Quick-Service Restaurants median by more than 10%, red = worse by more than 10%, gray = within 10% or no benchmark. Source: FDD filings + SBA 7(a).
Data from public FDD filings and SBA records. Methodology
Bottom line
- RETURNSAverage gross sales of $612K/year (outlet median $513K; Item 19 group “All Representative Traditional Franchised Factories (Overall)”, 111 outlets; gross sales, not profit).
- GROWTHIn the latest Item 20 year, the number of franchised outlets grew by 9 (14 opened, 5 closed).
AT STAKEOne unit at the Item 7 midpoint: $53K a year in payments on assumed SBA 7(a)-style terms.You put in about $82K of your own cash and personally guarantee a $328K loan. Assumptions are labeled in Sales; not investment advice.See what one unit could make and lose
Things to check before you sign (4)
- SBA 7(a) charge-off 24.5% on 94 resolved loans, loans approved since FY1991, above the Quick-Service Restaurants median of 17.6% (175 brands).
- The franchisor keeps the right to compete inside your territory (Item 12, territory).
- You waive a jury trial in disputes with the franchisor (Item 17, renewal, termination and disputes).
- Item 15 (owner participation) requires the owner, or a principal the franchisor approves, to run the business day to day. Ask how much of the business that principal must own.
Checked and clear: no auditor doubt that the franchisor can keep operating, no net loss of franchised outlets in the latest Item 20 years, no pending lawsuit naming the franchisor, no supplier rebates to the franchisor and the full filing on file, and an Item 19 average from 111 units.
What to do next
Step 1: Read the FDD itself.
Free: read the 2025 filing on this site, page by page. The franchisor must also give you its current FDD at least 14 days before you sign or pay. Or look it up in a state registry (Wisconsin, Minnesota, California). What to read first.
Step 2: Talk to current and former owners.
Free: Item 20 of the FDD lists every current owner and those who left last year, most with a phone number. Questions to ask.
Shortcut: the Philly Pretzel Factory owner list as a CSV, in the Contacts section.
Step 3: Talk to an SBA lender.
Free: the SBA's Lender Match, or the lenders already lending to this brand in the SBA section. Ask what you would personally guarantee and what the monthly payment would be. If you plan to use retirement savings, ask a CPA about the rules for that first.
Step 4: Have a franchise attorney review the FDD and agreement.
Free: your state bar's lawyer referral service can name franchise lawyers, and many offer a short first consultation. Bring the checks listed above.
Research steps, not investment or legal advice.
Can you afford it, and what does the money buy?
Entry cost (the Item 7 midpoint) is 16% below the Quick-Service Restaurants median ($487K).
Source: FDD 2025 · Items 5–7 (fees and startup costs)
Do you qualify? The filing states no minimum net worth or liquid capital. Ask Soft Pretzel Franchise Systems, Inc. (Item 1: 1525 Ford Road, Bensalem, Pennsylvania 19020) and your lender what they require, and keep living costs for the first year outside the deal.
Full Item 7 breakdown18 line items
Initial investment breakdown
| Line item | Low | High | |
|---|---|---|---|
| Initial Franchise Fee | $40K | $40K | |
| Rent | $1.1K | $7.5K | |
| Lease Deposit | $1.1K | $15K | |
| Architect Fees | $12.5K | $15.5K | |
| Construction/Leasehold Improvements | $90K | $150K | |
| Equipment | $150K | $200K | |
| Computer System, Office Supplies & Miscellaneous Equipment | $1.62K | $2.22K | |
| Promotional Materials | $500 | $2.5K | |
| Grand Opening Advertising Requirement | $5K | $5K | |
| Permits and Licenses | $400 | $4K | |
| Training Expenses | $100 | $2K | |
| Signage | $3.2K | $10K | |
| In-Store Camera Surveillance System | $500 | $1K | |
| Prepaid Insurance Premium | $3K | $5K | |
| Utility and Telephone Deposits | $500 | $2K | |
| Legal Costs | $500 | $1.5K | |
| Initial Inventory | $5K | $7.5K | |
| 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. The total row is the total as printed in Item 7. Actual costs may fall outside this range depending on market and build-out scope.
Item 6 · what you pay once you are open
Ongoing fees
| Fee | Amount |
|---|---|
| Royalty | 6.0% of gross sales |
| Marketing / ad fund | 2.0% of gross sales |
Technology feeThe filing's detailTraditional Factories: $204.30/month POS software, $25/month per delivery integration, $116/month CRM, $0.07-$0.15 per transaction. Non-Traditional: $120/month POS, $25/month delivery integration, $20/month kitchen display, $116/month CRM, $0.07-$1.00 per transaction | $0/month |
| Transfer fee | $20,000 |
| Renewal fee | $20,000 |
| Total fee loadabove the Quick-Service Restaurants median of 7.0% (heavy) | 8.0% of sales |
What do units actually make?
Average gross sales are 36% below the Quick-Service Restaurants median ($950K).
Source: FDD 2025 · Item 19 (sales and earnings)
Items 6 (other fees), 7 (startup costs) and 19 (sales and earnings) · assumptions labeled
What you could make and lose: one unit
What one Philly Pretzel Factory unit would ask of you, from the filing's Item 7 total and labeled assumptions.
Average gross sales are $612K (FDD Item 19, p.51), and the royalty and ad fund take about $49K of that a year (Item 6). This brand's Item 19 does not print cost lines. Enter your own from a lease quote, a payroll plan and calls with current owners. So this box does not estimate a profit. To cover the loan payment alone, one unit has to clear $53K a year after its food, labor, rent and other costs and the franchisor's fees.
How these figures are worked out
- Loan (assumption): 80% of the $410K Item 7 midpoint is a $328K loan, paid over 10 years at 10.5%: $53K a year. SBA 7(a)-style terms on a long-term rate; your lender sets yours. Philly Pretzel Factory's past SBA 7(a) loans averaged 8.2% at approval; 7(a) rates move with the prime rate, so 10.5% is a current-rate assumption, not this brand's history.
What you put at risk
Your own cash in: about $82K Assumption (the part the loan does not cover of the $410K Item 7 midpoint), plus whatever anything Item 7 leaves out (its notes say what). The loan is $328K.
Personal guarantee. SBA 7(a) loans require a personal guarantee from anyone who owns 20% or more of the business. If the unit cannot pay, the lender can collect from you personally, which can include your savings and your home. The worst case is losing the cash you put in and still owing the rest of the loan.
Gross sales are not profit, and none of these figures is take-home pay until tax and every operating cost are paid. The assumptions are ours, not the filing's. Not investment advice.
Returns modelOne unit · several units · editable
One unit
One unit: what is left after the loan payment
Gross sales, minus the franchisor's fees and the operating costs, is the unit's EBITDA (earnings before interest, taxes, depreciation and amortization). Minus an assumed loan payment, that is what is left for you, before tax. Gross sales are not profit.
This brand's Item 19 does not print cost lines. Enter your own from a lease quote, a payroll plan and calls with current owners. Invested capital is the Item 7 total, which already includes its working-capital (additional funds) line.
Returns model · one unit
What would one Philly Pretzel Factory unit leave you each year after the loan payment?
Item 19: $612,352 average for 111 outlets (All Representative Traditional Franchised Factories (Overall)). Use a figure for outlets like yours if yours differ.
Gross sales, not profit: the costs below decide what is left.
This brand's Item 19 does not print cost lines. Enter your own from a lease quote, a payroll plan and calls with current owners.
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.
Item 7 midpoint of $325K to $496K
Item 7's $10K to $25K additional funds are already in the total
Left after the loan payment · per year
The unit's EBITDA minus the assumed loan payment. Before tax, depreciation and any cost your inputs leave out (insurance, accounting and legal, licenses, technology fees): not take-home pay.
Gross sales are not profit. Neither the filing nor a stated assumption on this page supplies COGS, labor, rent / occupancy and other operating costs. Enter your own (a lease quote, owner calls) and the model runs on it.
Loan of $328K at 10.5% over 10 years, an assumption, not a quote. Return and payback are before tax, depreciation and the costs above. The loan usually needs your personal guarantee.
Buying several existing units? The acquisition scenario
Buying several units
What buying a few existing units could return
Prices an existing operator of a few units off the single-unit EBITDA above, after shared services, and finances it with an SBA 7(a) loan, a conventional loan and a seller note. It shows the yearly return on your cash (IRR), whether year-1 earnings cover the loan payments (DSCR) and how the price is paid for. It starts at 5 units; every deal term is an assumption you can change, and none is from the FDD.
Not modelled yet
Gross sales are not profit. Neither the filing nor a stated assumption on this page supplies COGS, labor, rent / occupancy and other operating costs. Enter your own (a lease quote, owner calls) and the model runs on it.
This scenario starts from a per-unit EBITDA. Fill in the operating costs in the one-unit model above and it runs on that figure, or take it to the full ROI workbench, where the multi-unit and acquisition models accept your own per-unit economics.
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 · filed by Soft Pretzel Franchise Systems, Inc.
Financial performance
- Range (low → high)
- $136K→$1.9M2025 FDD Item 19, p.51
- Cohort dispersion (min → max)
- Top and bottom 33%
- $336K→$961K
- Bottom group → top group: the top and bottom 33% as the filing reports them
- Transparency
- 10 / 10
- vs category median 4 / 10 (more detail than most)
Percentile ranks within Quick-Service Restaurants
Each rank is among the Quick-Service Restaurants brands that report that figure (the count is under each bar).
Item 19 · 5 groups · FDD p.53
Item 19 by group
The 2025 filing reports gross sales for 5 groups of outlets. The headline average on this page is the “All Representative Traditional Franchised Factories (Overall)” group (111).
| Group | n | Average | Median |
|---|---|---|---|
| Top 1/3 Traditional Franchised Factories | 37 | $961K | $842K |
| Middle 1/3 Traditional Franchised Factories | 37 | $540K | $513K |
| Bottom 1/3 Traditional Franchised Factories | 37 | $336K | $373K |
| All Representative Traditional Franchised Factories (Overall)headline above | 111 | $612K | $513K |
| Non-Traditional Franchised Factories | 23 | $219K | $221K |
Costs and profit, as the filing prints them
The cost lines for 1 groups (FDD p.53)
| Line, as the filing names it | All Representative Traditional Franchised Factories (Overall)n=111 |
|---|---|
| Average gross sales | $612K |
| Average Costs of Goods Sold | 23.10% |
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.
Who are you contracting with?
Soft Pretzel Franchise Systems, Inc.
Item 21 (audited financials) · audited statements · 2025 FDD
The franchisor's own finances
The franchisor paid out 88% of its latest net income as dividends. A franchisor that keeps little of its own profit has less of a cushion if the system has a bad year; ask how support and the ad fund are funded.
The figures, with their pages
- Net income
- $1.5Mlatest year · FDD Item 21
- Dividends paid
- $1.3M88% of net income (our arithmetic) · FDD p.95
- Total assets
- $7.8MFDD Item 21
- Equity
- $2.7MFDD Item 21
Item 1 (the franchisor) · 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
- latest fiscal year in the 2025 FDD; $7.3M the year before
- Management churn noted
- Frequent turnover
- Item 2 disclosed frequent executive changes
Overview
About
- CEO
- Daniel Dizio
- Franchised outlets in
- 12 states and territories
- Item 20 Table 3, at year end
- States and territories listed
- 14
- registered or offered in, as the filing lists them (DC and territories included); not where units may open
Is the system healthy?
+12 franchised outlets over the two years to 2024 (143 to 155, +8.4% in total, +4.1% a year compounded).
Source: FDD 2025 · Item 20 (outlets opened, closed and transferred)
Item 20 (outlet counts) · unit dynamics
The growth chart
- Company-owned
- 7
- Corporate units in the system
- % franchised
- 96%
- vs corporate-owned
Last fiscal year · Item 20 rates and pipeline
- 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
Item 20 · franchised units at year end
Franchised units rose from 143 in 2022 to 155 in 2024
Axis does not start at zero.
Source and method
Item 20 (outlet counts) Table 3 · franchised outlets in 12 states
Where franchised outlets are
Franchised outlets at year end by state, as the filing's Item 20 Table 3 counts them. Not a list of where the franchisor may sell new units.
Current outlets (count on the tile) · 12 statesNo current outlet
Current outlets (count on the tile) · 12 statesNo current outlet
155 franchised outlets at year end in 12 states (Item 20 Table 3).
Government records
SBA loan data
Lenders charged off 24.5% of 94 resolved SBA 7(a) loans, above the 17.6% category median. 7(a) is the SBA's main small-business loan; a resolved loan was paid in full or charged off.
- Loans on file
- 123
- SBA 7(a) loans matched to this brand, incl. those still being repaid
- Loan volume
- $21.6M
- Average loan
- $176K
- loan volume divided by loans
- Charge-off rate
- 24.5%
- 23 of 94 resolved loans
- Paid in full
- 75.5%
- of resolved loans
- Recent-loan charge-off
- 10.0%
- on 10 resolved recent loans
- Lenders
- 34
- Average interest rate
- 8.2%
- Jobs reported
- 305
- Lender concentration
- 16%
- top lender's share
Cumulative: every 7(a) loan matched to this brand in the SBA’s FOIA files, approved FY1991 onward. Historical lending data, not predictive of future performance. Lenders, interest rate, jobs and lender concentration cover only the 37 non-cancelled loans approved FY2007 to FY2026. How SBA charge-off rates are calculated
Benchmark: the median Quick-Service Restaurants brand charges off 17.6% (175 brands with a published rate, same cumulative window and source). This brand is 6.9 points above it.
Borrower mix: of 35 loans with a business-age entry, 33 recorded an age: 17 (52%) went to startups or businesses under two years old and 16 (48%) to established businesses or ownership changes; 2 were marked unanswered.
The approval-year breakdown covers 87 of the 94 resolved loans and 23 of the 23 charge-offs (FY2007 to FY2020).
SBA 7(a) · charge-off rate by approval year
Philly Pretzel Factory: below all franchise loans in 2 of 3 rated years
Hollow rings on the axis: years with fewer than 10 resolved loans, not rated (too few to judge; recent years are too early to judge while loans are still being repaid). Their numbers are in the table.
Show the numbers by year
| Year | Resolved | Charged off | Rate |
|---|---|---|---|
| 2007 | 15 | 3 | 20.0% |
| 2008 | 31 | 17 | 54.8% |
| 2012 | 3 | 0 | Too few |
| 2013 | 4 | 0 | Too few |
| 2014 | 4 | 0 | Too few |
| 2016 | 4 | 1 | Too few |
| 2017 | 5 | 0 | Too few |
| 2018 | 12 | 1 | 8.3% |
| 2019 | 6 | 1 | Too few |
| 2020 | 3 | 0 | Too early |
Dashed line: all franchise 7(a) loans approved the same year.
Source and method
Explore lender portfolios on Bank Reports or regional data on State Reports.
Full SBA lending reportlenders · charge-off rate · trend
Lender network · SBA 7(a)
SBA Lending Report
Lender, state and yearly detail for Philly Pretzel Factory from SBA 7(a) FOIA loan records.
The tables below cover the 37 non-cancelled loans approved FY2007 to FY2026, the window this report’s lender, state and yearly detail is built from. The headline charge-off rate comes from the full loan file (123 loans, cumulative from fiscal 1991; the rate counts only loans that have finished), so the two can differ.
- Average SBA guarantee
- 73%
- Average interest rate
- 8.2%
- Lender concentration
- 16%
- Jobs reported
- 305
- among the 37 non-cancelled loans approved FY2007 to FY2026
Top 10 SBA lenders by loan count
| Loans | Volume | Charge-off |
|---|---|---|
| TD Bank, National Association | ||
| 6 | $315K | Too few3 resolved |
| Stearns Bank National Association | ||
| 4 | $866K | Too few4 resolved |
| CRF Small Business Loan Company, LLC | ||
| 2 | $756K | Too few0 resolved |
| KeyBank National Association | ||
| 2 | $465K | Too few2 resolved |
| Hanover Community Bank | ||
| 2 | $500K | Too few0 resolved |
| Cadence Bank | ||
| 2 | $458K | Too few1 resolved |
| Citizens Bank | ||
| 2 | $713K | Too few1 resolved |
| Valley National Bank | ||
| 1 | $225K | Too few1 resolved |
| Provident Bank | ||
| 1 | $180K | Too few0 resolved |
| Trenton Business Assistance Corporation | ||
| 1 | $200K | Too few0 resolved |
A lender’s rate counts only its resolved loans, the loans that have finished (paid in full or charged off); a 0.0% often means few of its loans have finished. Under 10 resolved loans, the rate reads “Too few”.
Charge-off rate by state (top 10 by loans)
| State | Loans | Charged off | Rate |
|---|---|---|---|
| NJ New Jersey | 13 | 0 | Too few6 resolved |
| PA Pennsylvania | 13 | 0 | Too few4 resolved |
| NY New York | 5 | 0 | Too few5 resolved |
| NC North Carolina | 2 | 0 | Too few2 resolved |
| AZ Arizona | 1 | 1 | Too few1 resolved |
| DE Delaware | 1 | 0 | Too few0 resolved |
| FL Florida | 1 | 1 | Too few1 resolved |
| SC South Carolina | 1 | 0 | Too few1 resolved |
Rate: charged-off loans over resolved loans (paid in full plus charged off), shown from 10 resolved loans. "Too few": under 10 resolved. The Loans column counts every approval in the window, including loans still being repaid.
SBA 7(a) loans approved per year
Borrower profile
The SBA's own business-age labels (5)
Industry context
Most of this brand’s borrowers recorded NAICS 722513 (Limited-Service Restaurants) on their loans. Across every SBA 7(a) loan in that industry code, all approval years, franchised businesses charged off 10.8% (6,442 resolved loans) and independent businesses 10.0% (5,874 resolved loans). Franchising does not lower the rate in every industry.
Source: SBA 7(a) FOIA loan-level data, matched to the brand by FranchiseVerdict.
A 24.5% charge-off rate means about 1 in 4 resolved SBA 7(a) loans to this brand was charged off. The approval-year chart above shows which years they came from.
What are the risks?
Main risk in the grade: unit economics. The reasons are below.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Verdict grade + FDD Items 3 (litigation), 4 (bankruptcy), 8 (required suppliers), 16 (what you may sell), 21 (audited financials)
Risk and legal
Grade B: Second tier, 56/100 (category median 51); the full grade is at the top of the page.
How the grade is built
Philly Pretzel Factory's main risks are unverified financial claims, past litigation involving the founder, modest unit growth, and lack of disclosed Item 19 data to validate franchisee profitability.
Why a B, factor by factor
- Financial health HelpsAudited financials; no going-concern doubt; franchisor net income positive; dividends paid equal to 88% of net income (Item 21; shown, not scored)
- Unit economics Weighs on it, weakest dimensionAvg gross sales $612K on a $410K investment midpoint, 1.5x (gross sales, not profit)
- Unit growth Helps+12 franchised outlets over the two years to 2024 (143 to 155, +8.4% in total, +4.1% a year compounded); turnover 3.1%
- Scale Helps155 franchised units, +7 company-owned (162 in all); franchising since 2004
- Legal Helps1 matter naming the franchisor among the Item 3 matters we list (0.6 per 100 outlets)
- Transparency HelpsItem 19 discloses financial performance; audited financials
- Adjustments after the six dimensions (-19 points)SBA loan record: the SBA charge-off rate (24.5% on 94 resolved loans) is between 20% and 50%, a range the score counts against a brand, so it took 15 points off. The score uses fixed ranges, not the category median, so a rate below its category median can still cost points.Score limits: a ceiling the method sets for specific risks (such as a very high SBA charge-off rate, high turnover or an auditor's going-concern doubt) took 4 points off.
From the six scored dimensions, an editorial assessment, not investment advice. How the score is built
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)
The revenue figures are in the Franchisor tab, under The franchisor.
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
Ask what the franchisor earns on the supplies it sells you or the rebates it takes (Item 8).
- Franchisor sells you products: Yes
- Franchisor takes supplier rebates: No
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: No
Notes from the filing review · not the score inputs
- 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
- 03MINORSuspiciously high claimed net income ($611k) nearly equals average gross sales ($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
Litigation case detail1 matter · Item 3
Litigation cases
The franchisor
Concluded (1)
UC Twister, LLC. v. Soft Pretzel Franchise Systems, Inc. and Ron Heil
settledBrought by a franchisee · filed 2017-08-04 · Court of Common Pleas of Philadelphia County, Pennsylvania · 170703995
“… In the Court of Common Pleas of Philadelphia County, Pennsylvania, Case No. 170703995.”Page 11 of the 2025 FDD, Item 3
Outcome: “On November 15, 2018, the parties entered into a settlement agreement pursuant to which Soft Pretzel purchased certain assets owned by UC Twister and used in connection with their closed Philly Pretzel Factory franchise for $97,000 in exchange for mutual releases.”
Item 3 lists the litigation the franchisor must disclose; a matter against a parent, an affiliate or a named officer is not a matter against the franchisor, and pending claims are allegations, not findings.
What are you signing up for?
Ongoing fees run about 8.0% of sales (royalty + ad fund), before your own operating costs.
Source: FDD 2025 · Items 11, 12, 17
FDD Items 12 (territory), 15 (owner participation) and 17 (renewal, termination and disputes)
Contract and territory detail
| Allowed renewals | 1 |
|---|---|
| Protected territory | Yes |
| Exclusive territory | No |
| Territory radius | 2–3 mi |
| Online sales rights | Restricted |
| Franchisor can compete | Yes |
| Who runs it (Item 15) | The owner, or a principal the franchisor approves, must run it |
| Non-compete (years) | 2 years |
| Non-compete (miles) | 10 mi |
| Right of first refusal | Yes |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Mandatory arbitration | Yes |
| Arbitration location | Philadelphia, Pennsylvania |
| Jury trial waiver | Yes |
| Governing law | PA |
Items 10 (financing), 11 (training and support)
Training and 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 (initial fees) & 11 (training and support)
Franchisor support
Item 20 (outlet counts) · call current owners
Franchisee contacts
Who can you call before you sign?
174 current outlets listed
Records carry the franchisee (company or owner name as the filing prints it) and phone number (franchisee name on 167 of 174). No cities or states. 174 records. From the filing's Item 20 (the outlet list); the FDD itself is the free source. Our list holds 174 current outlets; Item 20's table counts 155 franchised at year end.
For your own due-diligence calls only. Not for telemarketing, marketing lists, or automated or prerecorded calls or texts.
One-time · CSV download · full refund within 7 days if the data does not match the FDD. Some numbers, especially for former owners, may be outdated.
Frequently asked questions
How much does it cost to open a Philly Pretzel Factory franchise?
Per the 2025 FDD, the total investment to open a Philly Pretzel Factory franchise ranges from $325K to $496K, with an initial franchise fee of $40K. This is the Item 7 total in the Franchise Disclosure Document (FDD): the startup costs the franchisor lists, such as build-out, equipment, inventory and working capital. It usually leaves out buying land or a building; Item 7's notes say what is excluded.
What do Philly Pretzel Factory franchise owners earn?
According to Item 19 of the Philly Pretzel Factory FDD, average gross sales were $612K (Item 19 group “All Representative Traditional Franchised Factories (Overall)”, 111 outlets; gross sales, not profit). The median is $513K. What an owner keeps depends 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?
There is no published franchise failure rate. What is measurable is Philly Pretzel Factory's SBA charge-off rate: 24.5% on 94 resolved loans. Put plainly: 1 in 4 SBA 7(a) loans to Philly Pretzel Factory owners charged off (23 of 94 resolved loans, approved since FY1991); loans approved FY2014–FY2020: 3 of 34 resolved loans charged off (8.8%); newer loans have not had time to default, so this is not a trend. The SBA charge-off rate is the share of a brand's resolved SBA 7(a) loans to its franchisees that the SBA wrote off, including purchased guarantees. Resolved means paid in full or charged off; active loans are excluded because their outcome is not yet known. It is a lending outcome, not a count of closed businesses. A franchisee can repay and close, or default and keep trading.
How many Philly Pretzel Factory franchise locations are there?
Per the 2025 FDD, Philly Pretzel Factory has 155 franchised units and 7 company-owned (162 in all). In the latest year, the number of franchised outlets grew by 9 (14 opened, 5 closed).
Is Philly Pretzel Factory a good franchise to buy?
FranchiseVerdict gives Philly Pretzel Factory a B Verdict grade (Second tier) with a verdict score of 56 out of 100 (higher is better), an editorial assessment, not investment advice. Helped by financial health (audited financials), unit growth, scale, legal record and transparency. Held back by unit economics (avg gross sales $612K on a $410K investment midpoint, 1.5x: gross sales, not profit). The “Why a B” section on this page lists all six dimensions and any adjustment. Speak with current franchisees before making any investment decision.
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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.