Bottom line
- Total investment $392K – $573K including a $25K franchise fee, 7.0% ongoing royalty.
- Average unit revenue of $559K/year (median $484K).
- Rated MODERATE with a risk score of 63/100. SBA loan default rate of 0.0% across 40 loans (below the industry average).
- System contracting at -12.2% CAGR over 3 years. Investigate whether closures are franchisor-driven (consolidation) or franchisee-driven (economics).
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 Pretzelmaker unit return on the cash you put in?
Unlevered ROIC · per unit
16%
Below typical band (30–60%)
Levered LBO scenario · Yale Crease Capital framing
What would 25 Pretzelmaker units return on equity?
Equity IRR · 5-yr
49.9%
7.57× MOIC
Year-1 DSCR
1.88×
EBITDA ÷ debt service
Equity required
$783K
on $3.9M purchase
Total debt
$3.1M
SBA $2.0M + senior + seller note
Overview
About
Pretzelmaker franchisees operate kiosk-based or small-footprint retail locations selling handmade pretzels and pretzel-based snacks, typically in malls, airports, or high-traffic venues. Daily operations include product preparation, inventory management, customer service, and food safety compliance. Franchisees are responsible for staff hiring/training, local marketing, and meeting corporate brand standards while paying 7% of net sales in royalties to FAT Brands.
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 · 26 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
Pretzelmaker presents HIGH RISK due to a contracting franchise system (-5.1% YoY), non-disclosed profitability, parent company SEC violations and fraud allegations, regulatory action, and unprotected territories—creating poor unit economics on a declining brand.
Score breakdown · what drove the 63 / 100 rating
- 01MINORParent company (FAT Brands) under SEC investigation with pending putative class action and prior securities settlement indicating financial reporting credibility issues
- 02MINORSystem declining 5.1% YoY with only 129 units remaining, suggesting deteriorating franchise viability and market saturation
- 03MEDNo Item 19 (Average Net Income) disclosed despite $559K average revenue, preventing accurate ROI calculation and raising transparency concerns
- 04MINORVirginia state regulatory action against franchisor for franchise registration and reporting inaccuracies demonstrating compliance failures
- 05MINORUnprotected territory creates direct competition risk from other Pretzelmaker franchisees in same market
- 06MINORHigh initial investment ($391.5K-$573K) paired with 7% royalty burden on declining average revenue of $559K yields marginal unit economics
- 07MINOR15-year term lock-in with shrinking system reduces exit liquidity and resale value
- 08HIGHMultiple litigations involving alleged fraud against affiliate entities signal corporate governance and ethical concerns within parent company structure
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
93 numbers
One-time purchase · CSV download · Validation questions included
FDD download
Pretzelmaker · FDD (2025) PDF