Top 250 Franchise by Entrepreneur – Rank no.141 – Wetzel’s Pretzels – US
Products & Services: Soft pretzels, lemonade, hot dogs
Number of Locations: 284
Total Investment: $156.3K – 370.64K
Began Franchising: 1996
About Wetzel’s Pretzels
Former marketing executives Bill Phelps and Rick Wetzel founded Wetzel’s Pretzels in 1994. The private company began franchising in 1996 and now has units across the United States and internationally. It is based in Pasadena, California, and has co-branding relationships with Cold Stone Creamery, Juice It Up, Swensen’s and others.
Startup Costs, Ongoing Fees and Financing
Franchise Fee: $35,000
Ongoing Royalty Fee: 7%
Term of Franchise Agreement: 10 years, renewable
Net Worth: $200,000
Liquid Cash Available: $50,000
50% of all franchisees own more than one unit. Number of employees needed to run franchised unit: 5. Absentee ownership of franchise is NOT allowed. (100% of current franchisees are owner/operators).
How This Franchise Supports Franchisees
Franchise Ranking History
- Pretzels, consisting of several different flavors.
- Wetzel dogs, hot dogs with pretzel bread for buns.
- Wetzel Bitz, bite-size pretzel bits sold in a cardboard container.
- Frozen Lemonade, sold in a variety of flavors.
- Frozen Granita, a frozen version of the Italian dessert.
Rick Wetzel and Bill Phelps are the chieftains of pretzel empire Wetzel’s Pretzels. In 1994, the two were working in marketing at Nestle USA. On a business trip to Seattle, the colleagues, though not friends at the time, started kicking around the idea of pretzels as a new snack-food business. An eavesdropping stranger told them soft fresh-baked bread pretzels were really tasty. The pair got excited and started mapping out a business plan that night at a bar. They wrestled with finding a name that could be trademarked. Everything Phelps wanted had already been taken. Wetzel, who had been teased in the schoolyard with “Hey Wetzel, you pretzel,” kept his mouth shut. A friend who was a marketing consultant finally pointed out the obvious for a name. The chain expanded quickly, and in 1997 Hollywood movie producer John Davis came in with $1 million raised from angel investors. Only after opening a company-owned flagship store at Disneyland in 2001 did the pair realize they had made it. “It was one of the top retailers in all of Downtown Disney per square foot,” Phelps said.
Los Angeles private equity firm Levine Leichtman Capital Partners Inc. bought a majority stake in the company in 2007 for an undisclosed amount. Phelps still owns a 20% share, while Wetzel holds a smaller stake.