Philly Pretzel Factory

Baking a dream

With well over 100 franchised locations and growing, Philly Pretzel Factory is the world’s largest Philadelphia-style pretzel bakery. At the factory, they mix only the finest pretzel ingredients and twist each and every pretzel by hand to ensure quality and freshness. Every menu item – from their award-winning soft pretzels to crowd-pleasing party trays – is baked right before the customer’s eyes, and delivered straight from the oven into their waiting hands.

At Philly Pretzel Factory, their entire family of franchisees, founders and employees are committed to providing world class service in a clean, friendly and inviting atmosphere. Their pledge is to make every visit enjoyable, convenient and affordable in every way.

Philly Pretzel Factory was born in Philadelphia – home to some of the greatest snack foods on record.  In 1998, founders Dan DiZio and Len Lehman continued that legacy by tracking down “the Cadillac of pretzel-making machines,” starting their first store in the Mayfair section of the city. For DiZio, this was the realization of a lifelong dream. When he was 11 years old, he used to sell pretzels on the street corners of Roosevelt Boulevard, often running out of stock by mid-afternoon.

Philly Pretzel Factory was a success right from the beginning. Demand for the pretzels became so large that they had no choice but to offer them right out of the oven. This new-found serving method became an instant hit, and in the following years DiZio and Lehman opened up more and more stores. In 2004, they decided to give others the opportunity to share in their success.

To help with growing the concept, Marty Ferrill was brought in. “Dan and Len are very smart guys, and very entrepreneurial, but they will admit they didn’t know a lot about franchising or creating a franchise system – and that’s my background,” Ferrill says. “I liked the guys and really liked the concept, so I decided to come on board and help them put a management team in place to support the franchisees.”

With Ferrill’s help, Philly Pretzel Factory assembled a team of highly experienced experts in marketing, franchising, operations, and training, and developed the Philly Pretzel Factory franchise program. Over 100 stores later, that program has proven to be an effective one.

Loving the product

The most distinguishing factor when it comes to Philly Pretzel Factory is their product. “It’s a very traditional Philadelphia-style pretzel, which is quite different than what people would consider a mall pretzel,” Ferrill says. “It’s the same formula you would literally get in Germany. That goes back to the early days in Pennsylvania, where a lot of those people immigrated and started making pretzels.”

Their product is also affordable, which sets it apart even more. “It’s all about value when you visit a Philly Pretzel Factory,” Ferrill explains. “Typically people don’t buy one pretzel, they buy multiple pretzels.” For three pretzels, most of their stores only charge $1.50. Then, they have an “escalator model,” where a customer can buy 10 pretzels for $4 or 20 pretzels for as low as $6.

Currently, Philly Pretzel Factory has roughly 100 franchisees, with over 120 stores open and roughly 175 agreements in place. At a corporate level, they employ 19 people to support those franchisees including Franchise Support Managers, Real Estate Managers, Construction Managers and their Creative Director.

From a franchising perspective, Ferrill says Philly Pretzel Factory is set apart by the simplicity of their concept. Their menu is not complicated, and the focus will always be on serving pretzels every day at a good value. “It’s a unique product with good value in terms of investment, and a good return on the investment,” he says. “The majority of our franchisees were also customers, and they love the product.”

That love is the first thing the brand looks for in potential franchise owners, Ferrill adds. After that, they try to find people who are willing to work hard and grow the business. “We’re looking for someone who understands marketing, understands how to manage and train a staff, and is willing to follow a system,” he says. “We’re willing to train them on those things, but they have to show those skillsets, and prove they’re able to do those things before we award them a franchise.”

Once a franchise has been awarded, however, Philly Pretzel goes above and beyond in ensuring their franchisees success. Their assistance starts at the very beginning of the process with site selection and lease negotiations, then architectural services for floor plan and design. They also offer construction management services, including assistance in selecting a general contractor – as well as periodic on-site inspections to ensure the build-out of the store are proceeding to plan.

Philly Pretzel Factory also offers a comprehensive initial training program that lasts two weeks. The first week is at “Pretzel University,” where they are given very hands-on training. Ferrill says that 60 per cent of that training is spent on teaching the actual production of the product. The other 40 per cent is spent on how to sell and market the pretzels, as well as other management disciplines, such as how to ensure the security of a store and how to train a staff.

The second week of training is on-site training at the location. At that point, they will assist with training employees the franchisee has hired, and making them aware of the Philly Pretzel culture. When the doors open, they spend additional four or five days from open-to-close to help franchisees manage the store.

After that, franchisees are paired with a Franchise Support Manager – whose job is to help franchises learn and grow the business, while providing continuous and ongoing training. “We believe in a very hands-on approach,” Ferrill says. “We try to do a good job communicating with franchisees about any changes that are coming up in the system, or new marketing and product initiatives.”

“We have a great relationship with our franchisees, and a large part of that is just being out there,” he adds. “They know they can depend on us, that we’re going to help and support them as best we can.”

Evolving and adapting

Over the last three or four years, Philly Pretzel Factory has seen a slowdown in growth, but an increase in leads. This is largelydue to people’s inability to acquire financing.  A franchise investment in a traditional Philly Pretzel Factory can cost anywhere from $225,000 to $300,000. Over the last year, they have looked at ways to decrease that investment so people can readily grow with them.

“What we’ve done with them is create a smaller, scaled-down version of our traditional concept,” Ferrill explains. “We’ve created a kiosk model that can be done in as little as 300 to 400 feet.” At this size, the expense of the equipment and the build out is much less, so the investments only reach around $150,000. This allows them to target a whole new group of potential franchisees.

From a product standpoint, they’re always working on new products. They recently rolled out a pepperoni pretzel melt that proved to be a big hit – the idea for which actually originated with a franchisee. “We’re getting really good feedback on that,” Ferrill says.

Moving forward, Philly Pretzel will continue to evolve and adapt to the changing market, and grow into a very strong East Coast concept. Over the next five years, Ferrill envisions them going from 175 agreements to 500. From that point, he says it is not hard to imagine them expanding to the West and reaching the rest of the country.