Auntie Anne’s Franchise Opportunity (2024)
Auntie Anne’s Franchise is a soft pretzel, lemonade and beverage chain. They also offer Pretzels & More Homemade Baking Mix. It was founded in 1988 by husband-and-wife Anne and Jonas Beiler. As of 2022, they have 1126 franchised and 12 company-owned locations. Owned by the same parent company as Cinnabon, Auntie Anne’s competes in the Food and Beverage Industry.
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How is Auntie Anne’s Franchise Positioned in the Food and Beverage Industry?
The Food and Beverage industry in the USA accounts for 13% of all manufacturing employment in the country. Around 1.46 million people are employed in this industry. Food franchises make up to 36% of the total franchise establishments in the USA and it is expected to create 1.6million more jobs by 2027. The annual growth rate in the industry is around 2% and the EBITDA multiplier is around 3x.
Auntie Anne’s competed against other businesses like Krispy Kreme, Cinnabon, and Wetzel’s Pretzels.
How Much is an Auntie Anne’s Franchise?
The initial Auntie Anne’s Franchise Fee is $35,500. You have to pay this upfront fee when opening an Auntie Anne’s franchise.
Auntie Anne’s Cost
The estimated total investment necessary to begin the operation of an Auntie Anne’s Franchise ranges from $146,050 to $523,500. The following costs are part of the upfront costs included in the initial investment for Auntie Anne’s. Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy an Auntie Anne’s franchise in 2022.
Initial Investment
| Type of Expenditure | Amount of Expenditure (Low – High) |
|---|---|
| Initial Franchise Fee | 35,500 – 35,500 |
| Construction and Build Out Costs | 27,000 – 194,000 |
| Permiting | 2,000 – 4,000 |
| Equipment Package | 21,000 – 60,000 |
| Millwork | 5,000 – 27,000 |
| Furniture | 0 – 2,500 |
| Menu Board, Graphics, and Interior Signane | 250 – 12,000 |
| Exterior Signane | 1,500 – 7,000 |
| Computer System | 6,000 – 24,000 |
| Smallwares | 1,000 – 4,500 |
| Architect/Engineer | 2,000 – 12,000 |
| Rent | 2,000 – 10,000 |
| Grand Opening Marketing | 1,000 – 5,000 |
| Legal and Accounting Fees | 5,000 – 10,000 |
| Insurance | 2,000 – 10,000 |
| Misc. Opening Costs/Office Supplies | 13,000 – 25,000 |
| Security Deposits | 0 – 15,000 |
| Training and Support Fees | 0 – 3,500 |
| Travel and Living Expenses during Training | 3,500 – 7,500 |
| Opening Inventory | 3,300 – 4,000 |
| Additional Funds – 3 Months | 15,000 – 51,000 |
| Total Investment | 146,050 – 523,500 |
Requirements
A minimum of $100,000 in Liquid Capital and a net worth greater than $300,000 is required to start a franchised location.
Ongoing Fees
Royalty: 7-8% of Net Sales
Advertising Fee: 1-3% of Net Sales
Their fees are on the higher end of the industry standard with 5-6% for royalty being more typical.
How much do Auntie Anne’s franchise owners make?
| Quartiles | Average Net Sales | Number and Percentage of Shops Attaining or Exceeding Average Net Sales | Median Net Sales | Lowest Net Sales | Highest Net Sales |
|---|---|---|---|---|---|
| Top Quartile | 981,739 | 43/114 (38%) | 925,679 | 798,548 | 2,383,796 |
| 2nd Quartile | 685,318 | 50/114 (44%) | 679,856 | 597,395 | 795,101 |
| 3rd Quartile | 527,870 | 58/113 (51%) | 529,605 | 459,341 | 595,429 |
| Bottom Quartile | 351,924 | 63/114 (55%) | 359,762 | 116,626 | 456,758 |
| Total | 636,952 | 202/455 (44%) | 597,395 | 116,626 | 2,383,796 |
2021 Auntie Anne’s Median Franchise Sales: $597,395
| Initial Investment (midpoint) | %Profit margin of average franchise sales | Estimated profits | Time to recoup investment |
|---|---|---|---|
| 334,775 | 10% | 59,739 | 8 years |
| 15% | 89,609 | 6.25 years | |
| 20% | 119,478 | 5.5 years |
Based on the median sales provided by Auntie Anne’s locations, at an average of a 15% profit margin it will take around 6.25 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 15% profit margin which would elongate getting a return on your investment.
Many factors affect the sales, costs and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace. The presence of other stores; the extent of market penetration and brand awareness that Auntie Anne’s stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.
Is the Auntie Anne’s Profit Worth the Franchise Cost?
To assign a valuation multiple for Auntie Anne’s franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
Under $1 Million Net Sales
- Estimated Selling Price = Net Sales – 0.44
When you go to sell an Auntie Anne’s franchise based on the median multiple of .44 and net sales in 2021 of $597,375, it would sell for $262,853. This is lower than the midpoint investment of $334,775 but can be recuperated.
The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
Looking at the franchises for sale on BizBuySell, Auntie Anne’s franchises are listed at prices between $120,00 and $250,000. This is a revenue multiple of between 0.45 and 0.7. Based on the higher end of the range, when you go to sell an Auntie Anne’s franchise based on the multiple of .70 and net sales in 2021 of $597,375, it would sell for $418,162. This is higher than the midpoint investment of $334,775 and would instantly recuperate the initial investment not adjusting for inflation.
Key Insights:
Income Statements
| For the fiscal years ended: | December 26, 2021 | December 27, 2020 | December 29, 2019 |
|---|---|---|---|
| Revenues: | |||
| Franchise Revenues | 221,276 | 166,977 | 210,226 |
| Total Revenues | 221,276 | 166,977 | 210,226 |
| Fees and Expenses: | |||
| Management Fee to FBLLC | 41,654 | 42,353 | 44,098 |
| Selling, General and Administrative Expenses | 404 | 1,793 | 462 |
| Depreciation and Amortization Expense | 3,030 | 3,435 | 3,929 |
| Total Fees and Expenses | 45,088 | 47,581 | 48,489 |
| Operating Income | 176,188 | 119,396 | 161,737 |
| Income Before Income Tax Expense | 176,188 | 119,396 | 161,737 |
| Income Tax Expense | 1,565 | 1,188 | 1,637 |
| Net Income | 174,623 | 118,208 | 160,100 |
Auntie Anne’s Franchise is a very profitable business for the franchisor with retained earnings of $174 million in 2021. Compared to $160 million in 2019, they saw an increase of 8.75% from 2019 to 2021. This is a good indication of growth as a company overall. Especially after they saw a dip in income in 2020.
How many Auntie Anne’s units have opened and closed?
| Outlet Type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 1219 | 1200 | -19 |
| 2020 | 1200 | 1140 | -60 | |
| 2021 | 1140 | 1126 | -14 | |
| Affiliate-Owned | 2019 | 12 | 11 | -1 |
| 2020 | 11 | 12 | +1 | |
| 2021 | 12 | 12 | 0 | |
| Total Outlets | 2019 | 1231 | 1211 | -20 |
| 2020 | 1211 | 1152 | -59 | |
| 2021 | 1152 | 1138 | -14 |
Over the last three years, the company has been in decline. Between 2019 and 2021, 93 franchised locations closed shop, representing around 8% of the stores. This could be due to numerous factors like franchisees not renewing their agreements or poor trickle-down management leasing people to move away from this franchise. We recommend talking to current franchise owners to find out more about this.
Conclusion
Pretzels are the snack of choice for many Americans, and Auntie Anne’s franchise offers a chance to be a part of bringing that product to customers across the country. While this may be the business for you, make sure to also check out other businesses offered on Vetted Biz and in the Food and Beverage Industry.
