FRANCHISING THE PRETZEL: THE AUNTIE ANNE'S STORY

TABLE OF CONTENTS

CONTENT PAGES

1.0 Franchising Background of the Company 2

2.0 Company’s Type of Franchising (business-format 3-4

franchising)

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3.0 Company’s Franchising Key Factors 5 - 10

4.0 Conclusion 11
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Bibliography 12 - 13
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Appendices 14 - 15
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1.0 Franchising Background of the Company

The bready yeast products namely pretzels were first prepared in Germany or
Alsace, and they are well known for the distinct shape that they have satisfying
crunchiness, and the many ways that they can be flavoured. The dough is made into a
loose knot using a long rope which is then put in boiling water before being brushed with
egg yolk, sprinkled with salt and baked. Some people eat pretzels as fast foods along
with beer while others prefer to consume hot soft pretzels sold by street vendors in big

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towns such as New York City together with mustard. Hard pretzels are more versatile
than soft ones since they can stay for long without getting spoiled hence allowing for a

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large-scale production and packaging process. Salt is the most commonly used
seasoning on pretzels followed by sugar, chocolate, cinnamon, sweet glazing (sugar
icing), seeds or nuts. One of the dominant pretzel companies is Aunty Anne's
(Biergarten at Old World & Germandeli.com, n.d.).
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The company was founded in 1988 by a businesswoman named Anne F. Beiler
and her husband, Jonas. Before the miracles happened, Anne Beiler started baking
pretzels to help fund her husband’s desire to provide free family counselling services for
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their community. Then, they are determined to trade in pretzel and lemonade which at
the time was a trend in the Middletown city market, Pennsylvania. It opened its first
overseas store in Jakarta, Indonesia, and also had stores at Saturday's Market in
Middletown, Pennsylvania, Penn Station in New York City, and Granite Run Mall in
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Media, Pennsylvania. They purchased and restored the former Lancaster Post Office for
$7 million in 2006 when their corporate offices relocated to downtown Lancaster.
Heather Leed Neary was the president of Auntie Anne's from 2013 until 2015, following
its acquisition by Atlanta franchisor Focus Brands in 2010. The number of international
locations for Auntie Anne’s has now grown to over 600, with various spots opened in
Europe particularly in the United Kingdom. On the other hand, Brunei, Cambodia, India,
Indonesia and Malaysia are several countries within Asia that have provided venues.
Aunty Anne’s is currently setting its store to begin outlets in China (Auntie Anne’s ®
Pretzels, n.d.). As for today, Auntie Anne’s could be found in 1,300 locations worldwide.

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2.0 Company’s Type of Franchising

There are two types of franchise business which are Business Format Franchising
and product distribution franchising. This study found that Aunty Anne's company is a
type of Business Format Franchising. In the business format franchise, the franchisor
provides to the franchisee not only trade names, products and services, but the entire
system for operating the business. Franchisees usually receive site selection and
development support, operating manuals, training, brand standards, quality control,

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marketing strategy and business consultation support from franchisors. The franchisee
in the franchise format will operate the business using the primary trademark owned by

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the franchisor. This is usually the name that will be used to identify the franchisee
company to the public and is usually called as a brand.

The franchisees will gain access to the franchisor’s proprietary systems. But it
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also means that franchisees must utilise those systems and be guided by any standards
established by the franchisor. Some of these might include; initial training, standardised
buildout plans, operations manuals, continuous support, point-of-sale system education
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and key functionalities. Franchisees are also given the right to sell products and services
that the franchisor could otherwise restrict to prevent competition from other firms.
Such may encompass branded products, proprietary recipes, service suites and specific
methodologies. For example, before the franchisees of Aunty Anne's start their business,
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the franchisor will conduct credit and background checks, psychometric check-ups,
cryptographic trials, project research, existing franchises and discussions on the correct
location selection to avoid client bonds in one of the selected areas (Auntie Anne’s ®
Pretzels, n.d.).

However, at times a third party is deployed for financing for establishment of the
Auntie Anne’s Franchise, the initial expenses, equipment, raw materials, cost of the
accounts receivable and the payroll costs are incurred through Auntie Anne’s Fund.
However, there are direct costs of in house are not financed by Auntie Anne’s. This is

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invalid as it does not grant any lease, note or any other obligation that it has to meet
for the same is missing. The candidate for setting up the franchise should have industry
experience so that he or she should be in a position to undertake all the necessary
measures that are essential in the management of the franchise business. It is also
desirable if he has some level of computer literacy. It is also required that he should
have sales ability. Thus, the following propositions are that it is prohibited to have
shares in a company where the individual does not attend the physical company
meetings. Another employee count requirement that a franchise should require from a

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staff is nine up to a maximum of twelve franchises to establish a franchise (Fortune,
2023).

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However it cannot be done otherwise since it has to be done mandatorily if one
is to consider it having attained its stated goal and objectives which knows the form of
the training program. As a researcher, I have found that there is a new program to be
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followed for starting a franchise store and the store manager has to follow it to become
familiar with the mode of operation. These training consist of intermittent training within
stores with the training extent of higher than a hundred hours, together with training
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that occurs in the classroom. Finally, forums have mentioned that for a franchisee, one
has to be apart from an existing Auntie Anne’s store for a specific amount of time and
it’s at least forty hours every week (Auntie Anne’s ® Pretzels, n.d.).
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3.0 Company’s Franchising Key Factors

There are several key factors that prove the Auntie Anne's is one of the successful
franchise. These include strong brand recognition, supply chain and vendor
relationships, innovation and menu development, and comprehensive training and
support.

3.1 Strong Brand Recognition

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The key to Auntie Anne's first franchise business success is strong brand

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recognition. Auntie Anne's today is located at 49 locations just on the Malaysian
Peninsula and trying to imagine how many shops there are today all over the
world. With a total of more than 2,000 stores worldwide, all Auntie Anne's outlets
are easily exposed to customers as they are widely opened in high-traffic areas
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such as being in shopping centres, airports and amusement parks. In addition to
having a large number of outlets around the world, Auntie Anne's also attaches
great importance to the quality of its products and therefore if you visit every
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store she has, Auntie Anne’s definitely offers a uniform product line in an effort to
maintain loyalty amongst customers and attract interest to prospective customers
of their pretzel products. This is because the owner of this franchise business
itself, Anne F. Beiler, attaches great importance to the use of high-quality
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materials and always delivering consistent product quality has solidified its brand
(Auntie Anne’s, 2023).

Additionally, Auntie Anne's has a strong brand strength because she

focuses on pretzels which is their main product in their marketing strategy on
social media. It's no wonder this franchise business has always been warmly
spoken and spread easily on the news display in social media accounts for the
past 26 years. This is because through social media accounts, Auntie Anne's
enthusiasm for communicating directly with buyers, promoting new products and

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even conducting interesting contests and giveaways. Not only that, the franchise
business also argues that the pictures and videos uploaded on social media do
not necessarily meet aesthetic criteria. Instead, Auntie Anne's chose to
manifested its brand and explore other types of content including more graphics
and (brand-safe) memes (Tippett, 2024).

3.2 Strategic Supply Chain and Vendor Relationships

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The second key factor that led Auntie Anne's success as one of the
successful franchise was strategic supply chain and vendor relationships

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management. Auntie Anne’s stated that they manage the supply chain associated
within the Focus Brands Portfolio which is the indirect parent company to seven
franchisors, including Carvel, Cinnabon, Schlotzsky’s, Moe’s, Jamba Juice, and
McAlister’s (Auntie Anne’s Franchisor SPV LLC, 2022). This can be seen in terms
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of the use of centralised supply chain management and bulk purchases. For
example, Auntie Anne's has a centralised purchasing department that provides
pretzel’s ingredients and supplies from approved vendors. Therefore, every
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pretzel that is available in any store of this franchise business is the same and no
longer in doubt among customers. This allows Auntie Anne's to negotiate better
prices and pass on the savings to its franchisees which also ensures a steady
supply of materials at the same time. Auntie Anne's also has adapted the
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importance of the use of technology and data analysis in business activities by

identifying the stages of inventory, procurement management and optimising
delivery routes. While data analysis helped Auntie Anne's inforecasting desires,
identifying market trends and making informed decisions regarding inventory and
supply chain operations (QSR Web, 2020).

Meanwhile, in vendor relationships, long-term relationships with supply

chain partners require continuous commitment, effective communication,
constructive collaboration and easy-to-implement adjustment. In that, Auntie

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Anne's builds long-term relationships with selected and trusted suppliers who
meet their high standards for quality and reliability in an effort to maintain a
brand reputation so that we always offer high quality pretzel products. For
example, in 2014, Auntie Anne's shared a statement that there are three
suppliers selected for high commitment in offering high quality, affordable and
professional products from the customer service aspect. Three of these partners
are Sensient Flavors, which supplies new products and flavour enhancements
since 1995, Dairy Farmers of America, which provides ghee or commonly known

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as clarified butter for more than 15 years, and the Bagcraft Papercon, which has
supplied paper bags since 1991. The tight quality requirements that Auntie

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Anne's set up must likewise be followed by vendors. This involves conducting
routine quality audits and checks in order to make sure all ingredients match to
the standards set by the company. These exacting requirements contribute in
preserving the flavour and consistency that consumers have come to expect from
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Auntie Anne's products (QSR Web, 2014).

3.3 Innovation and Menu Development

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Third Auntie Anne’s key factor as a franchisor is innovation and menu

development. In order to stay relevant in the market, attract new customers and
maintain loyal ones, innovation and menu development of those pretzels are the
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important aspects of Auntie Anne's as a franchise. Thus, to appeal to a wide

range of consumers and adjust to evolving tastes of customers, Auntie Anne's
refreshes its offering of pretzel products on an ongoing basis. This involves
releasing a fresh pretzel flavour, the sauce, and seasonal variety. Regular menu
updates allow Auntie Anne's to adapt to the ever-changing personal tastes of its
customers and guarantee that they always have something fresh to a large
customer base. For example, Auntie Anne's new experiment with OREO-topped
nuggets seems to have reached a sweet spot in the world of snacks. By
combining rich texture, cookie cream and ice cream with a satisfying crunch of

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broken pieces of Oreo, Auntie Anne's has turned their classic pleasure into
something that makes customers seem back to childhood. Although OREO
Topped Nuggets are still being tested in selected stores, feedback proves that the
product innovation in this new menu is very likely to reach the global market just
like the previous product. The action of the new menu item, combined with the
entertaining awareness of the pretzels and the iconic flavour of Oreo, absolutely
guarantees the brand's popularity in the markets, especially in the food industry
(Baylee, 2024).

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Besides, as a way to spark a trend and draw attention to their outlets,

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Auntie Anne's also runs seasonal and limited-time offers (LTOs). Customers are
encouraged to return more frequently to enjoy the new goods before they are
gone by the limited-time products, which typically coincide with holidays or
special events. This offer is usually implemented only once a year because the
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product in this category has not yet been confirmed as one of the regular menus
and can be considered as a special menu only. In addition to creating excitement,
their limited-time offers (LTOs) allow customers a chance to try out new items
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before possibly introducing them to the everyday menu. The Auntie Anne’s
Snowball Nuggets is a seasonal holiday snack offered by the brand during the
Christmas season of 2021 back then. This is one of the delicious snacks due to its
soft pretzel, sliced and shaped in bite size and then dusted with white powdered
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sugar to give it the look of snow. Although the snacks come individually packed in
cups the same comes along with a bucket for those who intend to share these
snacks with friends or relatives. These snacks are manufactured and available in
the market with an intention to market them for the holiday season and they will
be in the market until 31st December, 2021. Snackathon Pack also included this
menu item together with many other products that are sold with the pack
(Hemsworth, 2021).

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3.4 Comprehensive Training and Support

A comprehensive training and support among the franchisees may help the
growth of the franchisee itself and that of the franchise system may also be
supported. This is because training may enable the franchised parties situated in
various regions to receive an understanding on business concepts, products and
services, and managing the firm as well to enhance customer service since
training usually raises awareness among franchisees on how to handle customers

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and understand their demands. For instance, Auntie Annne’s have provided an
initial training program such as operational training and hands-on training to its

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franchisees by sending a set of paper training manuals and DVDs to every store.
There consists of product preparation which is training in pretzel manufacturing
techniques and several other menus, equipment usage training revealing how the
equipment used in the store are run and maintained and business management
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training which include control of the store activities on a daily basis, including the
inventory and work shift, and customer relation training (QSR Magazine, 2023).
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Furthermore, Auntie Anne's is also keen to implement ongoing support for

its franchisees to remain relevant in the market especially in the food and
beverages industry. For example, Auntie Anne's provides a continuous support
package to her franchise through the Francais Business Adviser (FBC) who acts
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under the direction of Aunties Anne. Auntie Anne’s also stated that they provide a
Support Centre that offers unparalleled operational assessment, training and
analytical support to franchisees to improve the performance of pretzel
manufacturing operations. The Centre provides support for opening training with
certified trainers and certified training locations worldwide. It serves as a R & D
centre for product development and testing, quality control and inspection as well
as hosted advanced training and professional development classes (GoTo Foods,
2024) . Not to mention, the employees and their families also had the
opportunity to receive a scholarship from Auntie Anne's in an effort to motivate

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its employees to continue serving the company. For example, in 2014, Six
students internationally received scholarships from Auntie Anne's in recognition of
their exceptional performance in and out of the classroom. The individuals were
chosen in recognition of their exceptional accomplishments and dedication to
excellence in and outside of the classroom (QSR Magazine, 2014).

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4.0 Conclusion

This individual report has some limitations as long as it's under way. First, the
shortage of secondary material such as newspapers, field studies, journal articles and
books related to Auntie Anne's franchise business. Therefore, this report relies entirely
on information and data from the Internet to discuss the success of Auntie Anne's as
one of the world's leading franchisees of pretzel products. Not only that, the writer of
this report also faced the difficulties from time constraints due to a shortage of

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secondary data and had to apply for the date of delivery of the report to be postponed
to the last week of the lecture, which is the 14th week.

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In conclusion, Auntie Anne's franchise business received the ICSC Foundation
Retailer Community Support Award on May 20th during RECon, the premier
international retail real estate conference ICSC in Las Vegas which reasonably served as
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a bounce point for individuals who want to engage in franchise. This is because key
factors such as strong brand recognition, strategic supply chains and vendor
relationships, innovative and exciting menu development as well as comprehensive and
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continuous training and support make this brand ideal and perfect for opening up in the
market. With such a franchise business, it is expected that entrepreneurs will be aware
of its existence in the food and beverage industry and open their minds to engage in
the business world.
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Bibliography

Auntie Anne’s ® Pretzels. (n.d.). Franchise Process.

https://www.auntieannesfranchising.co.uk/process

Auntie Anne’s ® Pretzels. (n.d.). Testimonials. Franchise Cost, Fees, Franchise Details.

https://www.auntieannesfranchising.co.uk/

Auntie Anne’s Franchisor SPV LLC. (2022). Auntie Anne’s Franchise Disclosure Document

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2022 (EAST\187733891.4). Retrieved June 16, 2024, from

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https://www.restfinance.com/app/pdf/fdd/Auntie-Annes-2021.pdf

Auntie Anne’s. (2023). About Us. Auntie Anne's. Retrieved June 15, 2024, from

https://www.auntieannes.com.my/about
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Baylee, P. (2024, April 28). Auntie Anne's Tries New Pretzel Snack. Fast Food Club.

https://www.fastfoodclub.com/p/auntie-annes-tries-new-pretzel-snack/

Biergarten at Old World & Germandeli.com. (n.d.-b). History of the Pretzel. Old World |
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German Restaurant in Huntington Beach, CA.

https://www.oldworldhb.com/history-pretzel/

Fortune. (2023, November 10). Auntie Anne’s Franchise. Fortune; Investment, Crypto &
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Business Portal. https://www.fortune.my/auntie-annes-franchise.htm

GoTo Foods. (2024, May 28). International Pretzel Franchises | Auntie Anne’s franchise.

GoTo Foods. https://development.gotofoods.com/auntie-annes-international/

Hemsworth, M. (2021, November 20). Seasonal Snow-Inspired pretzel snacks.

TrendHunter.com.

https://www.trendhunter.com/trends/auntie-annes-snowball-nuggets

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QSR Magazine (2014, September 12). Auntie Anne’s awards $35,000 in scholarships to

employees. QSR Magazine.

https://www.qsrmagazine.com/news/auntie-anne-s-awards-35000-scholarships-e

mployees/

QSR Magazine. (2023, November 21). How Auntie Anne’s Leveled Up Their Training

Program. QSR Magazine.

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https://www.qsrmagazine.com/sponsored_content/how-auntie-annes-leveled-thei

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r-training-program/

QSR Web. (2014, June 17). Auntie Anne’s recognizes top three suppliers.

www.qsrweb.com.
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https://www.qsrweb.com/news/auntie-annes-recognizes-top-three-suppliers/

QSR Web. (2020, July 11). Auntie Anne’s, Cinnabon Parent Company Names Supply

Chain officer. www.qsrweb.com.

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https://www.qsrweb.com/news/auntie-annes-cinnabon-parent-company-names-s

upply-chain-officer/

Tippett, B. R. (2024, February 15). The art of making pretzels part of every
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conversation. Adweek.

https://www.adweek.com/social-marketing/the-art-of-making-pretzels-part-of-eve

ry-conversation/

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Appendices

Appendix A: Founder of Auntie Anne’s, Anne F. Beiler

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Appendix B: Auntie Anne’s Outlet at the KLIA2, Malaysia
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Appendix C: Instagram Account of Auntie Anne’s

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