What was the initial term of the Bens Soft Pretzels franchise agreement beginning in June 2018?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
Initial Franchise Fee Revenue – The Company enters into franchise or license agreements that grant franchisees or licensees the right to operate individual Ben's Soft Pretzels locations in exchange for an initial franchise fee. The Company's performance obligations consist of the franchise license which includes the use of the brand, initial services including pre-opening training, and ongoing services including advertising and operational support. Management has determined that these performance obligations are highly interrelated and therefore are not considered to be distinct under ASC 606. As a result, they are accounted for as a single performance obligation which is satisfied by providing the right to use the Company's intellectual property over the initial term of the franchise agreement. Beginning in June 2018, the initial franchise or license agreement is for five years and contains two options to renew for an additional five years each (for a total term of 15 years). Prior to this change in 2018, the initial franchise agreement was for seven years and contained two options to renew for an additional seven years each (for a total term of 21 years). Each option to renew includes an additional fee and is considered a separate performance obligation.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 Bens Soft Pretzels Franchise Disclosure Document, the initial term for franchise agreements beginning in June 2018 is five years. After the initial five-year term, franchisees have the option to renew the agreement twice, each for an additional five years. This means that a franchisee could potentially operate their Bens Soft Pretzels location for a total of 15 years under the franchise agreement.
This change, implemented in June 2018, reduced the initial term from seven years to five years. Franchise agreements prior to this change had an initial term of seven years with two renewal options of seven years each, totaling a possible 21-year term.
For prospective franchisees, the shorter initial term may be seen as a benefit, providing more flexibility and a quicker opportunity to reassess their business venture. However, it also means that franchisees will need to consider the renewal process and associated fees sooner than those with older agreements. Each renewal option requires an additional fee, which franchisees must factor into their long-term financial planning.