Operations of a Franchise Firm

Auntie Anne's Hand-Rolled Soft Pretzels: A franchising opportunity

Why is it interesting to you?

Auntie Anne's Hand-Rolled Soft Pretzels offer 'comfort food' without the unappealing grease of a burger. Increasingly, franchises that offer something outside of the conventional burger 'box' are becoming more popular. Auntie Anne's Hand Rolled Soft Pretzels are a great opportunity to embark upon a franchise that offers the cache of homemade baked goods. The pretzel company was founded by a couple that wished to raise funds for counseling Amish families, and has continued in its spirit of public-spiritedness towards all its employees and customers.

What should be produced?

As its name suggests, the company specializes in handmade, large traditional Amish pretzels. The pretzels come in a variety of sweet and savory flavors, along with various dipping sauces. It also offers pretzel hot dogs and pretzel nuggets and sticks. A wide variety of cravings and flavors are satisfied by Auntie Anne's, spanning from breakfast to lunch, snacks to light meals.

How should goods and services be produced?

Pretzels are baked on-premises at franchise stores. The preparation, display, and components of the pretzel must meet company specifications, as in the case of all franchises which wish to ensure a consistent customer experience. Staff is also trained within specific protocols, in terms of how to greet and interact with customers. The types of pretzels may vary with locations and the demands of the core customer base.

For whom should goods and services be produced?

Location will largely determine to whom the pretzels will be offered. Auntie Anne franchises are often located in shopping malls, for example, which tend to offer snack-based foods designed to please an adolescent palate. These franchises may profit by stressing the company's sweeter offerings, versus independent stores which might be more apt to showcase the lunch-appropriate offerings, such as the pretzel dogs. Pretzel dogs and the traditional lemonades offered by the franchise might be popular at concession stands and sporting events.

What are some of the costs associated with starting a franchise (Auntie Anne)?

The first cost is the franchise fee: "Most franchise fees are between $20,000 and $50,000" (Daszkowski 2012). Legal fees, build-out costs, buying the required amount of inventory for every franchise, supplies, and the need for working capital must all be taken into consideration (Daszkowski 2012).

Define opportunity cost in your own words

An opportunity cost consists of the opportunities forsaken when making a particular decision. Human choices are finite in nature: we cannot have everything. Choosing to go to college full time, for example, extracts the opportunity cost of four years of earned income in the workforce, and four years' full-time work experience.

What are some of the opportunity costs of purchasing a franchise?