For a mature U.S. Wetzel’s Pretzels bakery in a regional mall or outlet mall, the strongest current evidence is the franchisor’s official fiscal 2025 Net Operating Income. Treat the median-to-average span of roughly $162,000 to $191,000 as a central operating-income reference, not as a guaranteed salary or after-tax paycheck.
Why HIGH: the current Item 19 directly reports a defined earnings measure for a broad 147-store franchised cohort, although transferability is weaker for new units and non-mall formats.
What does the 2026 FDD actually report?
Officially, Item 19 reports Net Operating Income—not owner salary—for 147 franchised regional-mall and outlet-mall bakeries during fiscal 2025. The disclosed median was $162,252, the average was $190,698, and the average Net Operating Income margin was 17.7% of Net Sales.
Wetzel’s Pretzels defines Net Operating Income as Gross Profit minus Total Expenses. Gross Profit equals Net Sales minus Cost of Goods Sold. Total Expenses comprise Labor, Rent, and Other Expenses. “Other Expenses” includes royalties, advertising-fund fees, advertising, utilities, insurance, licenses, permits, repairs, uniforms, and store supplies. The disclosure therefore already captures the recurring royalty and advertising burden inside the official operating result; subtracting those fees again would double count them. Source: 2026 FDD, Item 19, pp. 86–88.
Official Fiscal 2025 Benchmark Stores.
Official Average of 147 reporting stores.
Official Net Operating Income divided by Net Sales.
Official Franchised regional and outlet mall bakeries.
Derived 147 Benchmark Stores divided by 202 full-year regional/outlet mall bakeries.
Benchmark May 2024 median for food-service managers in food services and drinking places.
| Official Item 19 measure | Lowest | Median | Average | Highest |
|---|---|---|---|---|
| Net Sales | $202,871 | $937,507 | $1,078,423 | $2,825,155 |
| Net Operating Income | -$85,048 | $162,252 | $190,698 | $788,357 |
Lowest, median, and highest values are separate observations for each line item; they must not be combined into a synthetic store-level profit-and-loss statement. The wide spread demonstrates that the central figures are not a floor or ceiling.
Official fiscal 2025 average for 147 regional/outlet mall Benchmark Stores; all components reconcile to average Net Sales.
Interpretation: rent and labor are the largest disclosed operating-cost blocks. The “Other” category already includes royalties and advertising-fund fees. Source: 2026 FDD, Item 19, Table 3A, pp. 86–87.
What is a reasonable annual owner-earnings range?
A defensible planning range is approximately $110,000 to $233,000 per mature regional/outlet mall bakery, with a modeled base of about $166,000. These are independent estimates, not additional Item 19 results, and they inherit the FDD’s Net Operating Income definition and owner-compensation limitation.
The model uses the official median Net Sales of $937,507 as the central revenue anchor. Because Item 19 does not provide quartiles for the profit-and-loss cohort, the Conservative and Upside revenue cases use 80% and 120% of the median. The margin cases use the official 17.7% average Net Operating Income margin, minus or plus 3 percentage points. Those spreads are analytical assumptions, not probabilities or franchisor forecasts.
| Scenario | Revenue anchor | NOI margin | Estimated pre-tax owner benefit |
|---|---|---|---|
|
Conservative 80% of FDD median revenue; margin 3 points below official average |
$750,006 | 14.7% | $110,000 |
|
Base FDD median revenue; official average NOI margin |
$937,507 | 17.7% | $166,000 |
|
Upside 120% of FDD median revenue; margin 3 points above official average |
$1,125,008 | 20.7% | $233,000 |
Independent estimates based on the 2025 Item 19 median revenue and average Net Operating Income margin.
Interpretation: the range is driven by both sales and margin sensitivity. It is not a probability distribution, and the midpoint is not presented as the most likely outcome. Source inputs: 2026 FDD, Item 19, Tables 3A and 3B, pp. 86–88.
How does owner involvement change the result?
Owner involvement changes what the official Net Operating Income figure means, because Item 19’s Labor line excludes wages and related expenses paid to the owner. An owner-operator may therefore see the disclosed NOI as a combined owner-operator benefit: residual operating profit plus compensation for management work. A manager-run owner should evaluate residual profit only after the Designated Manager’s full payroll cost is included.
Item 15 requires either the owner or a Designated Manager to supervise day-to-day operations. That person must devote at least 40 hours per week to on-premises management, and an appropriately trained person must be present whenever the bakery is open. The FDD permits a manager-run structure; it does not support an assumption of purely passive ownership. Source: 2026 FDD, Item 15, pp. 73–74.
Illustrative owner-operator bridge using the official median NOI and the BLS median wage for food-service managers in food services and drinking places.
Interpretation: $99,212 is a derived labor-value sensitivity, not an Item 19 result. It applies only when the owner personally performs the manager role and the owner’s compensation is omitted from Labor. It excludes payroll taxes and benefits, so the cost of hiring a manager may be higher. The BLS benchmark is May 2024 and excludes self-employed workers. Sources: 2026 FDD, Item 19, pp. 86–88; BLS Food Service Managers.
What does an owner-operator receive?
An owner-operator may receive the operating benefit plus the economic value of their own management work. The official NOI can include that labor value because owner wages are excluded from the FDD Labor line. It should be labeled owner-operator benefit, not passive business profit.
What does a manager-run owner receive?
A manager-run owner receives the residual NOI after the Designated Manager’s payroll and other unit expenses are recorded. Do not add back manager wages. Obtain the actual store P&L to confirm whether the reported Labor line includes a general manager, assistant managers, payroll taxes, bonuses, and benefits.
Which operating details can move owner earnings most?
Labor, occupancy, store format, and the treatment of owner compensation are the largest disclosed earnings drivers. The official average cost structure assigns 28.9% of Net Sales to Labor, 18.6% to Rent, 19.2% to Cost of Goods Sold, and 15.6% to Other Expenses.
- Recurring franchise fees are already embedded. Current royalty and advertising-fund rates total 8% of Adjusted Gross Revenue for non-street-front, Walmart, and street-front bakery structures, although the mix differs. The advertising contribution can increase, potentially raising the combined rate to 10%. The current direct technology fee is $29.50 per week, plus supplier technology charges. Source: 2026 FDD, Item 6, pp. 34–41.
- The profit table is format-specific. Tables 3A and 3B cover franchised regional-mall and outlet-mall bakeries. They do not establish profit for entertainment-center, NTO/transit, Walmart, concession truck/trailer, or other formats described by the official franchise program.
- The cohort is mature and selected. Benchmark Stores operated for the full fiscal year and supplied profit-and-loss statements in the required format. First-year results may be materially less favorable, and excluded or nonreporting stores can change the observed distribution.
- Remote Mobile Unit economics are not cleanly separable. Item 19 states that bakery and Remote Mobile Unit sales are combined where an RMU operates with a bakery. The P&L benchmark does not provide a separate RMU profit result.
- Debt service is separate. The operating figures are not after financing principal payments. Item 10 says thefranchisor generally does not offer direct financing, apart from limited one-off circumstances. Interest treatment is not separately defined in the Item 19 NOI description and should be confirmed from the substantiation and store-level P&L.
- Personal taxes are excluded. Entity structure, state and local taxes, deductions, owner payroll, and distributions can materially change personal cash received. No after-tax estimate is presented.
What should a buyer verify before relying on the range?
The buyer should verify whether the target unit’s P&L uses the same definitions and operating structure as the 147-store Item 19 cohort. The biggest unresolved uncertainty is the mix of owner-operated and manager-run stores—and therefore how much owner labor is embedded in Net Operating Income.
- Request written Item 19 substantiation. Ask for the methodology, store-level distribution, reporting controls, treatment of owner wages, and whether the target format and geography are represented. The FTC Consumer’s Guide to Buying a Franchise explains why gross sales, averages, and cohort limitations require scrutiny.
- Rebuild the target-store P&L. Separate Cost of Goods Sold, hourly labor, manager compensation, payroll burden, base rent, CAM, percentage rent, utilities, insurance, royalties, advertising contributions, technology, repairs, merchant processing, delivery fees, and local marketing.
- Interview comparable franchisees. Prioritize regional or outlet mall operators with similar rent structures, sales volumes, market maturity, owner involvement, and Remote Mobile Unit status. Ask for normalized annual results, not a single strong month.
- Reconcile owner pay. Determine whether owner wages are excluded from Labor, whether distributions are taken separately, and whether a Designated Manager is already in payroll. Do not count the same labor value twice.
- Stress-test occupancy and labor. The official average assigns 47.5% of Net Sales to Labor plus Rent. Small percentage-point changes in those two categories can materially change annual owner benefit.
- Separate operating income from financing and taxes. Model loan interest and principal, maintenance capital expenditure, remodel reserves, and personal taxes outside the Item 19 NOI figure.