Tim Hortons franchise | How to start? | Investment cost & fees.

Tim Hortons Franchise is Canada’s largest chain of restaurants with 4,613 locations across nine countries. The menu features tea and coffee hot and cold drinks as well as snacks and donuts. In this post we are going to see how to start a Tim Hortons franchise?

Hortons restaurant franchises offer exciting opportunities to run a successful business. When purchasing an Tim Hortons franchise, an owner gets the support of the franchisor, along with a set of education, franchise costs and profit balance guidelines as well as a proven strategies for management and marketing.

How do you open one of the Tim Hortons franchises available for sale? Look through the list below of Tim Hortons’ franchise requirements and investment details that includes all franchise fees.

You can also select the best format for you. (Official website of Tim Hortons franchise)

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About Tim Hortons franchise

The company was established around 1964, in Hamilton, Ontario, by Canadian hockey players Tim Horton and Jim Charade after a first project in the hamburger industry.

It was in 1967 that Horton joined forces with an Investor Ron Joyce, who assumed the management of the business after Horton passed away in 1974.

person performing coffee art
Photo by Chevanon Photography on Pexels.com

Joyce increased the size of the chain to a multi-billion-dollar franchise. Charade was let go in the year 1966, but briefly returned in the year 1970 and 1993 until 1996.

On the 26th of August on 2014 Burger King agreed to buy Tim Hortons for US$11.4 billion. The restaurant became a subsidiary of Canadian Holding Company Restaurant Brands International, which is owned by the Brazilian investment company 3G Capital.

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Tim Hortons franchise cost

The process of establishing an Tim Hortons franchise requires heavy investment. New franchisees often face challenges with raising money, earning the money they earned tax-free, finding an appropriate site, and many more aspects.

The initial investment required to set up the up of an Tim Hortons franchise is as like:

Initial Franchise Fee Initial Franchise Fee: $25,000-$50,000

Equipment from $18,000 to $435,000

The Professional Fee and the License Fee: $1500 to $10,000

Revenue: 4.5 6 percent of sales gross or more in certain circumstances.

Advertising Contributions 4 percent of the gross sales

Minimum Net Worth – US$ 1500,000

Minumum Liquid capita l-US$ 500,000

in the United States, the total amount of investment required to begin an operation like the Tim Hortons Restaurant is somewhere between $680,900 and $1,906,300.

It’s an enormous investment, and the return on Investment for the first few months aren’t known to be particularly high. It isn’t always easy to make money in the initial years, until your branch is one of the top franchises.

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Initial Training Cost

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You must complete and successfully complete Tim Hortons Initial training program prior to being able to start your Franchised restaurant.

The price for this course is between $2,000 and $2,500 depending on whether you are a brand new or existing franchisee as well as the conversion rate between USD and CAD.

The training costs are due prior to the training is completed and cannot be refunded. In certain circumstances Tim Hortons can waive the cost of training for franchisees with specific franchises based on their particular circumstances and their experience.

  1. Equipment Fixtures, Signage, and Equipment from $50,000 to $435,000 in the Standard Shop and $18,000 to $70,000 for a non-standard Shop

Apart from the first franchise cost, it’s likely that you’ll have to make additional payments in the form of Tim Hortons or its affiliates prior to the opening of an Franchised Restaurant in order to acquire various fixtures, equipment and signs that need to be purchased through the Shop prior to its opening.

Tim Hortons franchise

If you are looking for an Standard Shop, these items can range in price between $50,000 and $435,000 and for a non-standard Shop between $18,000 and $70,000.

Unless the item that you received is defective or is determined by Tim Hortons to not be necessary the amount is non-refundable. They must be paid on receipt of the invoice for the equipment.

  1. Development Fee 25.000 multiplied by number of Franchised Restaurants that you will develop

If you sign the Area Development Agreement with Tim Hortons, you will have to prepay an amount of the Franchise Fee ($25,000) multiplied with the amount of franchised restaurants you agree to build.

The amount is payable in installments, with the one installment to be due due at the time of signing the Area Development Agreement. The remainder of the amount is payable in installments over a period of 4 years. It is considered fully earned after it is the amount is paid.

This amount cannot be refunded, but the $25,000 will be applied to the current franchise fee in the beginning for each Franchised Restaurant that is opened in your name (or your affiliate or subsidiary) in accordance with the Area Development Agreement until exhausted.

If you fail to meet the requirements of the Area Development Agreement, then any amount remaining is due in the direction of Tim Hortons.

The agreements typically are granted to only sophisticated experienced franchisees with years of experience.

  1. Revenue: 4.5% to 6 percent of Gross Sales
  2. Advertising Contribution 4.4% of Gross Sales
  3. Costs of Audit and Interest cost of audit, plus interest
  4. Additional Training: the cost for additional training, including transportation, food and accommodation, as well as a materials cost. The cost of materials will not exceed the amount of $1,000.
  5. Transfer Fee 5 percent of the total purchase price
  6. Indemnification: may vary based on the circumstances
  7. Taxes: amount assessed to Tim Hortons by state, federal local, and state tax authorities for any charges or other amounts owed from you Tim Hortons
  8. The maintenance of the shop premises to be in good Condition: It varies.
  9. Refurbishing shop: different
  10. Lease for franchised restaurant premises It varies, but is between 7 to 8.5 percent of Gross Sales for a Standard Shop , and up to 13 percent of Gross Sales for non-standard shops. You must also pay for flow through charges like CAM property taxes, insurance, as well as Tim Hortons’ administrative expenses of billing.
  11. Reorganization of Your Company: Tim Hortons’ legal and administrative expenses that result from processing changes that result from organization of your business.
  12. Espresso Machine and Equipment: $11,000 to $15,000. It is also necessary to pay the vendor to set up as well as calibrate your Espresso machine and equipment, which is estimated to range between $600 and $900. It is also possible to sign an annual maintenance contract with the vendor, at an estimated annual expense of about $985.
  13. Smart Store Costs: $450-$1,050 per month
  14. Approving the Suppliers requested by You: There are a variety of
  15. Costs for Inspections and Expenses: Costs and expenses for inspections vary
  16. Replenished Franchise Fee Credit same amount as the Franchise Fee Credit
  17. Development Failure Payment $4,000 multiplied by number of Shops you are unable to open as per your development plan
  18. Renovation default payment $4,000 per month for each shop that you buy that is not renovated on time
  19. Tim Horton Children’s Foundation: The Tim Horton Children’s Foundation varies
  20. Background Check Fee Between $280 and $15,000
  21. U.S. applicants range typically between $280-$1,000. International applicants can range between $5,000 and $15,000.
  22. Brand Damage Fee the amount of the subsequent installment of franchise fees that you had to pay to Tim Hortons under the Area Development Agreement prior to the day of expiration

In the event that Tim Hortons terminates your Area Development Agreement prior to expiration. Tim Hortons can also retain any franchise fees initially that are due pursuant to the Area Development Agreement.

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Selection Process of Tim Hortons franchise

The process of selecting prospective Tim Hortons restaurant owners is an important decision, requiring an extensive process of interviewing and approval.

It is not always the case that everyone who applies to franchises meets the qualifications to become an Tim Hortons restaurant owner.

We work to ensure that every restaurant’s owner has the determination to succeed, managerial skills as well as financial resources and commitment that is needed in today’s highly competitive marketplace.

We are very proud of our committed restaurant owners across the chain who embody and follow our Tim Hortons’ principles and guidelines of operation on a regular basis.

We select owners and operators who are hands-on who are able to dedicate their time on a continuous basis and for a long time to the operation of their establishment.

Our experience during our several years in operation shown the importance of a spousal staff or a group of two or more family members, is the most effective way to run the operation 24 hours a day.

In reality 95 percent of our restaurant proprietors are family-owned businesses.

We do not give area or regional development rights. We believe in the development of our system of restaurant owners or restaurant for restaurant.

We will grant additional restaurants only to restaurant owners who demonstrate that they are successful in running and managing their establishments.

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Training and Assistance

New restaurant owners take part in a seven-week intensive course of training at the Tim Hortons University, located in Oakville, Ontario, at the headquarters of our affiliate , The TDL Group.

The campus is equipped with classrooms as well as an operational restaurant offering trainees a training in the production of the entire range of Tim Hortons products.

The emphasis is on food handling and hygiene practices as well as team member relations. maintenance of equipment and security measures.

After completing the initial training course and passing the initial training program, you’ll be required to work between 10 and 15 hours doing “on-the-job training” at a fully operational Tim Hortons, located in the same location as your planned restaurant.

We serve the owners of our restaurants from in our Dublin, Ohio office, which is home to a team of highly skilled and committed experts who offer operations and training and real estate development construction accounting, human resources and franchising, information technology and marketing assistance.

Our District Managers serve as the direct contact to the owners of our restaurants through their frequent visits to the restaurant.

Alongside their main task of providing knowledgeable and informed feedback and guidance they also ensure that our standards for quality cleanliness, value, and guest service are regularly fulfilled in all places within their respective districts.

Tim Hortons franchises spread rapidly and eventually took over McDonald’s as Canada’s most significant food service company.

The chain established nearly twice as many Canadian restaurants as McDonald’s in 2005. And its system-wide sales outstripped the sales from McDonald’s Canadian operations by 2002. McDonald’s was responsible for 22.6 percent of all revenue from fast food outlets across Canada during 2005.

In response to pressure from the major investors Peter May and Nelson Peltz In the latter half of the year 2005 Wendy’s made an announcement that it will sell 15 to 18% of its Tim Hortons operations in an initial public offering.

The deal was concluded on March 24 on the 24th of March, 2006. It then announced it would sell the remaining stake to shareholders at the end of the year.

Wendy’s stated that it was experiencing increasing competitiveness between its two chain, as well as Tim Hortons’ increasing self-sufficiency as the main reasons behind its decision.

However, the company was under pressure from shareholders to make an announcement due to the strength and the financial viability that Tim Hortons. Tim Hortons brand.

The shares of the company started trading in March of 2006 through the company’s first public offering at approximately CA$27 per share, which raised more than $700 million on the initial day of trading.

On September 24 on the 24th of September, the year 2006 ended, Wendy’s removed the remainder of its shares in Tim Hortons, by distributing the remaining 82% of its shares to shareholders.

On the same day Tim Hortons was added to Canada’s stock market benchmark indicator called The S&P/TSX Composite Index as well as to the S&P/TSX 60.

As of March 2006 Tim Hortons commanded 76% of the Canadian bakery market (based by the volume of people they served) and was the largest player in its share of the Canadian cafe market (compared to Starbucks at second position at 7percent).

Lawsuits filed against Tim Hortons franchise

Tim Hortons has been facing legal charges of a business scheme by their US franchisees. It is the Great White North Franchisee Association USA Inc is an organization that represents the majority of American Tim Hortons franchisees.

They have filed a lawsuit on behalf of Tim Hortons and its parent company, Restaurant Brands International (RBI) and alleged that they engaged in unfair practices, selling their products at more expensive prices.

Tim Hortons has also faced a class action lawsuit in Quebec concerning the data collection of customers through their app for ordering food.

The class action lawsuit may create some doubt among customers of the company’s reputation. Additionally, the notion of the over-priced supply is a significant reason not to consider purchasing a franchise since it can result in lower or no revenue to franchisees.

Pandemic Impacts on Fast-Food Chains

Covid-19 caused a major influence on restaurants. A lot of restaurants were closed due to the outbreak because owners struggled to pay mortgages and operating their restaurants.

When the lockdown was in place restaurants were closed for several months. After lifting lockdowns, the restaurants were in a state of slow recovery.

Tim Hortons franchisees also faced the consequences of the pandemic very severely. A few reports indicate that there was a decline in profits of 37% when compared to the prior year.

The company has picked over with time, but isn’t at its maximum potential. The idea of opening a brand new franchise at this time isn’t an ideal idea, especially when established franchises that are successful struggle to make a profit.

Merger Along With Burger King

Following the union of Burger King in 2014, Tim Hortons sales decreased 10 percent per store. A lot of Canadians were angry about the fact that Tim Hortons was selling unhealthy fast food, similar to Burger King and moving away from their Canadian origins.

According to sources, Tim Hortons parent company RBI tried to intimidate some franchisees who brought a lawsuit against them, to quit the companies.

The method by which they tried to intimidate franchisees was through the issue of default notices, which is the franchisor’s legal right to seize the franchisee’s restaurant.

Additionally, in the year of 2018, RBI shut down four restaurants owned by David Hughes.

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