Tim Horton’s Franchise: Information and Costs

From Simple Coffee and Donut to a Variety of Food Items

The Tim Horton’s franchise network started off with a single location in Hamilton, Ontario in 1964. The restaurant was actually named after one of its owners, Tim Horton, a National Hockey League star. Originally, Tim Horton’s franchises sold donuts and coffee. The restaurant became very popular with Canadian customers after the introduction of its two specialty donuts, the Dutchie and the Apple fritter. Throughout the 1970s and 1980s, more and more items were added to the menu; most were treats, but sandwiches and soups were eventually included. Tim Horton died from a car accident in 1974 but the franchise continued to remarkably expand and develop in honor of his name. More franchises were opened in the US and Canada over the years.

Learn More from a Tim Horton’s Franchise Review

In the US alone, there are about 350 Tim Horton’s franchises and in Canada, there are more than 2,750 operational locations. The company’s operations in the latter are more than 95% franchise-owned but have the same goal in mind for operations to the south of the border. In 1995, Tim Horton’s agreed to merge with Wendy’s International, Inc. This move helped boost the company’s growth and expansion in the US. Almost all US-based Tim Horton’s franchisees are located east of Mississippi, New York, Michigan, Ohio, New York, Massachusetts, and Pennsylvania. The company has consistently showed a strong growth over the past several years. In the first quarter of 2009, the company’s corporate figures show sales amounting to $507 million. This is a positive 10 percent increase over the same period in 2008. In addition, same-store sales also grew by 3.4 percent in Canada and 3.2 percent in the US. There are 28 new franchises that opened in the first quarter of 2009, 20 of which are located in Canada.

Tim Horton’s Franchise Cost and Other Details

A Tim Horton’s franchise for sale has an initial franchise fee of $35,000. The estimated total investment cost ranges between $400,000 and $675,000. To acquire a franchise, one must have a minimum of $144,000 available and an additional $50,000 for operating capital. Included in franchise information are details about its franchise incentive program. This program offers short-term financing on equipment, indoor signage, furniture, and other store fixtures. The program is designed to offer franchisees a financial break. A Tim Horton’s requires $20,000 down payment commitment, with the remainder stated on a promissory note. For the first two years of operations, the royalty fees are lowered from 4.5 percent to 2.5 percent of the store’s gross income. Rent is also lowered by one-half percent. By the end of the two-year period, the promissory note also matures and requires payment. It is expected from the franchise owner to set aside money from the two-trice cuts and to use this money to pay off the promissory note. Furthermore, there is a four percent advertising fee, which remains the same throughout the entire franchise contact. The franchise agreement enforces a 10-year contract, and an option to renew for another 10 years. A franchisee may not be given location exclusivity, but the parent company ensures that any old or new operations in the area won’t affect the sales and growth of existing sites.

Extensive Training for Tim Horton’s Franchisees

The company’s training center is located in Oakville, Ontario. This is where franchisees receive extensive training on how to run or manage their business. All new members of the franchise undergo training for eight weeks. The facility in Ontario includes classrooms and a fully operational store. During the training, proper food handling, hygiene processes, store equipment maintenance, and employee relations are given emphasis. Once the training is completed, the corporate office will send a store-opening crew who will remain on hand with the franchisee’s operations for two weeks.

Source by Brian Ernst