Tim Horton Franchise Cost, Fees, Profit Margin and Opportunities
The Tim Horton’s group of restaurants was established in Hamilton, Ontario, Canada, in 1964. The chain’s focus on premium quality, ever fresh product, value, tremendous service and community interaction and leadership has seen it to grow into the biggest quick service restaurant chain of stores in Canada.
Tim Horton specializes in serving freshly brewed coffee, pastries and home-themed lunches. Initially, the first Tim Hortons Restaurant served up only two meal types - coffee and donuts. The choice of donuts was underlined by two original Tim Hortons recipes- the AppleFritter and the Dutchie.
These variants became the most notable donut choices in the 1960's, and remain just as popular today. In addition to our standard stand-alone Restaurants, Tim Hortons also operates from shopping malls, expressway outlets, colleges and medical facilities, assuring prominent visibility and brand reinforcement for the group.
Most standard Tim Horton’s sites offer 24-hour drive-through service, serving consumers on the move. Tim Hortons, at present, franchises only stand-alone Restaurants. As at June 30th, 2013, Tim Hortons operated 4,304 Restaurants, comprising 3,468 in Canada, 807 in the United States and 29 in the G.O.C( Gulf Cooperation Council)
The Franchising Program
Franchise Cost ranges from 480000 to 510000 USD plus all obligatory taxes
Additional Working Capital which covers start-up costs starts at 50,000 USD (non-borrowed). At least 153,000 USD of the franchise cost must be non-borrowed (cash or liquid assets) as well as the 50,000 USD working capital that must also be unencumbered. The remaining sums may be sourced through various financing schemes offered by the investment banks, consequent upon the candidate meeting requirements for borrowing.
The specific cost of a Tim Horton’s franchise depends upon the building size and the standard furnishings and the machinery to be installed. Some times the cost of a Tim Horton’s franchise may surpass 510,000 USD in other locations due to steeper development costs. The cost of a franchise comprises the following:
•All equipment and machinery, furniture, display equipment and bill boards.
• A Seven (7) week training course in the Oakville, Ontario, at Tim Horton’s University
•A Restaurant launch crew/Manager of Operations Standards (MOS) to provide assistance and guidance with the opening of the Tim Horton’s Restaurant (for a maximum period of a forth night)
•The use of Tim Horton’s Manuals and instructional materials
• The right to use registered trademarks and trade names
•Support and consultancy from Franchise personnel, who will make at the disposal of the franchisee, their extensive knowledge of the food service sector
Not included in the cost of the franchise:
•The Physical structure
•The property that the Restaurant is constructed on
The duration of the License agreement runs for 10 years and there are clauses that allow for renewals of a further period of 10 years.
In addition to the initial investment costs, recurrent payments (plus applicable taxes) comprise the following:
• A weekly royalty fee of 4.5%, calculated on gross sales for the duration of the agreement.
• A monthly rental that is computed at 8.5% of monthly gross sales
• A monthly advertising levy of 4% on gross sales for the duration of the license
The awarding of a new Tim Horton’s Franchise is an important exercise involving a thorough and detailed interview/approval process. For the mutual benefit of both parties(Franchisor and franchisee) ,the selection process ensures that each Franchisee possesses the necessary entrepreneurial grit, management skills, financial wherewithal and the determination required in today's competitive market place.
In the Tim Horton’s system, the selection of the most suitable people followed by a comprehensive training course, as well as recurring operational and marketing support, has enabled the chain to continue to expand its operations and retain the status as Canada's leading coffee and baked pastries group.
New franchisees undergo an in depth 7- week training course at the Tim Horton’ s University, situated next to the head office, at Oakville, Ontario, Canada. The facility comprises classrooms and a fully fledged operational Restaurant, affording trainees with intensive and relevant hands-on experience in the preparation of all Tim Horton’s meals. Emphasis is placed on the handling of food and hygiene processes, Team Member work relations, maintenance of machinery and in-house security procedures.
With the head office located in Oakville, Ontario and regional offices situated at Nova Scotia, Quebec, Alberta and British Columbia, franchisees can access corporate support from on a network scale. The Canadian team n provides key functions such as operations, training, real estate development, construction, accounting, human resources, I.T, franchising dynamics and marketing.
Our Managers of Business Development (MBD’s) serve as the direct point to our franchisees through regular on-site visitations. In addition to their primary function of rendering experienced and insightful feedback and guidance, they also ensure that franchisees adhere to the Tim Horton standards of product quality and value, while observing hygienic procedures in meal preparation at all times, in their stores.