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How Much Does a Tim Hortons Franchise Cost and Profit?


With Tim Hortons being one of the most successful Canadian franchises, I’m willing to bet that you have wondered about the Tim Hortons business.  that is specifically how much revenue/profit a single location generates and how much it costs to start one up.

While it’s apparent that owning a Tim Hortons is like having a money printing machine, most do not realize the costs involved, and how much an owner really takes home.  When doing my research on the costs, I was surprised with how much the parent company takes off the top.  I always thought that franchises had to pay in about 8%-9% royalty which includes marketing.  But the numbers  that I’ve been coming up with is in the range of 17% – 19% on gross sales!  Then I realized that the Tim Hortons parent company actually builds the property and owns the land, so a large portion of the total royalty expenses is the rent charge.

How much does a Tim Hortons Franchise Cost?

As with any franchise, since the franchisee is getting a business that has track record of success, there is an added layer of cost.  Not only do they need to cover typical operating expenses, Tim Hortons franchises need to pay a weekly royalty, monthly marketing fee (similar to royalty), and monthly rent.  If that wasn’t enough, the start up costs are quite high.  As mentioned, Tim Hortons will build the location, but the franchisee is responsible for the startup equipment and the initial franchise fee.

Here is a tally of the ongoing costs from the Tim Hortons website:

  • a weekly Royalty fee of 4.5% of gross sales for the term of the License;
  • a monthly Rental fee (which is the greater of a fixed minimum rent or 8.5% of gross monthly sales);
  • a monthly Advertising levy of 4% of gross sales for the term of the License.

This works out to be a 17% of total gross sales per month – that is before any other expenses are paid!

Here are the startup costs:

The cost of a full Canadian franchise varies from $430,000 to $480,000* (CDN$) (plus all applicable taxes). At least $144,000 of the franchise cost must be unencumbered (cash or liquid assets), in addition to $50,000 in working capital (also unencumbered). The remaining amount may be financed through the chartered banks, upon approval of a franchise.

Included in the cost of a franchise is the following:

  • all equipment, furniture, display equipment and signage
  • 7-week training program in the Oakville, ON Tim Hortons University
  • a store opening crew to assist in the opening of a Tim Hortons restaurant (for a maximum period of two weeks)
  • the use of all Tim Hortons Manuals
  • right to use the Trademarks and Trade names
  • support from the head Office personnel

I’ve read on the U.S Tim Hortons site that they offer an incentive program for new franchisees.  It doesn’t appear to be available to Canadians, but the offer is basically a reduced royalty for 24 months (4.5% -> 2.5%).

How much does a Tim Hortons Franchise make?

Information on franchise profits was a little harder to come by as it’s not openly shared information.  From my digging around, I’ve read that average franchisees (in 2006) made around 16%-20% profit after all expenses but without real numbers for backup.  However, the big court case between franchisees and the parent company in 2011 made some of the numbers public.

In 2008, the average Tim Hortons franchisee profited $265k after all expenses.  We don’t know the actual average revenue numbers for 2008 to earn the $265k, but they disclose that between 2002 and 2008, the average franchise earned (before interest and taxes) $1.5M which fits franchisee profit range of 16%-20%.

If you know more about the Tim Hortons franchise, please share!

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FrugalTrader About the author: FrugalTrader is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

{ 67 comments… add one }

  • Richard January 4, 2014, 5:41 am

    Hi I’m new to Canada and have heard a lot of buzz about Tim Horton’s. In fact I even heard its opening in Kuwait where i came from and has already opened in Oman. Dubai has several I believe.

    Wanted to know the average expected waiting period to own one. I have 500k start up capital, International medical grad (foreign family physician) 28 years old and little business background?! (My dad owns two spas)
    Spouse has the same background but no biz experience.

    I reside in Barrie Ontario but am willing to relocate.

  • R Winklareth January 6, 2014, 5:21 pm
  • Petkn January 14, 2014, 7:03 am

    Joesnapple:; 978k would that be profit or gross?

  • J. March 2, 2014, 7:00 pm

    David, thanks for kindly sharing your input. I’m in the application for a Tim Horton’s. I’d love to ask you some questions via email if that’s possible. Business returns are more real than Stock market investments, IMO, and I’m a stock investor for 10 years and worked in NYC.

  • Stu April 4, 2014, 8:12 pm

    Hello, I have the business skills and finances to invest in a tim franchise (or two). My question is, how long does it typically take once you have made a request for a franchise and it materializing? Any input would be great. Thank you

  • JTG May 6, 2014, 2:16 am

    @David or any other THF owners.

    Is the $400k or average $256k after you pay yourself salary or before?

    I mean if the $256k is take home and you are already paying yourself $100k-150k salary. That makes a huge difference in the analysis

  • David May 6, 2014, 12:52 pm

    @JAG,

    That would be after all overhead is covered including my salary.

    If you have any further questions feel free to ask.

  • David May 6, 2014, 12:54 pm

    JTG** sorry auto correct.

  • Loic May 10, 2014, 12:59 pm

    @David

    I have been looking for a TH franchisee to talk to.
    I live in Brampton, would you mind to connect with me to talk about TH franchise plz?

    Thanks,

    Loic

  • David May 12, 2014, 2:06 pm

    @Loic

    Sure, I wouldn’t mind answering some questions,
    I don’t know how comfortable I am about leaving my email on a public forum though unless we just communicate on here, let me know.

  • Loic May 20, 2014, 1:58 pm

    Hi David,

    I shared my email but it is awaiting for moderation…
    In the meantime, I was curious to know how long is the process to be chosen as a franchisee please.

    Thanks,

    Loic

  • kevin July 19, 2014, 9:43 pm

    Hello, this is to SST.
    I’ve really enjoyed your analysis on David Franchise!
    I’m looking to get into the “SUBWAY SUB” franchise with the next 2yrs.
    I’ve done my basic preliminary reserch on it.
    However I’m in need of much more detailed info. like you’ve supplied to DAVIDS franchise.

    looking to get subway sub franchise worth about $300.000.
    What can I expect in return, with that investment, realistically!
    Thank You

  • SST July 20, 2014, 10:51 am

    @kevin: thanks, but not much analysis can be done with only one piece of data — purchase price. Please seek professional financial counsel.

  • kevin July 20, 2014, 10:35 pm

    Its a good advise.
    Thanx!

  • jntn July 28, 2014, 12:01 am

    Hi everyone my question is for David or anyone who knows the answer i would like to know how much longer is the waiting list and how many interviews you had with the TDL group before you can finalize everyting and open the restaurant .

    Thank you.

  • SST August 27, 2014, 2:23 am

    @David — how does the recent sale effect your business, if at all?

    Interesting that Timmy’s started off as a private company, went public, and has now been brought back into the folds of private equity.

    R.I.P. to yet another Canadian cum Brazilian icon.

  • Armyman13 February 24, 2015, 9:18 am

    Is there any chance of getting a tim hortons? I submitted my application got an email that I don’t qualify. I did send the email back asking why because I do meet all basic requirements. Is this only for ppl with bigger capital like 500k+?

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