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Tim Hortons Franchise Cost & Fees

Date of Incorporation: 1964

Franchising Since: 1964

U.S. Headquarters: Dublin, Ohio

Country of Origin: Canada

 

Description: Tim Hortons is a Canadian fast-food restaurant known for coffee and doughnuts. Tim Hortons Inc. engages in the development and franchising of quick-service restaurants. It primarily offers premium coffee, flavored cappuccinos, specialty teas, home-style soups, sandwiches, baked goods, and donuts.

 

Franchise Offer:  The Franchise Agreement grants franchisees the right to open one of the following three types of retail stores:

  1. Standard Shop: A Standard Shop is the typical Tim Hortons store. It produces, merchandises, and sells a variety of baked goods, such as donuts, cookies, muffins, tarts, as well as coffee and other beverages. Most Standard Shops also offer a variety of soups, chili, and sandwiches. The Standard Shop also typically includes a drive-thru facility.
  2. Kiosk: The versatility of kiosks allows them to be installed in almost any type of location or area. There are generally three types of kiosks, namely, (i) a built-in kiosk; (ii) a self-serve kiosk; and (iii) a full service cart. Kiosks are generally located within another facility or institution such as retail stores, universities, gas stations, hospitals or airports. The built-in kiosk is designed to accommodate any product format but is best suited for a full menu line, including coffee, baked goods, soups, sandwiches, and chili. The self-serve kiosk is typically located within grocery stores and gas stations, offers coffee and a limited selection of baked goods, and occupies approximately six feet of counter space. The full service cart is modular and can be modified to suit the size, location and consumer demand of its location. It can accommodate one or more coffee stations, a full baked goods line, and/or a soup/sandwich/chili station. In certain limited circumstances, kiosk owners may be required to supply kiosks with all necessary products or make arrangements to obtain their goods from a local franchisee.
  3. Drive-Thrus: Drive-Thrus are generally a free-standing building of either brick or modular construction, and typically serve customers in their vehicles from the Drive-Thrus' windows. Drive-Thrus can be built to allow customers to enter the building to purchase products, or contain, very limited seating.

 

Financial Assistance: Except for Kiosks located at institutional sites the franchisee typically will lease/sublease your Shop premises location from the franchisor or an affiliate. The franchisor does on occasion and in its discretion allow franchisees who have its prior approval to arrange for their own lease or ownership of property where the Shop premises will be located. The franchisor also has made arrangements with PNC Equipment Finance, LLC (PNC) to offer a Shop financing program to qualified borrowers. Franchisees of the Tim Hortons system are eligible for expedited and streamlined SBA loan application processing through the SBA's Franchise Registry Program.

 

Training and Assistance: All franchisees and Operators must attend and satisfactorily complete Tim Hortons’ initial training program before they may open their Shop. Tim Hortons will provide you with training, instructors, a training manual, and other materials without charge. For Standard Shops and Drive Thrus, the location of all classroom instruction is Tim Hortons’ training center in Oakville, Ontario, Canada which is operated by its affiliate TDL. The location of the first phase of the on-the-job training will be in Oakville, Ontario in a fully operational Shop, and in conjunction with the classroom training. The final two weeks of the on-the-job training will occur at a Shop located in the United States. The training program for Kiosks focuses on customer service and familiarity with the Tim Hortons System. The location of both the classroom and on-the-job training is the training facility in Oakville, Ontario, Canada that is used for the Standard Shop and Drive-Thru training.

 

Territory: The franchisee will not receive an exclusive territory. The franchisee may face competition from other franchisees, from outlets owned by Tim Hortons, or from other channels of distribution or competitive brands controlled by Tim Hortons.

 

Term of Agreement and Renewal: The term of the franchise agreement is typically 10 years, less one day, after the Shop opens for business, except for Kiosks, whose terms are usually five years less one day. All Shops except Kiosks may be renewed for two renewal terms of five years each, subject to contractual pre-requisites. Renewals for Kiosks vary depending upon location.

 

Obligations and Restrictions: The franchisee must (i) faithfully, honestly, and diligently perform your duties in connection with, and devote his or her entire working time, labor, skill, and best efforts to, operating the Shop; and (ii) reside in the United States at a location no farther than 30 miles from the Shop. The franchisee cannot delegate this responsibility except in very special circumstances and subject to the franchisor’s prior approval, such as if the franchisee is a large corporation. If the franchisee is an Institutional Kiosk franchisee, the manager must be fully trained by Tim Hortons and act in the same manner as described. All sales must be made at the franchisee’s Shop premises. The franchisee may not sell any goods or services from or to any location other than his or her Shop premises. 

 

Estimated Number of Units: 4,305

 

Investment Tables:

Initial Investment:

Standard Shop

Name of Fee Low High
Initial Franchise Fee $35,000  $35,000
Real Estate Taxes, Personal Property Taxes and CAM Charges  $2,400  $40,000
Equipment $399,000  $578,953
Training $4,800  $6,400
Start-up Supplies and Initial Inventory $15,000  $22,000
Professional and License Fees $1,500  $3,000
Design and Construction Assistance Fees $0  $25,000
Insurance  $2,500  $21,500
Initial Advertising and Promotion  $2,500  $2,500
Security Deposits $0  $10,000
Special Shop Development Expense $0  $100,000
Additional Funds $20,000  $20,000
ESTIMATED TOTAL  $482,700  $800,506

 

Kiosk

Name of Fee Low High
Initial Franchise Fee $5,000  $35,000
Real Estate Taxes, Personal Property Taxes and CAM Charges $800  $11,000
Equipment  $52,937  $398,277
Training  $0  $6,400
Start-up Supplies and Initial Inventory  $1,000  $22,000
Professional and License Fees $1,500  $3,000
Design and Construction Assistance Fees $0  $25,000
Insurance $150  $15,000
Initial Advertising and Promotion  $0  $10,000
Security Deposits $0  $10,000
Special Shop Development Expense  $0  $100,000
Additional Funds $20,000  $20,000
ESTIMATED TOTAL  $81,887  $647,177

 

Drive Thru

Name of Fee Low High
Initial Franchise Fee $35,000  $35,000
Real Estate Taxes, Personal Property Taxes and CAM Charges $2,300  $10,000
Equipment $319,000  $415,325
Training $0  $6,400
Start-up Supplies and Initial Inventory  $8,000  $22,000
Professional and License Fees $1,500  $3,000
Design and Construction Assistance Fees $0  $25,000
Insurance $150  $15,000
Initial Advertising and Promotion  $1,500  $1,500
Security Deposits $0  $10,000
Special Shop Development Expense $0  $100,000
Additional Funds $20,000  $20,000
ESTIMATED TOTAL $388,800  $663,225

 

Other Fees:

Type of Fee Amount
Royalty 4.5% - 6% of Gross Sales or more under limited circumstances.
Advertising Contributions 4% of Gross Sales.
Audit by Tim Hortons Costs of audit plus interest.
Additional training Cost to attend additional training such as transportation, food, and lodging, as well as a materials fee.
Transfer Fee 5% of the full purchase price.
Indemnification Will vary with circumstances.
Securities offering by franchisee $25,000
Maintaining Shop premises in good repair Varies
Refurbishing Shop Varies
Lease for Shop premises Varies, but typically between 8% and 8.5% of Gross Sales.
Reorganization of your business The franchisor’s reasonable legal and administrative expenses incurred in processing changes resulting from the reorganization of the franchisee’s business structure.
Nestle Milano Espresso Machine Equipment and Maintenance Fee $165
Real estate and personal property taxes Varies
Insurance Varies
Utilities Varies
Common Area Maintenance Varies
Smart Store charges Varies
Approving Suppliers Requested by Franchisee Varies

 Date of FDD: 2013

The above information has been compiled from the FDD of Tim Hortons.
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