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!

88 Comments

  1. Richard on January 4, 2014 at 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.

  2. R Winklareth on January 6, 2014 at 5:21 pm
  3. Petkn on January 14, 2014 at 7:03 am

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

  4. J. on March 2, 2014 at 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.

  5. Stu on April 4, 2014 at 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

  6. JTG on May 6, 2014 at 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

  7. David on May 6, 2014 at 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.

  8. David on May 6, 2014 at 12:54 pm

    JTG** sorry auto correct.

  9. Loic on May 10, 2014 at 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

  10. David on May 12, 2014 at 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.

    • Alex on April 22, 2016 at 1:20 am

      Hi David,
      I am curious if you can answer some of my questions I have in regards to TMF? Please let me know, if your ok with that. Thanks.

  11. Loic on May 20, 2014 at 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

  12. kevin on July 19, 2014 at 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

  13. SST on July 20, 2014 at 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.

  14. kevin on July 20, 2014 at 10:35 pm

    Its a good advise.
    Thanx!

  15. jntn on July 28, 2014 at 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.

  16. SST on August 27, 2014 at 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.

  17. Armyman13 on February 24, 2015 at 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+?

    • Alex on April 22, 2016 at 1:17 am

      Hello,

      I would like to own a TMF. Any comments and help will be appreciated.
      I only have the 250K, would that be enough to fill out an application and see if I qualify? Please help. Thanks.

  18. Dave on April 30, 2015 at 3:12 pm

    What I was hoping to gain from this article was demystifying the financial lingo. How exactly is unencumbered 144k is required etc. All I found here is quotes from the actual website and rewording of identical info without actual explanation.

  19. chloe on June 16, 2015 at 7:48 pm

    encumbered means cash/liquid assets

  20. Shaheed on February 3, 2016 at 4:03 am

    Hi, I am from Auckland,New Zealand came to Vancouver to visit families .I went to a Tim Hortons and am very impressed about your coffee .So i am willing to have a Tim Hortons franchise in New Zealand .
    So please kindly inform me how to setup .
    Your kind attention to my above request will be much appreciated

    With Best Regards
    Shaheed

  21. Virginia on February 18, 2016 at 1:42 am

    I was just wanting to know if I am able to start a tim horton’s in Asia? What it takes to make this happen?

  22. Paramveer Singh on May 26, 2016 at 9:53 pm

    Hi I am interested in buying Tim Horton. So Please suggest me how i can apply for that application.

    Thanks

  23. Paul H on October 21, 2016 at 4:18 pm

    I heard that as a franchisee you can not list your Tim Hortons business for sale when you’re ready to retire. Corporate has the first right of refusal to purchase it at depreciated value of assets. Even if you had a qualified franchisee or a huge investor to buy you out, Tim Hortons corporate will not match the same offer. They have a clause in their contract that prohibits that. Can somebody tell me if this is accurate or if there is a way around it?

  24. terry on February 27, 2017 at 12:09 pm

    does not include the cost renovate every 4-5 years paid by the owner
    min $500,000

  25. terry on February 28, 2017 at 9:35 am

    First yes Tim Horton’s does have to approve who you sell to there is a clause in the lease, usually means they will buy at a lower amount from you and then resell
    here is a breakdown all are at the lowest amount
    17 % rent royalties advertising (not including maintenance costs paid yearly)
    30 % labour
    32 % food and paper
    7 % utilities
    2% – 4% wastage not everything sells

    does not include management payroll (supervisors, manager and yourself)
    again does not include the cost renovate every 4-5 years paid by the owner
    min $500,000

  26. Passivecanadianincome on February 28, 2017 at 11:56 pm

    Great post, I have always wondered stuff like this. The lineups at drive trough’s are insane. Seems like a money press. I would hate the lack of power tho. More strawberry vanilla doughnuts! haha

  27. Mike on April 25, 2017 at 3:10 pm

    what are any owners general hours that you have waged out per week for your employees at one store? looking for some info on Mark Holly franchise owner in Minnesota area.

  28. Xs on November 11, 2017 at 1:33 pm

    Hey there is a mistake in the royalty percentage math. The first one is 4.5% weekly which means around 18% monthly + 8.5% + 4% = 30.5% per month.

    • D on January 8, 2018 at 6:16 pm

      No. 4.5% per week does not equate to 18% monthly. According to your math the 4.5% weekly would be 234% per year (52 x 4.5%).

      If the fee is 4.5% per day, at the end of the week it would total 4.5% of the week’s earnings. Same for the month or year.

  29. Kris on January 7, 2018 at 2:18 am

    Lol at people asking about how to be a franchise owner. Clearly you don’t have the tenacity to become a franchise owner if you can’t even look up the website on your own.

  30. Wachucha on January 25, 2018 at 2:54 am

    The profitability of an average Tim Hortons store in Ontario is badly affected by the minimum wage hike. The stores operating at lower margins would probably go in losses if prices are not increased in near future. Consumers have disliked TH Franchisees cutting staff benefits to deal with this overwhelming increase in labor cost. Whether it damages the brand equity is to be seen in future.

  31. Harvey McQuestion on May 1, 2019 at 12:49 pm

    More input please

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