Tim Hortons is a staple in Canada. Not only is it beloved in Canada, but it’s known worldwide. But what if you wanted to open one of these acclaimed franchises? How much does a Tim Hortons franchise cost in Canada?
The answer is it depends. There are various factors the company looks at when reviewing applicants. To start, it will depend on the intended location, as well as the infrastructure needed, and the type of shop you intend to build. Franchisees should budget to spend over $1 million or more, which we go into more detail below.
Tim Hortons is the largest restaurant chain in Canada, with more than 80% of people saying they visit at least once a month. With numbers like that, opening one of the restaurants seems like a no-brainer, but just how much does a Tim Hortons franchise cost in Canada?
When opening a Tim Hortons restaurant, there are two different design formats to pick from.
First is a “standard shop,” which usually includes seating for customers, a drive-thru, and ranges in size from 1,000 to 2.300 square feet. Standard shops typically have larger menus with more options.
The other choice, the “nonstandard shop” or “kiosk,” will be smaller and can have a limited menu. You might find these shops in airports or malls.
Before working on that franchise application, you should know the minimum financial requirements needed.
You will need a net worth of $500,000 and unencumbered funds (liquid cash) of $100,000. If you don’t have those two financial pieces in place, you will not gain acceptance as a potential franchise candidate.
Tim Hortons Franchise Cost in Canada Breakdown
If you meet the minimum income requirements after Tim Hortons accepts your application, you can obtain a license to start running your operations. However, you’ll need to pay a one-time nonrefundable franchise fee.
The franchise fee costs depend on your restaurant format design. The fee ranges from $25,000 to $50,000, with standard shops on the higher end and kiosks towards the bottom.
The franchise fee is due within 10 days of signing the agreement but before starting operations.
In addition to your savings and franchise fee, potential owners will incur many other costs. For example, you’ll need insurance coverage. The expense depends on your plan and coverage.
Other sizable costs include real estate taxes, equipment and supplies, and initial inventory.
You’ll need to consider these other fees:
- Professional fees (lawyers, accountants, etc.)
- Site development
- Planning, development, and design costs
- Staff salary
Another often overlooked cost is the royalty fee. When a franchisee buys into a franchise like Tim Hortons, they’ll have to pay the royalty fee regularly. This cost is separate from the one-time nonrefundable franchise fee paid to start operations.
Tim Hortons charges franchisees 4.5% to 6% of gross sales, due weekly. However, each franchise does get something in return for paying weekly royalty fees. These costs go towards advertising and promotions, staff training, and some professional costs like audit fees.
Overall, franchisees should expect to spend over $1 million for a standard restaurant setup, but going over that amount is common.
Non-standard shops generally cost less and range from $300,000 to $800,000. Of course, this is only an estimate, and expenses can vary based on location and needs.
Before pouring all your money into a franchise, check out how well the company performs. What does the average franchise make?
A survey of Tim Hortons business owners found that they made around $80,000 on average before taxes.
Newer franchises should expect to make less than that until they become established and cut some costs. In addition, location and traffic play a big part in your bottom line. Restaurants in urban areas typically make more money because they often have higher prices and more customers.
Before filling out the application, ensure you have the minimum income requirements outlined above. If you don’t, you won’t be accepted.
If you meet the income requirements, you can fill out a pre-qualification questionnaire located on their website. If your questionnaire and income requirements are on par, you’ll move on to a discovery phone call and background checks.
If you continue to pass those steps, you’ll interview with the Operations Representatives team and present your business plan. From there, you’ll participate in “experience days” at a Tim Hortons restaurant and meet with members of Senior Leadership.
If all that goes well, you can start mandatory Tim Hortons training before beginning operations at your own franchise. All potential franchisees will complete three to five weeks of training before opening their own restaurant.
Before investing a good chunk of money and time into a franchise, it’s smart to check out its past sales growth and how they’re trending for the future. The bottom line is that you don’t want to put all your hard-earned money into a company that isn’t successful.
After experiencing a same-store sales decline in 2020, the restaurant giant picked things back up in 2021 with a 10.8% sales growth. Now in a better position, the company expects to expand on that with added 2%-3% annual growth.
Over the past few years, the company shuffled much of its executive team, suffered through a global pandemic, and rehashed its menu and loyalty program. Those moves seemed to work and keep the company at the top of the to-go coffee world.
To continue growing, Tim Hortons will focus on staying up-to-date with technology. That means rolling out digital menus and suggesting different options depending on the weather.
They’ll also add digital versions of the bakery displays so customers can see what goods are available. This is an effort to ramp up bakery sales for drive-thru customers.
Tim Hortons franchise costs in Canada will depend on the store type you’re opening, your location, and your building needs. To start, you’ll need a $500,000 net worth and liquid cash of $100,000.
Running a franchise is hard work and probably won’t make the average Joe a millionaire, but you could earn a decent cut if you run the business efficiently. Looking for other businesses to run? Check out these top business ideas to get going.