Earn More Money, InvestingNovember 1, 2021November 22, 2021

Is A Tim Hortons Franchise A Wise Investment?

For many people, coffee is a must. Regardless of cost or caffeine, some people need their daily fix. However, have you ever stopped to think about the money that you’re spending on a day-to-day basis? Conversely, have you ever stopped to think about how much money the person on the other side is making? Of course, I do not mean the cashier. When I say “the person on the other side”, I’m talking about the owner of the franchise. Tim Hortons has become a staple within the coffee-drinking community. More specifically, within Canada. It has gotten to the point where you cannot go anywhere within Toronto or the GTA without a Tim Hortons being relatively close to you.

With that being said, one would assume that a Tim Hortons franchise can bring in some serious cash. Both in revenue and In profit. However, if this is truly the case, we can also assume that they can cost quite a bit of money. Furthermore, since Tim Hortons is a nationally recognized company, they most likely have a lot of procedures that need to be adhered to. Therefore, we will go through all of that including how much money you can potentially earn as a Tim Hortons franchisee.

How To Get A Tim Hortons Franchise?

Getting a Tim Hortons franchise is quite similar to KFC or any other establishment for that matter. You need to apply, have the income/capital, and have the knowledge on how to run a successful business. You will need to go through a few procedures when applying. The best way to go about explaining the process is by outlining what’s already written on Tim Horton’s official website. The first step is what they call “Candidate Inquiry”. At this stage, you have to make sure a few things are up to par. First, you need to complete the pre-qualification questionnaire. On this questionnaire, you will have to fill out a generic form that asks questions ranging from your name to how much you hope to earn. Furthermore, there are 4 steps to this questionnaire. Therefore, it’ll take a bit of time to complete that process.

One interesting thing to note about the sign-up process with Tim Hortons is that they require a minimum net worth. This contrasts places like KFC and McDonalds which don’t outwardly say that you need a minimum net worth. This net worth is $500,0000.

Next on the list is a list of interviews. This includes operations interviews and senior leadership reviews. However, this does not include the discovery call. After this, a Tim Horton’s rep will call you. From there you have to participate in a criminal check, credit check, asset verification, and an NDA. After that, you need to do your restaurant experience days and final training after approval.

Above is a picture of the overview for the training that you’ll need to go through if you make it that far in the selection process. As you can see, the average training is 20 days and takes place within Oakville. Furthermore, you’ll also be able to choose a designated manager to look after your store.

Lastly for this section, it is important to highlight that there are two different types of franchises you can choose from. Similar to the KFC franchises you can choose to try and go for an establishment that is standard or non-standard. To put this in perspective, a non-standard establishment would be one you’d see in a food court or the middle of the mall. These establishments are typically smaller. However, they tend to cost less and be more manageable. Before applying to obtain a franchise, you should check out which type of establishment would better suit your needs. If you want to know more about the process, you can click here or any one of the pictures above.

What Are The Fees/Requirements?

If you read our previous article on how much a KFC franchise earns, you’ll know that they can cost a lot. Of course, since Tim Hortons is a huge company, their franchises are probably in demand. This means there should be a considerable amount of fees and competition. Due to the competition, Tim Hortons requires their franchisees to flexible in where they can go. For example, if Tim Hortons has a franchise opportunity available in a city a few hours away from where you currently live, you need to be flexible enough to move there. Tim Hortons takes their business seriously which means you should as well.

Above is a picture that displays the various fees that you’ll encounter when opening up a Tim Hortons franchise. In terms of the amount of capital needed, Tim Hortons is on par with the likes of KFC and McDonalds, However, the picture above does a good job by giving us arrange in which these fees can be. For example, the franchise fee can be as low as $15,000. However, it can also be as high as $50,000. Although the $50,000 is quite a lot, $15,000 is on the low end when comparing various franchises.

The amount of money you pay can depend on a few things. Let’s take equipment for example. The low end for purchasing equipment is $75,000 whereas the high-end is over $400,000. This can be attributed to whether or not you get a standard or non-standard restaurant. Of course, the standard restaurants are considerably larger. This means that you’ll have to purchase more equipment. Since we’re talking about fees, we can’t forget about the most important ones. Royalties and advertisement. These two are staple fees in any franchise. Advertising will cost you 4% of gross sales. However, royalties can cost you anywhere between 4.5% – 6%. This number most likely depends on the number of monthly sales your location generates.

The range for the amount of total capital needed is quite large. Ranging from $300,000 to over $2,000,000. However, the chances of you paying over $2,000,000 for a franchise are extremely slim. Conversely, you’ll more than likely pay more than $300,000. As a new Tim Hortons franchisee, you should be looking to spend anywhere from $500,000 to $1,200,000.

How Much Can I Make From It?

Usually, companies don’t disclose how much their franchises profit on average. Luckily for us, we can get a rough estimation due to a series of unfortunate events that took place against Tim Hortons. Apparently, there a rather large class-action lawsuit filed against Tim Hortons at the beginning of the 2010s. While we won’t get into what the lawsuit was about, we will talk about what Tim Hortons made public.

According to Tim Hortons, the average franchisee earns $1,500,000 per year before interest and taxes. Furthermore, they boast an average profit of $265,000 per year. This is an extremely high amount of money to be earning. This profit put Tim Horton into the upper echelons of earners when it comes to franchises. While this is a good way to earn money and build wealth. It is by no means easy. Therefore, you have to make sure possibly earning that amount of money is worth it. However, if you are earning around $250,000 per year. You should be able to pay off your initial investment relatively quickly. If you spent $1,000,000 on opening this franchise, you should be able to pay that off within the next 4 years.

Shameed Chris Khan

Shameed is just a man on a mission to help those around him gain financial success. Obsessed with writing about all things finance, this GTA native is constantly learning and sharing his experiences with others.