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Tim Hortons Franchise ProfileCoffee Franchises > Coffee Shops |
To open a Tim Hortons franchise, you'll need to prepare for a range of initial investment costs. The franchise fee is $50,000, but the total initial investment can vary significantly, ranging from $53,650 to $2,137,500. It's essential to have cash reserves of at least $25,000 and a net worth of between $500,000 and $1,000,000 to qualify. This financial foundation will help ensure you can cover startup costs and sustain operations in the early stages.
As a franchisee, you will be responsible for ongoing royalty and marketing fees. The royalty fee for a new unit is set at 6% of your gross sales, while a marketing fee of 4% is also required. These fees contribute to the brand's national marketing efforts and support services that help drive customer traffic to your location. Understanding these ongoing costs is crucial for maintaining profitability and ensuring your franchise's long-term success.
Tim Hortons franchises can be quite profitable, with an average annual revenue per unit of $99,396. The median revenue is slightly higher at $100,757, indicating a solid earning potential. The cost of goods sold (COGS) is approximately 29% of revenue, leaving a gross profit margin of 71%. After accounting for operating expenses, franchisees can expect an EBITDA of around $42,951, which represents 43% of total revenue, showcasing the franchise's strong financial performance.
Tim Hortons franchisees can anticipate a breakeven timeframe of about 12 months, which is relatively quick in the franchise industry. This means that, with effective management and marketing strategies, you could recover your initial investment within the first year of operation. Additionally, the investment payback period is also estimated to be around 12 months, making it an appealing option for aspiring entrepreneurs looking for a timely return on their investment.
Tim Hortons Franchise Financial Requirements
Below, you’ll find an overview of the initial investment needed to launch the business, along with the ongoing fees required by the franchisor to maintain operations over time.
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Tim Hortons Franchise Unit Growth Summary
A breakdown of corporate, franchised, and total units, with yearly net changes.
Total Units
Franchised Units
Corporate Units
Units | 2021 | 2022 | 2023 |
---|---|---|---|
Total Units | 21 | 16 | 13 |
Net Change YoY | -5 | -3 | |
Franchised Units | 21 | 16 | 13 |
Net Change YoY | -5 | -3 | |
Corporate Units | 0 | 0 | 0 |
Net Change YoY | 0 | 0 |
The initial investment for a Tim Hortons franchise ranges from $53,650 to $2,137,500. This includes the franchise fee of $50,000 and various costs associated with setting up the business. Aspiring franchisees should be prepared for substantial financial commitments, with a cash requirement of at least $25,000 and a net worth requirement between $500,000 and $1,000,000.
Tim Hortons franchisees are subject to a royalty fee of 6% on gross sales, along with a marketing fee of 4%. These fees contribute to the overall operational costs but also ensure that franchisees benefit from the brand's marketing efforts and support. Understanding these ongoing financial obligations is crucial for maintaining profitability.
The average annual revenue per Tim Hortons unit is approximately $99,396, with a median annual revenue of $100,757. Revenue can vary significantly, with the lowest annual revenue reported at $42,684 and the highest reaching $4,586,424. This variance highlights the importance of location and management in driving sales performance.
Tim Hortons franchisees can expect a gross profit margin of around 71%, with operating expenses averaging $30,528 annually. Key components of these expenses include franchise and property costs, advertising, and general administrative expenses. A strong understanding of these metrics can help franchisees optimize their operations and improve financial performance.
Franchisees at Tim Hortons typically experience a breakeven period of about 12 months, with an investment payback period also around 12 months. This relatively quick return on investment can be an attractive feature for potential franchisees, indicating the brand's strong market presence and customer loyalty.
Tim Hortons has seen a gradual decline in the number of franchised units over recent years, with 21 units in 2021, 16 in 2022, and 13 in 2023. Despite the reduction in franchised units, the brand remains a recognizable name in the quick-service restaurant sector, and potential franchisees should consider the implications of this trend on future growth opportunities.
Frequently Asked Questions
The total initial investment for a Tim Hortons franchise ranges from $53,650 to $2,137,500, which includes the initial franchise fee of $50,000.