Franchise Costs: Detailed Estimates of Tim Hortons Franchise Costs (2020 FDD)

Updated June 7, 2020.

Detailed Estimates of Tim Hortons Franchise Costs Based on Item 7 (Estimated Initial Investment) of Tim Hortons’ 2020 Franchise Disclosure Document

For Standard Shop

1.  Initial Franchise Fee:  $50,000

• The initial franchise fee for a Standard Shop and a Non-Standard Shop (Drive-Thru Only) is $50,000. The initial franchise fee for a Non-Standard Shop without a Drive-Thru is $25,000 and $15,000 for a Kiosk.

2.  Real Estate Taxes, Personal Property Taxes, and CAM Charges:  $5,000 to $22,000

• Real estate taxes, personal property taxes, and CAM charges will vary considerably, depending on the Franchised Restaurant’s location.

3.  Equipment:  $325,000 to $435,000

• Equipment must conform to Tim Hortons’ specifications, which vary among Tim Hortons Shop types. This expense covers items like bakery and display equipment, espresso machine and ancillary equipment, other restaurant equipment, fixtures, signage, digital menu boards, drive-thru menu/preview boards, refrigerators, seating and installation, and delivery. This estimate excludes sales tax.

4.  Real Estate:  Amount Not Specified

• Real estate costs vary considerably according to the type of Tim Hortons Shop, real estate values in your area, your real estate interest (leasehold or ownership), location, size of the site, code requirements, and other factors, including labor, as well as whether you or your landlord develop the Franchised Restaurant.

• A Standard Shop typically consists of approximately 1,000 to 3,000 square feet. The recommended size for a Standard Shop is one-half acre to 1.5 acres. A Non-Standard Shop/Kiosk will vary in size depending on the type of Non-Standard Shop and location, but would typically be between one-third and two-thirds of an acre for a Non-Standard Shop with a Drive-Thru and 200 and 1,000 square feet otherwise.

• Factors that typically affect your real estate costs include your cost to negotiate your lease (or buy the property); fair market lease values and lease terms in your area; how the costs to renovate or develop the land, building, and other site improvements are allocated between landlord and tenant; and interest costs.

• Lease terms are individually negotiated and may vary materially from one location or transaction to another.

• Because of the numerous variables that affect the value of a particular piece of real estate, this initial investment table does not reflect the potential cost of real estate.

5.  Planning, Development, and Design Costs:  $20,000 to $100,000

• These costs are only applicable to newly-constructed Franchised Restaurants, if you are developing and will own or lease the property upon which the Franchised Restaurant premises are located. This estimate includes, among other items, architectural, engineering, and design fees, as well as zoning and planning costs, and building, health, and fire permits.

• These estimates do not include extraordinary costs due to extensive redesign, permitting, variances, environmental issues, legal obstacles, geotechnical issues, etc.

6.  Site Development Costs:  $200,000 to $500,000

• These costs are only applicable to newly-constructed Franchised Restaurants, if you are developing and will own or lease the property upon which the Franchised Restaurant premises are located. This estimate includes the costs to develop the land and other site improvements, such as exterior landscaping, electrical and water hookup, paving, sidewalks, and lighting.

• Some local governments may charge an additional amount for utility connections to offset their costs for maintaining water and sewer plants; these amounts are not included in the estimate provided.

• Costs can be higher for various reasons. For example, if extensive storm water retention and landscaping is required, or soil problems or other environmental issues are encountered.

• These ranges do not include unusual offsite costs including costs to bring utilities to the property for hookup, or government imposed “impact fees”.

• Some local governments may also require a performance bond, which is not included in the above estimate.

7.  Building Costs:  $350,000 to $800,000

• For new build Franchised Restaurants, building costs include the cost to construct a building’s shell structure, systems, and interior finishes prepped for installation of equipment.

• For remodel Tim Hortons Shops, these costs include modifications to the existing exterior structure, systems, and finishes, and interior finishes to satisfy Tim Hortons’ current design standard.

• Building costs for Non-Standard Shops/Kiosks can vary widely depending on kiosk type, physical location within a larger structure, and the size of the leased space. Adding a drive thru to any building type will increase the Building costs.

• This range of costs does not include metropolitan or unique development areas, or special municipal building and zoning requirements that may present extraordinary acquisition costs.

• Building costs will vary by geographic region.

8.  Training:  $7,000 to $15,000

• You must attend and satisfactorily complete Tim Hortons’ initial training program before you may open your Franchised Restaurant. In exceptional circumstances, Tim Hortons may waive this training for certain franchisees based upon their individual circumstances and experience level.

• The fee for this training varies based upon whether you are a new or existing franchisee or a branded partner.

• The estimated cost for training also includes the costs incurred while attending the initial training program.

9.  Start-up Supplies and Initial Inventory:  $15,000 to $30,000

• This estimate will cover Tim Hortons’ recommended opening inventory of food items, packaging, cleaning, uniforms, and other supplies.

10.  Professional and License Fees:  $1,500 to $10,000

• These costs cover legal and accounting fees, and various licenses and permits like occupancy and business licenses. If you are (with the franchisor’s approval) negotiating the purchase or lease of the Franchised Restaurant premises, you should expect to pay approximately $7,000 for legal advice and services you may need in connection with negotiating the purchase or lease of the Franchised Restaurant premises.

• This does not include legal fees for services provided in conjunction with processing and preparing necessary immigration documentation for non-U.S. citizens.

11.  Development Assistance Fees:  $5,000 to $25,000

• These costs are only applicable to newly-constructed Franchised Restaurants. Tim Hortons may provide management and assistance through the site development process for which it may charge you a Development Assistance Fee.

• The extent of services Tim Hortons will provide and the amount of the Development Assistance Fee you will pay depends on the type of service provided and the amount of time spent on the project.

12.  Insurance:  $2,500 to $21,500

• This estimate is for the first year’s premium.

• If you lease or sublease your Franchised Restaurant premises from Tim Hortons or one of its affiliates, you may be required to pay these insurance expenses to it (i.e. Tim Hortons or one of its affiliates), and it will remit these payments to the insurer or landlord.

• If you own or lease the Franchised Restaurant premises from a third party, you must pay these expenses directly to the insurer or landlord pursuant to your lease.

13.  Initial Advertising and Promotion:  $3,000 to $5,000

14.  Security Deposits:  $0 to $15,000

• Security deposits may be required by the landlord, utilities, and suppliers.

15.  Additional Funds:  $25,000 to $40,000

• You will need capital to support on-going expenses, such as cash float, payroll, utilities, and telephone service, if these costs are not covered by Gross Sales. New businesses often generate a negative cash flow.

• This amount also includes, at a minimum, credit card processing fees between $400 to $3,000, financial management software costs of about $900, and guest Wi-Fi service fees between $115 to $900 (if you purchase the Wi-Fi hardware, your costs for this fee will be at the high-end of this estimate).

• This amount is an estimate and Tim Hortons cannot guarantee that you will not have additional expenses starting your business.

• Your costs will depend on factors like your management skill, experience, and business acumen; economic conditions; the local market for your business; competition; and the performance of your Franchised Restaurant. Tim Hortons relied on internal financial records in estimating your needs for additional funds.

16.  Total:  $1,009,000 to $2,068,500

For Non-Standard Shop/Kiosk

• The total estimated initial investment necessary to begin operation of a Tim Hortons Non-Standard Restaurant/Kiosk ranges from $298,650 to $1,394,000.