Updated April 27, 2021.
If you are considering a Tim Hortons franchise, don’t get blindsided by these 25 important franchise fees (from the initial franchise fee, to the royalty fee, to 23 other fees found in Items 5 and 6 of Tim Hortons’ 2021 FDD).
1. Initial Franchise Fee: $50,000 for a Standard Shop, $25,000 for a Non-Standard Shop
- The initial franchise fee for each type of Shop is as follows:
- Standard Shop: $50,000
- Non-Standard Shop: $25,000
2. Initial Training Fee: varies
- You must attend and satisfactorily complete Tim Hortons’ initial training program before you may open your Franchised Restaurant.
- The cost for this training is $2,000-$2,500 depending upon whether you are a new or existing franchisee and the USD/CAD conversion rate.
- These training fees must be paid before the training and are non-refundable. In exceptional circumstances, Tim Hortons may waive this training for certain franchisees based upon their individual circumstances and experience level.
3. Equipment, Fixtures, and Signage: $50,000 to $435,000 for a Standard Shop, and $18,000 to $70,000 for a Non-Standard Shop
- In addition to the initial franchise fee, it is likely that you will make additional payments to Tim Hortons or its affiliates before opening a Franchised Restaurant for various equipment, fixtures, and signage that must be acquired by a Shop before its opening.
- For a Standard Shop, these items will range in total cost from $50,000 to $435,000, and for a Non-Standard Shop from $18,000 to $70,000.
- Unless the equipment delivered to you is defective or determined by Tim Hortons to be unnecessary, these amounts are non-refundable. They must be paid upon receipt of an invoice for the items.
4. Development Fee: $25,000 multiplied by the number of Franchised Restaurants you commit to develop
- If you enter into an Area Development Agreement with Tim Hortons, you must prepay a portion of the initial franchise fee ($25,000) multiplied by the number of Franchised Restaurants you commit to develop.
- This amount is paid in installments with the first installment due and payable on the date of the Area Development Agreement. The remaining amount is paid in installments over a 4-year period. It is deemed fully earned when paid.
- This amount is non-refundable but $25,000 of this amount will be credited against the then-current initial franchise fee for each Franchised Restaurant opened by you (or your subsidiary or affiliate) under the Area Development Agreement until exhausted.
- If you default under the Area Development Agreement, then any remaining amount will be forfeited by you to Tim Hortons.
- These agreements are typically granted only to sophisticated, highly experienced franchisees.
5. Royalty: 4.5% to 6% of Gross Sales
- Due Date: Thursday of each week on the prior week’s Gross Sales, but Tim Hortons can change the day the royalty payment is due.
6. Advertising Contribution: 4% of Gross Sales
- Due Date: Within 10 days of the end of each month on the prior month’s Gross Sales.
7. Interest and Audit Costs: costs of audit plus interest
- Due Date: As incurred.
8. Additional Training: cost to attend additional training such as transportation, food, and lodging, and a materials fee. The materials fee will not exceed $1,000.
- Due Date: As incurred.
9. Transfer Fee: 5% of the full purchase price
- Due Date: Before transfer.
10. Indemnification: will vary with circumstances
- Due Date: As incurred.
11. Taxes: amount imposed on Tim Hortons by federal, state, and local tax authorities on any fees or other amounts payable by you to Tim Hortons
- Due Date: Payable upon receipt of invoice.
12. Maintaining Shop Premises in Good Repair: varies
- Due Date: Reimburse Tim Hortons or pay directly to suppliers.
13. Refurbishing Shop: varies
- Due Date: As incurred.
14. Lease for Franchised Restaurant Premises: varies, but between 7% to 8.5% of Gross Sales for a Standard Shop and up to 13% of Gross Sales for Non-Standard Shops. Must also pay flow through charges such as CAM, insurance, property taxes, and Tim Hortons’ administrative expenses of billing.
- Due Date: Within 10 days of the end of each month on the prior month’s Gross Sales.
15. Reorganization of Your Business: Tim Hortons’ legal and administrative expenses incurred in processing changes resulting from the reorganization of your business structure
- Due Date: When invoiced by Tim Hortons.
16. Espresso Machine and Equipment: $11,000 to $15,000. You must also pay the vendor to install and calibrate the Espresso machine, which is estimated to be between $600 and $900. You may also enter into a maintenance contract with the vendor at an estimated annual cost of approximately $985.
- Due Date: Upon receipt of the invoice.
17. Smart Store Charges: $450 to $1,050 per month
- Due Date: As incurred.
18. Approving Suppliers Requested by You: varies
- Due Date: On demand.
19. Inspection Costs and Expenses: varies
- Due Date: As incurred.
20. Replenished Franchise Fee Credit: same amount as Franchise Fee Credit
- Due Date: Within 30 days after the Franchise Fee Credit is exhausted.
21. Development Default Payment: $4,000 multiplied by the number of Shops you fail to open under your development schedule
- Due Date: First business day of each month.
22. Renovation Default Payment: $4,000 per month per Shop acquired by you that is not timely renovated
- Due Date: First business day of each month.
23. Tim Horton Children’s Foundation: varies
- Due Date: As incurred.
24. Background Check Fee: $280 to $15,000
- Due Date: As incurred.
- U.S. applicants range typically between $280 to $1,000. International applicants range from $5,000 to $15,000.
25. Brand Damage Fee: amount of the next installment of initial franchise fees you were required to pay to Tim Hortons under the Area Development Agreement before the date of termination
- Due Date: Upon demand.
- If Tim Hortons terminates your Area Development Agreement before expiration. Tim Hortons can also retain any initial franchise fees paid under the Area Development Agreement.
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