Detailed Information on Tim Hortons’ Initial Franchise Fee, Royalty Fee + 23 Other Fees (Items 5 and 6, 2022 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 per person 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:  $60,000 to $435,000 for a Standard Shop, and $20,000 to $77,000 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 $60,000 to $435,000, and for a Non-Standard Shop from $20,000 to $77,000.

• 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:  the materials fee will not exceed $1,000 per person

• 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.