This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Why Franchises Are Good for Investors

Tim Hortons (THI)
Company Profile: Tim Hortons develops and franchises quick-service restaurants that serve food, including coffee and other hot and cold beverages, baked goods, sandwiches and soups. Earlier this week, Tim Hortons abruptly announced that CEO Donald Schroeder is leaving after three years. Executive Chairman Paul House was named interim CEO while the company conducts a search for a permanent replacement.
Share price return: 10.6% this year
Franchise locations: As of April 3, Tim Hortons counted 3,169 restaurants in Canada and 613 in the U.S. Almost all of the company's restaurants are franchised. The company also has 274 self-serve licensed locations in Ireland and the U.K.
Revenue from franchises: Franchise-related revenue accounted for about 29% of Tim Horton's $643.5 million in total revenue last quarter. Franchise revenue totaled $189 million, with nearly $168 million from rents and royalties and $21 million from franchise fees. That compares with $454.5 million from company-owned locations.
Franchise costs: Tim Hortons estimates that the total initial investment for a U.S. franchise will vary between $337,000 to $439,800 for the equipment cost; $2,400 to $34,000 for real property cost; and a franchise fee of $35,000. There are also required pre-opening expenses that range between $47,000 to $88,400. Tim Hortons says there are also several ongoing fees, including a weekly royalty of 4.5% of a restaurant's gross sales, a rent fee equal to 8.5% of monthly gross sales and a monthly advertising fee of 4% of gross sales.
Analyst view: Scotia Capital is one of five research firms with a "buy" rating on Tim Hortons. Thirteen firms, including Canaccord Genuity and RBC Capital, say investors should hold the stock. No analyst has a "sell" rating on Tim Hortons.

4 of 11

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AFCE $52.44 0.00%
PZZI $8.17 2.90%
DIN $106.32 0.00%
KKD $20.11 0.00%
JACK $96.31 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs