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Lesson #5: Learn The Fundamentals of Franchising

Article Overview: Joyce was Tim Hortons’ original franchisee, but it would not be for long. After working under Horton for a few short weeks, Joyce immediately realized that he was on his own. “It was clear that he didn’t know the business all that well and couldn’t help me with any of the problems we were having,” says Joyce. “Tim had no expertise whatsoever, so the burden fell squarely on me.” As a franchisee who had little support from Horton, Joyce began to understand exactly what it would take to run a successful franchise. And, that is exactly what he set out to do after Horton’s death.

Lesson #5: Learn The Fundamentals of Franchising

Joyce was Tim Hortons’ original franchisee, but it would not be for long. After working under Horton for a few short weeks, Joyce immediately realized that he was on his own. “It was clear that he didn’t know the business all that well and couldn’t help me with any of the problems we were having,” says Joyce. “Tim had no expertise whatsoever, so the burden fell squarely on me.” As a franchisee who had little support from Horton, Joyce began to understand exactly what it would take to run a successful franchise. And, that is exactly what he set out to do after Horton’s death.

“It was my philosophy to treat the franchise owners as partners,” says Joyce. It was with that attitude that Joyce set out to build hid coffee empire. After realizing that he had on his hands a profitable business that could be replicated across the country, he set out to implement a fair and equitable system of franchising. For roughly half a million dollars, 25 percent of their own assets instead of loans, anyone with a bit of business expertise could open up a Tim Hortons franchise. That money would provide everything within the building, the signage outside, and seven weeks of training at Tim Hortons headquarters in Ontario.

Today, only five percent of the company’s stores are corporate, while the rest are locally and operated owned franchises. With average profit margins ranging from 15 to 20 percent, owning a Tim Hortons franchise is a promising venture. In fact, more than half of all franchisees own more than one unit.

However, it has only become a profitable chain because of Joyce’s efforts. In fact, it was Joyce who first created a ‘Donut University’, a central training facility where new franchise owners could go to learn the ropes of running the business and operating in the fast-paced environment. He also established regular meetings, a toll-free phone line, and field evaluations to provide support to his franchisees. He was willing to do whatever it took to get his partners off the ground and running.

Despite the fierceness with which he ran his business, in expanding his franchise Joyce strove to always play fair. When a man from Nova Scotia once applied for a Tim Horton’s franchise and was turned down, he opened up a competing Robin’s Donuts store nearby and saw his business explode. This time around, management at Tim Hortons became interested in the man, and sought to open their own outlet nearby. Joyce, who had already left the company by this point, called his friends inside the business and convinced them to cancel the plans. He said it would be unfair to open a store and put out of business someone who had once tried to be part of the Tim Hortons franchise team.

In November 1996, Joyce became only the second person ever to receive a Lifetime Achievement Award from the Canadian Franchise Association. It was by understanding the needs of his franchisees and going above and beyond to meet those needs that Joyce saw his franchise expand.

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Article Tags: assets, attitude, business expertise, donut, equitable system, fast paced environment, field evaluations, franchise owners, franchisee, franchisees, franchises, half a million, million dollars, profit margins, profitable business, profitable chain, ropes, seven weeks, tim hortons, toll free phone



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Re: Re Franchise etc - [quote="bmueller47":e0j0nu4t]Can you see a shift of various types of franchises? What I am thinking about is that today it is more difficult to create franchises, that has great appeal. More and more people want to have their business, but no interference of someone else.[/quote:e0j0nu4t] Not sure what you mean exactly but it is certain that more and more people want to have their own business but not more and more people know what they really want to do, or how to do it. And that's what franchising is all about. Franchising is not for an entrepreneur. An entrepreneur will do his own thing. People who buy franchises want a turn key business, with a proven model. Franchising in the US had never been that good. I don't have the exact numbers in mind but I know for sure that franchising is growing more and more as people are getting more and more aware of this business model.
Franchising vs. Licensing? - What is your opinion on Franchising vs. Licensing? Which is better?
Nominations for a new Franchising Moderator! - Is there anyone you'd like to nominate as our Franchising Moderator (or volunteers for the position)?
Great Article, chock full of info. - Ian, Thank you for linking your article regarding Licensing vs Franchising. Its a good read.
Lisa Shepherd Story - Great story! I love the Earn - Learn - Equity - it's very relavent for new entrepreneurs.


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