Tim Hortons Franchise Spotlight

Tim Hortons has been called the McDonald's of Canada, for good reason: The coffee and doughnut franchise has surpassed McDonald's in the Canadian market both in number of outlets and system-wide sales. Tim Hortons also holds the number-one spot in the Canadian coffee market, with Starbucks coming in a distant second. Yet in the U.S., Tim Hortons has not yet been able to reach franchise superstar status. It's not for lack of trying: The franchise has been trying to duplicate its Canadian success in the U.S. market since opening its first U.S. location in Buffalo, N.Y., in the mid 1980s. It started a major push for U.S. expansion in its merger with Wendy's in 1995, before spinning off to become a separate company in 2006. In 2009, Tim Hortons earned $409 million in U.S. franchise restaurant sales and started a partnership with Cold Stone Creamery to open 100 co-branded locations, including one in Times Square.

This March, Tim Hortons announced plans to expand into another 600 locations in Canada and 300 locations in the U.S. by 2013. But part of the challenge in its U.S. expansion is taking on a market long dominated by Dunkin' Donuts, which has about 6,000 locations. Tim Hortons is hoping the taste and quality of its coffee and 63 varieties of doughnuts, including the Blueberry and Strawberry Bloom Donuts, can help it overcome the saturation situation and turn it from cult following to household name.

Tim Hortons was started by star Canadian hockey player Tim Horton of the Toronto Maple Leafs and Jim Charade in 1964, and began its franchising boom under the direction of Ron Joyce, who took over operations after Horton died in a car crash in 1974.

Business Type: coffee and doughnut chain

Liquid Capital Required: $156,800-$272,700

Total Investment: $337,000-$439,800

Number of Franchises: More than 3,500, including 567 in the U.S.

Franchising Since: 1964

Start-up Costs: $47,000-$88,400