Tim Hortons entered the U.S. 40 years ago, establishing itself in markets where Canadians could make cross-border coffee runs. And while it’s added over 600 units in the country since then, the last four decades haven’t quite seen the coffee chain grab share the way it has up north, where there’s roughly one store for every 10,000 residents.

The brand started making a stronger push to grow in international markets after it was acquired by RBI a decade ago. Since then, it’s been implementing some changes to the U.S. business, adding more cold beverages and savory breakfast offerings and introducing new streamlined prototypes that come with lower CapEx and better paybacks for operators, says Ryan Ferranti, head of business development and franchising.

It’s also evolving its franchising strategy to accelerate growth in new markets across the country. 

“Originally, we thought, ‘We’re close to the border in Michigan, Ohio, and New York. How do we grow around those?’ Then we looked around and said, ‘Perhaps a more optimal approach is to go to the places that are growing,’” Ferranti says. “That’s twofold. What areas are growing, but also where are people from Canada and from our core markets in the Northeast and Midwest migrating? A lot of them are migrating south, so we have built-in brand awareness in those markets.”

To build density more quickly and effectively, Tim Hortons has shifted from relying on smaller, local franchisees to partnering with larger, more experienced multi-unit operators. 

“Selecting the right markets and franchisees and changing the format, including both the actual prototype as well as our menu architecture—those three things were the pillars of what we needed to change,” Ferranti says. “Since then, we’ve seen a ton of success.”

Tim Hortons ended 2023 with its largest number of U.S. restaurant openings in over five years, including some important expansions into new markets like Texas and Georgia. It also has signed agreements to enter Arizona, Missouri, Delaware, New Jersey, Tennessee, and several other states. 

Like many brands that cut their teeth in Canada, BURRITOBAR made its U.S. debut close to home. It awarded its initial master franchise agreement for Michigan and opened its first location in 2020 about 60 miles from the border. Two more stores in the state and one store in Delaware have opened since then. Leases have been signed or are under negotiation in Hawaii, Tennessee, and several additional parts of the country. Master franchise agreements have been awarded for nine other states, too.

“Following the proven formula in Canada, our tactic is to focus on developing the brand in suburban, secondary, and tertiary markets as a priority,” says chief development officer Jeff Young. “Once we build brand awareness and a critical mass, then we’ll shift to more urban settings.” 

U.S. expansion isn’t just about replicating the playbook that helped it reach more than 300 locations in Canada, though. The Tex-Mex chain goes by the name barBURRITO in its home market but entered the U.S. under a different moniker to avoid potential trademark disputes. Now, it’s teaming up with a design and marketing agency to help facilitate the evolution of BURRITOBAR. 

The franchisor is crafting a new look and feel for the brand with an updated logo and fresh design elements that Young says will “elevate all of the consumer touchpoints” and “reinforce our niche within the category.” That’s important, he adds, because Canadian chains looking to gain a foothold in the U.S. need to have a clearly defined niche within their respective segment. They also need to have “a compelling story of a resilient brand with a proven business model” along with “a rich history of success.”

“Generally speaking, Canada can be a challenging marketplace due to the higher costs of doing business,” Young says. “Occupancy costs, labor, cost of goods, and taxes are typically higher and AUVs are lower than south of the border. If a brand demonstrates that it can thrive in Canada, the U.S. offers a world of opportunity.” 

With a population ten times the size of Canada, America is an appealing market and natural extension for restaurant chains that got their start up north. But breaking into the U.S. comes with plenty of challenges. For starters, the intricate web of franchise regulations often makes entry more daunting compared to other international markets. 

That’s something James McInnes, CEO of Ontario-based Odd Burger, learned to navigate when plotting the vegan fast-food chain’s stateside expansion. 

“Every state has different laws and different regulations,” he says. “With that variation, the complexity of maintaining your franchise system is very substantial. The biggest hurdle is all of the legal work.”

In some states, brands must register their franchise disclosure agreement before offering or selling franchises. Those standards vary from state-to-state. Some include extensive details like financial statements and litigation history while others mandate only basic information. Some states have no disclosure requirements. 

“There’s a lot that goes into the strategy of where you’re going to expand first,” McInnes says. “Do you pay the cost of registering? Do you go into non-registration states? You have to figure out what your roadmap is going to be first, and then you have to start getting the documents together.” 

The company is gearing up to open its first batch of stores in two states next year. One requires registration and one doesn’t. But the decision about where on the map it should plant its flags first ultimately had less to do with registration requirements and more to do with its plan for building up a footprint and raising brand awareness in the country. 

Odd Burger inked its first deal to grow in a state that borders Canada. It signed an area representative agreement to build 20 locations in Washington last year. It followed that up this spring when it signed its second agreement to establish 40 locations in Florida. 

“We also wanted to have a territory that’s far away, because for us to be successful in the states, we can’t just be in places that are right next to Canada,” McInnes says. “We have to be able to grow in Florida, Texas, and other places like that.”