# Coffee Store Franchise Prices

## Whats the purpose?

Ever wanted to rent a coffee store franchise, but never really understood which is better? Today I will be comparing Tim Horton and Second Cup franchise prices and you will get to know in which situation you should rent a franchise.

## Firstly, how do we figure out how much each company charges?

By using formulas!

Tim Hortons

y = 100,000x+ 500,000

Second Cup

y = 150,000x

## Variable Classification

Tim Hortons

> y represents total cost of renting a franchise.

> x represents # of years you are renting the franchise for.

> 100,000 represents rent per year. It is the slope of the line.

> 500,000 represents start up cost. It is the y-intercept of the graph.

Second Cup

> y represents total cost of renting a franchise.

> x represents # of years you are renting the franchise for.

> 150,000 represents rent per year. It is the slope of the line.

> There is no start up cost, hence there is no y-intercept.

## Lets compare the prices of both companies!

Looking at the graph below, we can see how the rent price works for each company.

## How the graph works

The red line is Tim Hortons. It has a start up cost of \$500,000 which is shown on the graph as the y-intercept. It is \$100,000 to rent the franchise for the year, and this is represented as the slope of the line.

The blue line is Second Cup. It has no start up cost, therefore it will start at the origin (0,0). It is \$150,000 to rent the franchise for a year, and this is represented as the slope of the line.

The P.O.I. (Point Of Intersection) shows under which circumstances you should rent a franchise. In this case, the point of intersection is 10 years. This tells us that if you want to rent for under ten years, you should rent a Second Cup franchise and if you plan to rent for more than ten years, then you should rent a Tim Hortons Franchise.

## Tim Hortons

A table which shows cost of renting a Tim Hortons franchise for 11 years.

## Second Cup

A table which shows cost of renting a Second Cup franchise for 11 years.

## So whats the result?

Tim Hortons and Second Cup will both charge the same amount of money to rent their franchise for 10 years. If you are renting for less time than ten years, then Second Cup is the better choice. If you are renting for more than 10 years, Tim Hortons is the better choice.

Now which one would you like to rent?