Tim Horton was a Canadian national hero and hockey player with a career that spanned 24 seasons, 4 Stanley Cups and millions of fans. When he wasn’t on the ice, he was an entrepreneur. In 1964 at the age of 34 he started the Tim Hortons Doughnut Shop. By 1967, he had grown it to over 40 locations with partner Ron Joyce. Using franchising as a growth strategy, the company expanded aggressively, becoming a multimillion-dollar business in a few short years. That’s when things got complicated.
Horton was killed in an automobile accident in 1974. This was a terrible blow to his wife and young family who felt lost without him. Joyce offered Tim’s widow Lori $1 million for the family’s share in the business. She accepted the offer, leaving Joyce as sole owner. That was a decision she regretted for the rest of her life.
For decades Lori fought a legal battle to have the sale undone but ultimately lost. Joyce sold Hortons to Wendy’s in 2006 for $600 million, a nearly 30,000% return on the $1 million he paid for Horton’s half. The company’s current owners just struck a deal to sell Hortons to Burger King for a whopping $8 billion. The little doughnut shop started by a hockey player generates over $3 billion a year in highly profitable sales and serves millions of coffees and doughnuts daily. The Horton family though won’t benefit directly from this success.
There are several important lessons that all entrepreneurs can learn from the Hortons saga.
Involve your family in your business.
Many entrepreneurs dedicate long hours building a business with the dream of having the next generation take over. It’s a beautiful thought that seldom becomes reality. According to industry consultants George Stalk and Henry Foley, only 30 percent of businesses make it to the second generation, with just 10 percent making it to the third. A key problem is that many founders don’t include potential heirs such as spouses and children in the operation of the business. Even if they aren’t qualified to work in key positions, just being around the business, understanding how it works and showing them how important it is to you as founder makes a big difference in helping them appreciate its value. With time and patience they can be groomed to play key roles and eventually take over. Without this type of active engagement on the part of founders, it’s unlikely that heirs will care about the business beyond any passive income it could provide.
Plan for the unexpected.
Accidents, illnesses, financial setbacks, divorces, career changes and other life events can severely impact an owner’s ability to keep managing the business. Failing to have a backup plan in case something like this happens to you can mean the abrupt end of your business or like the Hortons, the untimely sale of your family’s ownership. A simple solution is to have an insurance policy in place that will provide sufficient funds to hire executives to manage the business you can no longer run.
Assume your business will succeed.
If you believe that your small business will be worth $10 billion in 100 years, you and your family will treat it with greater care and respect. Long-term positive outlooks help when it comes to planning for the future. This thinking will also help heirs take an active interest in ensuring the company’s long-term success. There are no guarantees that your business will be around in a century but short-term thinking will ensure that it won’t be.
For the Hortons and the Joyces, there is some closure to the saga. Ron Joyce’s son married Tim’s daughter Jeri-Lyn. This offered some unity between the families despite the courtroom battles. The couple operates several Tim Hortons as franchisees.
