Orangetheory Fitness Costs $613K – $1.6M (+ 2024 Profits)

Orangetheory Fitness, a renowned name in the fitness franchise industry, was founded by exercise physiologist Ellen Latham alongside Jerome Kern and David Long in March 2010. This innovative fitness concept evolved from Latham’s Fort Lauderdale-based Pilates studio, “Ellen’s Ultimate Workout,” which she had started in the late 1990s. 

With its unique blend of science and fitness, Orangetheory quickly distinguished itself from traditional fitness models, leading to rapid growth and recognition, including rankings in Inc. magazine’s “Fastest-Growing Private Companies” and Entrepreneur magazine’s “Franchise 500” list.

Headquartered in Boca Raton, Florida, Orangetheory began its franchising journey the same year it was founded, in 2010. The franchise stands out for its unique blend of fitness and technology, offering heart-rate-based group interval workouts that are scientifically designed to stimulate metabolism and increase energy.

Type of Expenditure	Amount
Initial Fee	$59,950 to $59,950
Travel and Living Expenses During Training	$1,200 to $4,800
Deposit for Leasehold	$0 to $60,000
Rent (one month)	$3,360 to $38,000
Leasehold Improvements and Construction Costs	$250,000 to $1,000,000
Fitness Equipment (including installation) and OTbeat™ Start-Up System	$164,250 to $233,500
Technology – Software Licensing Fee (3 months)	$3,272 to $3,272
OTbeat Fee (3 months)	$697 to $697
Fitness Equipment Maintenance	$900 to $2,400
Initial Inventory of Orangetheory® Fitness Retail Merchandise	$4,000 to $6,000
AED and First Aid Equipment/Training	$1,000 to $5,000
Exterior Signage	$5,000 to $14,000
Technology System	$70,000 to $98,500
Pre-Sale and Grand Opening Advertising	$30,000 to $40,000
Presales Training Program	$0 to $4,900
Business Licenses/Miscellaneous Opening Costs	$1,000 to $3,000
Insurance	$3,500 to $5,000
Additional Assistance	$0 to $5,500
Additional Funds – 3 Months	$15,000 to $60,000
Total	$613,129 to $1,644,519

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Initial Franchise Fee

The initial franchise fee is $59,950, payable upon signing the Franchise Agreement. This fee is not refundable.

Technology Fees

An initial non-refundable setup fee of $575 for the Management Software account is required. Additionally, a monthly technology fee of $899 is payable for certain products, services, licenses, and sublicenses related to the Technology System.

Presales Training Program

A non-refundable fee of $4,900, plus the travel and living expenses of the representatives, is required for participation in the Presales Training Program.

Royalty Fee

Franchisees must pay a weekly royalty fee of 8% of Gross Sales.

Brand Fund Contributions

A monthly contribution currently set at 3% of Gross Sales, which may be increased up to 5%, is required for the Brand Fund.

Successor Franchise Fees

Upon renewal, a fee equal to 50% of the then-current initial franchise fee for new franchisees is payable.

Transfer/Assignment Fee

A fee of 50% of the then-current Initial Franchise Fee for new franchisees is required for a Control Transfer, and 25% for all other transfers, payable before the consummation of the transfer or sale.

Franchise Pros and Cons

The Pros:

• Comprehensive training: The franchisor trains its franchisees to teach them about the business concept, operations, equipment usage, and sales. Its initial training is free and consists of 80 hours on the job and 40 classroom hours.
• Site selection and real estate: The brand provides franchisees with real estate experts to assist in establishing their fitness studios. It helps them in site selection, lease negotiation, design, and construction.
• Exclusive territory protection: Orangetheory Fitness allows its franchisees to operate in an exclusive development area. As long as the franchisees comply with the franchise agreement, the franchisor does not authorize other franchises or operate competitive units in the protected area.
• Third-party financing: The franchisor provides its franchisees with funding for franchise fees, startup costs, equipment, inventory, and payroll through partnerships with third-party sources.
• Marketing and advertising: The franchisor employs strategic marketing and advertising to promote its services and create public relations. Franchisees can use targeted national media, social media, influencer marketing, and local clubs’ promotional campaigns and tools to boost sales and profits.
• Small footprint: The franchisor uses a small footprint and a streamlined design for its clubs. Franchisees don’t require a lot of staff and can get started easily.

Cons

• No absentee ownership: The Orangetheory Fitness franchise is not a passive business opportunity. The franchisees are required to play active roles in the day-to-day operations of their gyms.
• Not a home-based opportunity: The franchise cannot be operated from home or a mobile unit. The franchisor requires the franchisees to have established office space, a warehouse, or a retail facility to operate from.
• Not a part-time business: An Orangetheory Fitness franchise is not a side business. Franchisees must adhere to the parent company’s operating hours of business.
• Competition from other fitness giants like Anytime Fitness or Planet Fitness.

How to open a Orangetheory Fitness franchise

Opening a Orangetheory Fitness franchise involves several steps, designed to ensure you are a good fit for the franchise. Here are the main steps to follow to open a Orangetheory Fitness franchise.

1. Conduct Preliminary Research

• Understand the Franchise: Familiarize yourself with Orangetheory Fitness’s brand, mission, and business model to ensure it aligns with your goals.
• Market Analysis: Assess the demand for fitness services in your desired location, taking into account local competition and demographics.

2. Meet Initial Requirements

• Financial Prerequisites: Ensure you meet the financial requirements for opening a franchise, which typically includes having a certain amount of liquid capital and net worth.
• Entrepreneurial Experience: Having a background in business or entrepreneurship can be beneficial, as Orangetheory looks for individuals or groups with solid entrepreneurial experience.

3. Submit an Inquiry

• Initial Contact: Reach out to Orangetheory Fitness through their franchise inquiry form or contact details provided on their franchising web page.
• Information Exchange: Provide your business background and financial information as requested to facilitate the initial evaluation.

4. Attend a Discovery Day

• Introduction to the Brand: Participate in a Discovery Day event, which is an opportunity to meet the franchisor, learn more about the franchise model, and ask questions.
• Franchise Details: Gain in-depth knowledge about the operational, financial, and support aspects of running an Orangetheory Fitness franchise.

5. Review the Franchise Disclosure Document (FDD)

• Receive FDD: Upon further interest, you will receive the Franchise Disclosure Document that details important information about the franchise.
• Legal and Financial Review: It’s advisable to review the FDD carefully, possibly with the help of a franchise attorney and an accountant.

6. Secure Financing

• Investment Planning: Determine the total investment required, including franchise fees, equipment, leasehold improvements, and working capital.
• Financing Options: Explore financing options, if necessary, which may include loans, investors, or savings.

7. Find a Suitable Location

• Site Approval: Work with Orangetheory Fitness to identify and approve a suitable location for your studio that meets their site criteria and market needs.
• Lease Negotiation: Negotiate the lease terms for the selected location with assistance from Orangetheory’s real estate team, if provided.

8. Sign the Franchise Agreement

• Agreement Review: Carefully review the terms of the Franchise Agreement with your attorney.
• Contract Signing: Sign the agreement and pay the initial franchise fee to officially become an Orangetheory Fitness franchisee.

9. Complete Training Program

• Initial Training: Attend the required training program provided by Orangetheory Fitness, covering operations, marketing, sales, and fitness aspects of the business.
• Ongoing Support: Take advantage of ongoing training and support offered by Orangetheory Fitness to ensure the success of your franchise.

Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

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