HOTWORX Franchise FDD, Profits, Costs & Fees (2024)
HOTWORX is a fitness franchise that began in 2017, with its first studio opening in Oxford, Mississippi. The company is headquartered in Marrero, Louisiana, and has grown rapidly, reaching 500 locations by mid-2023.
The franchise offers a unique workout experience that combines infrared heat, exercise, and 24-hour access, setting it apart from traditional gyms. Members engage in virtually instructed sessions, including isometric exercises and high-intensity interval training (HIIT), inside patented infrared saunas that enhance metabolism and speed up recovery.
The “3D Training” method employed by HOTWORX integrates heat, infrared energy, and exercise to deliver more effective fitness results in a shorter time.
This approach differentiates the franchise from other fitness concepts by providing a technology-driven, efficient business model with reduced labor costs due to virtual instructors. HOTWORX continues to expand its reach across the U.S. and has begun international growth, with locations now open in countries such as Ireland.
Initial Investment
How much does it cost to start a HOTWORX franchise? It costs on average between $261,000 – $870,000 to start a HOTWORX franchised studio.
This includes costs for construction, equipment, inventory, and initial operating expenses. The exact amount depends on various factors, including the type of facility you choose, the location, and whether the franchisee chooses to lease or purchase the property.
Indeed, HOTWORX offers 4 types of franchises:
Studio Type | Location | Initial Investment Range |
---|---|---|
Single Traditional HOTWORX® Studio Franchise | General | $268,250 to $698,500 |
Single Traditional HOTWORX® Studio Franchise | New York | $268,250 to $869,500 |
Single Express HOTWORX® Studio Franchise | General | $261,250 to $691,500 |
Single Express HOTWORX® Studio Franchise | New York | $261,250 to $862,500 |
We are summarizing below the main costs associated with opening a HOTWORX Exclusive of New York Franchise Outlets. For more information on the costs required to start a HOTWORX franchise, refer to the Franchise Disclosure Document (Item 7).
Type of Expenditure | Amount |
---|---|
Initial Franchise Fee | $12,950 to $19,950 |
HOTWORX Sauna, Workout Equipment, and Staff Uniforms | $95,000 to $155,000 |
Other Required Studio Equipment, Software, and Furniture | $17,000 to $20,500 |
Other Required Studio Components | $16,500 to $20,600 |
Leasehold Improvements | $15,500 to $380,500 |
CAD Fee/Engineering & Architect Fees | $3,200 to $14,500 |
Trade Dress Items and Finish Out | $25,000 to $46,000 |
Utility, Phone, Real Estate, and Lease Deposits | $5,000 to $95,000 |
Insurance Initial Payment | $4,000 to $19,450 |
Printing, Marketing, and Advertising | $10,000 |
Wholesale Goods/Inventory to Begin Operating | $20,000 |
Professional Fees | $1,000 to $10,000 |
Additional Funds During Startup Period | $35,500 to $54,500 |
Out-of-Pocket Initial Training Expenses | $600 to $3,500 |
Totals | $261,250 to $869,500 |
Average Revenue (AUV)
How much revenue can you make with a HOTWORX franchise? A HOTWORX franchised studio makes on average $342,000 in revenue (AUV) per year.
Here is the extract from the Franchise Disclosure Document:
This compares to $401,000 yearly revenue for similar fitness studio franchises. Below are 10 HOTWORX competitors as a comparison:
HOTWORX Franchise Disclosure Document
Recent Legal Disputes and Litigation
HOTWORX has faced a legal dispute involving franchisees Greg and Gabriela Skistimas, who filed a lawsuit against the franchisor in late 2023. The case, heard in the U.S. District Court for the Western District of Washington, centers around allegations of contractual issues.
The plaintiffs challenged the enforceability of the franchise’s dispute resolution clause, claiming it was unconscionable, void, and unenforceable. The franchisees sought to avoid arbitration requirements outlined in their agreements, while HOTWORX argued for the enforcement of these procedures.
In mid-2024, the court dealt with motions to dismiss the case and cross-motions concerning the arbitration clause. The initial motion to dismiss was rendered moot following an amended complaint by the plaintiffs, who included additional claims and specific allegations against various defendants associated with HOTWORX.
The court then instructed both parties to consolidate their arguments for further proceedings. The litigation illustrates ongoing friction over contractual terms and arbitration clauses, which are common issues in franchise disputes.
Frequently Asked Questions
How many HOTWORX locations are there?
As of the latest data, HOTWORX has over 500 franchise locations.
What is the total investment required to open a HOTWORX franchise?
The total investment required to open a HOTWORX franchise ranges from $261,000 to $870,000.
What are the ongoing fees for a HOTWORX franchise?
The ongoing fees for a HOTWORX franchise include a royalty fee of 7% of gross sales, which is paid to the franchisor for continued use of the brand and access to support services.
In addition to the royalty fee, franchisees are required to contribute 2% of gross sales toward a national marketing fund. This fee supports advertising efforts and brand promotion on a broader scale.
What are the financial requirements to become a HOTWORX franchisee?
To qualify as a HOTWORX franchisee, you must have a minimum net worth required is $400,000, ensuring that franchisees have sufficient overall assets to support the business.
Additionally, prospective franchisees need to have at least $75,000 to $100,000 in liquid capital. This liquid capital is necessary to cover initial expenses and ensure smooth operations during the startup phase.
How much can a HOTWORX franchise owner expect to earn?
The average gross sales for a HOTWORX franchise are approximately $0.34 million per location. Assuming a 15% operating profit margin, $0.34 million yearly revenue can result in $51,000 EBITDA annually.
Who owns HOTWORX?
HOTWORX is owned by its founder and CEO, Stephen P. Smith. He created the franchise in 2017, introducing the concept of infrared sauna workouts combined with virtually instructed exercise routines. Under Smith’s leadership, HOTWORX has rapidly grown, expanding its franchise network across the United States and internationally.
Disclaimer
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