Orangetheory Fitness Franchises: Sales, Costs & Profits (2023)

With 1,500 gyms across the US and globally, Orangetheory is one of the top 3 fitness chains based on the number of gyms they operate. As such, it’s an obvious alternative if you’re considering getting into the fitness industry as a franchisee.

Yet, at $1,380,000 Orangetheory Fitness has an expensive price tag, on the higher end of fitness franchises ($900,000 on average).

What about the profits? In other words: do the profits of an Orangetheory Fitness gym justify the hefty investment upfront of $1.4 million?

This is what we’re looking at in this article. We will see exactly how much it costs, how much profits you can realistically make with this franchise, and whether you should invest in a Orangetheory Fitness franchise. Let’s find out!

Key stats

Franchise fee	$59,950
Royalty fee	8.0%
Marketing fee	2.0%
Investment (mid-point)	$1,381,000
Average sales	$805,000
Sales to investment ratio	0.6x
Payback period*	11 years
Minimum net worth	$1,000,000
Minimum liquid capital	$300,000

What is Orangetheory Fitness?

Orangetheory Fitness is an American boutique fitness studio franchise founded in 2007 by exercise physiologist Ellen Latham in Fort Lauderdale, Florida.

The franchise operates contemporary fitness studios offering members access to exercise equipment, including cardio and strength equipment, and other related services and ancillary merchandise related to the Orangetheory concept.

Headquartered in Boca Raton, Florida, Orangetheory Fitness began franchising in 2010 and currently has more than 1,500 studios in 50 states and 25 countries worldwide.

Orangetheory Fitness franchises pros and cons

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 much does a Orangetheory Fitness franchise cost?

You would need to invest around $1,381,432 to open an Orangetheory Fitness gym on average.

The investment amount is an average. Indeed, it may change depending on factors like the gym’s location, size, etc. Generally, the investment amount ranges between $657,542 and $2,105,322 (Franchise Disclosure Document 2021)

Orangetheory Fitness startup costs

Why do you need to pay this much amount at the beginning, you may ask? Well, the investment covers all the startup costs you may need to start a fitness club.

In addition to an initial franchise fee of $59,950, the investment also covers:

• Formation Costs: training fees, leasehold improvements, construction costs, fitness equipment, first aid equipment, furniture, exterior signage, technology system, permits, business licenses, etc.
• Initial Marketing: grand opening advertising and presales costs
• Operating Costs: initial inventory of retail merchandise, insurance, and working capital for first 3 months, etc.

Type of cost	Low	High
Initial Franchise Fee	$59,950	$59,950
Formation Costs	$524,732	$1,894,372
Opening Advertising Expenses	$30,000	$40,000
Operating Costs	$42,860	$111,000
Total	$657,542	$2,105,322

How much revenue does a Orangetheory Fitness gym makes?

On average, an Orangetheory Fitness franchise makes $805,251 in sales per year.

Please note that Orangetheory Fitness does not disclose annual revenue for its franchises. Instead, we had to estimate the revenue per gym by dividing Orangetheory Fitness’s total revenue ($913,155,000) by the total number of fitness centers (1,134).

Also, Orangetheory has a higher revenue per square foot ($244 per year) vs. fitness franchises as a whole ($80).

How profitable is a Orangetheory Fitness franchise?

We estimate that a Orangetheory Fitness franchised gym makes about $200,000 in profits per year. This represents a 25% EBITDA margin.

Note that Orangetheory Fitness does not provide any cost information for its gyms in its latest Franchise Disclosure Document, apart from royalty fees and what it disclosed in Item 5.

Therefore, to estimate EBITDA we had to make assumptions and use average percentages from the top 25 fitness franchises. For example, we assume staff costs (managers and trainers) represents 28% of revenue, and rent costs 17%.

Profit and loss	Amount	% revenue	Notes
Revenue	$805,251	100%
COGS	$(40,263)	5%	Industry average
Staff	$(225,470)	28%	Industry average
Rent	$(136,893)	17%	Industry average
Royalty fee*	$(80,525)	10%	As per FDD
Marketing	$(40,263)	5%	Industry average
Other expenses	$(80,525)	10%	Industry average
EBITDA	$201,313	25%

Should you invest in a Orangetheory Fitness franchise?

Assuming a net profit margin of 15%, Orangetheory Fitness franchises have a payback period of 11 years on average, which is on the higher end vs. the average for fitness franchises (8 to 9 years).

In other words, the time to recoup your investment (and repay all creditors e.g. banks and investors) is around 11 years. Whilst not necessarily bad, it’s not the best payback period we found for fitness franchises.

That being said, your decision shouldn’t entirely be based on how much profits you can make, and how quickly you can repay your investment. There are 2 reasons for that.

First these numbers are based on the average performance of the franchises disclosed in the latest FDD, this doesn’t mean your gym will perform the same. Secondly, there are a number of things to take into consideration when choosing a franchise: the franchisor’s support and training, the brand awareness, competition and more.

How does it compare vs. other Fitness franchises?

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