Are you interested in starting your own Orangetheory Fitness, but have no idea how much an Orangetheory Franchise Costs? How do you even go about starting your own Orangetheory franchise? This quick guide will help answer most of your franchising questions and set you on the right path to fitness franchise ownership.
The fitness industry is growing at an average annual rate of 4.5% per year with nearly one million people joining health clubs in the U.S. each year. The industry’s annual revenue growth rate is pegged slightly higher at 6.7%. Orangetheory Fitness has created a brand (and workout) effective at leveraging the strong industry figures. The company grew 952% from 2014-2019 and currently has over 1,000 franchise locations.
The fitness giant offers trainer-led group workout sessions, broken into intervals of cardiovascular and strength training. Equipment used in the classes includes treadmills, rowing machines and free weights. Participants wear heart-rate monitors, which tracks and displays their heart rate on screens during the workout. Men’s Journal has dubbed the brand’s routine “One of the Best Workouts in America.”
So how do you tap into the amazing workout routine, explosive brand, and general industry cost? And how much does it actually cost? Let’s break it down.
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How Much Does an Orangetheory Fitness Franchise Cost?
The initial investment costs to launch an Orangetheory Franchise will set you back between $575,422 and $1,497,372. Although the costs are substantial, they include significant capital expenditures on high-ticket items like gym equipment and leasehold improvements. These two costs alone represent 60%-78% of the total investment cost.
The below table provides a complete breakdown of all initial investment costs.
Initial Cost Breakdown
Expenditures
Low
High
Initial Fee
$59,950
$59,950
Travel and Living Expenses During Training (for all attendees)
$1,200
$4,800
Deposit for Leasehold
$12,000
$25,000
3 Month’s Rent
$18,000
$30,000
Leaseholds Improvements and Construction Costs
$250,000
$1,000,000
Reception Desk, Retail Display Wall and all Interior Logo Signage
$11,600
$14,000
Graphics
$5,000
$6,000
Fitness Equipment (including installation) and OT Beat Start-Up System
$98,500
$177,500
Technology – Software Licensing Fee (3 months)
$1,772
$2,822
Fitness Equipment Maintenance
$900
$2,400
Initial Inventory of Orangetheory Fitness Retail Merchandise
$4,000
$6,000
AED and First Aid Equipment/Training
$1,000
$5,000
Exterior Signage
$5,000
$7,000
Technology System
$47,000
$63,500
Pre-Sale and Grand Opening Advertising
$30,000
$40,000
Presales Coordinator Program
$0
$4,900
Business Licenses/Miscellaneous Opening Costs
$1,000
$3,000
Insurance
$3,500
$5,000
Additional Assistance
$0
$5,500
Additional Funds – 3 months
$25,000
$35,000
ESTIMATED TOTAL (excluding real estate purchase costs)
$575,422
$497,372
Ongoing Cost Breakdown
In addition to the above initial investment costs, it’s important to know what else will ultimately play into the an Orangetheory franchise cost. Perhaps most significantly, you’ll be required to pay Orangetheory a weekly royalty fee of 8% of gross sales. You’ll also be responsible to contribute up tp 3% of gross sales to support Orangetheory’s advertising.
In addition, a dozen or so contingent fees (mostly industry standard) may, at some point, be required. The below table breaks down and explains all of Orangetheory’s ongoing fees.
Fees
Type of Fee
Amount
Royalty Fee
8% of Gross Sales.
Brand Fund Contributions
Currently 2% of Gross Sales; May be increased up to 3% of Gross Sales.
Cooperative Advertising
As determined by Cooperative.
Successor Franchise Fees
50% of then-current initial franchise fee for new franchisees.
Transfer/Assignment Fee
50% of then-current initial franchise fee for new franchisees for a Control Transfer. 25% of the then-current Initial Franchise Fee for all other transfers (other than transfers to an Entity formed to operate the Studio).
Relocation Fee
Fee equal to the franchisor’s costs and expenses.
Interest and Late Fees
Lesser of 18% per annum or the highest rate permitted by law, plus $100 per week or portion of a week that the payment or report is overdue.
Audit Expenses
Fee equal to the cost of audit, including any charges of independent accountants, travel expenses and per diem personnel charges.
Additional Initial Training
Reasonable fee, currently $1,000 per person per session.
Studio Launch Training
Reasonable fee, currently $1,000 per person per session (for additional, replacement, or repeat trainees).
Refresher Training Fees
Reasonable fee, $250 per day per person trained.
Conference Fees
Reasonable registration fees; varies by program.
On-Site Evaluation Fees
The franchisor’s costs and expenses in connection with the on-site evaluation.
Insurance Premiums
Amount of unpaid premiums, plus an administrative fee.
Products Purchases
Varies.
Technology Fee
Currently, $399-$749 per month, plus a $575 MindBody Online setup fee.
OT Beat Fees
Approximately $149-$449 per month (currently $149 per month).
Non-Compliance Fee
Up to $1,000 per notice of violation.
Product/Supplier Approval Costs
Reasonable cost of inspection or testing plus actual cost of laboratory fees, professional fees and travel and living expenses of the franchisor’s personnel.
Management Fee
A fee that the franchisor specifies up to 15% of Gross Sales plus the franchisor’s actual costs and expenses.
Indemnification
Will vary under circumstances.
Costs and Attorney’s Fees
Will vary under circumstances.
How Do I Start an Orangetheory Franchise?
Getting in on the popular fitness boutique is not easy. Last year, Orangethory gave only 0.1% of people inquiring the opportunity to franchise. The first step in Orangetheory’s franchising process is to request information through its website. After doing so you will be connected with an Orangetheory Fitness representative and will be required to complete an application and due diligence.
Orangetheory does not disclose what criteria it considers in assessing an applicant’s viability. But, assuming you are accepted, you will then attend training, select your site, run teaser promotions, and begin construction.
Now that you know the Orangetheory franchise cost and how to start, you can get out there and make an informed franchise decision!
