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How Much Does An Orangetheory Fitness Franchise Cost?
IBISWorld reported that fitness franchising grew significantly from 2013 to 2018. And the number is expected to rise until 2023. Hence, its business model has enticed many franchisees to consider establishing a fitness chain. Despite it being a sizable investment, many report success running a fitness chain franchise. For instance, Orangetheory Fitness is one of the fitness chains that have seen a surge in growth over the past few years. So, in this article, learn about the Orangetheory Fitness franchise cost and other requirements needed before you become a franchisee.
Orangetheory Fitness Franchise Overview
Before Orangetheory Fitness became one of the fastest-growing fitness boutiques, it was called The Ultimate Workout in 2008. Two years later, “The Ultimate Workout” rebranded to Orangetheory Fitness. And it has become known that ever since. Founder Ellen Latham shared those in her interview for Forbes Magazine.
Their approach to working out is what makes them different from other fitness chains. To explain, Orangetheory Fitness follows the “Excess Post-Exercise Oxygen” (EPOC) theory. To explain, this allows the members to have an “after burn.” It helps increase metabolic rates hours after doing the 1-hour workout. Because of that many members flock to their gym and continue to book their classes with them.
The discussion about franchising started in 2010 before it rebranded to Orangetheory Fitness. As more and more people visited their studio, franchising was their best option to meet the growing demand.
Presently, there are more than 1800 franchises in the U.S. and 26 other countries including Canada, Australia, Mexico, and Japan.
Training
Upon signing the Franchise Agreement (FA), signatories should undergo training. Firstly, there’s an initial four-day training held in Orangetheory Fitness’ headquarters at Boca Raton, Florida. However, the franchisor might also organize training resources or sessions digitally.
Aside from that, there’s also the Studio Launch Training conducted by the franchisor or an area representative. In fact, it comes at no charge for eight coaches and four salespeople. A first-time franchisee, owners, and employees will also have to attend a Presales Training. It also lasts for four days and is held in the franchisee’s studio.
Not to mention, franchisees, trainers, and managers may have to attend additional training and conferences.
Territory
The franchisor doesn’t seem to restrict the number of territories in a particular area. Instead, there are marks that allow the operations of a particular studio. This may then limit other studios opening near the area. However, the franchisor allows certain exceptions like limited access facilities to operate.
So, the franchisee may choose a location they see fit, and the franchisor can grant this territory. Factors such as population, traffic, competitors, and market conditions are considered when opening a new studio.
Obligations and Restrictions
Franchisees may supervise the studio but are not required to do so. However, the franchisor requires a manager to run the studio. The manager will then undergo the initial training program. Furthermore, the manager should be in the studio at all times and has no other obligations with other businesses.
Another key point to mention is sales. As mentioned in the FA, franchisees can only sell pre-approved products, services, and classes to customers.
Orangetheory Fitness Franchise Cost
The estimated Orangetheory Fitness Franchise Cost is between $608,172 to $1,800,322. According to the fitness chain, this includes the franchise fee, equipment, and licenses. Together with those, other costs to consider are royalty fees, brand funds, management fees, and training fees as well. Even so, it seems that Orangetheory doesn’t offer financing options.
You can check the tables below for the breakdown of your initial investment and other costs in franchising Orangetheory Fitness.
Your Investment
| Name of Fee | Low | High |
|---|---|---|
| Initial Fee | $59,950 | $59,950 |
| Travel and Living Expenses During Training for all attendees | $1,200 | $4,800 |
| Deposit for Leasehold | $8,750 | $206,000 |
| 3 Months’ Rent | $16,000 | $114,000 |
| 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 | $122,000 | $190,000 |
| Technology – Software Licensing Fee (3 months) | $3,272 | $3,272 |
| 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 | $60,000 | $88,500 |
| 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) | $608,172 | $1,800,322 |
Other Costs
| Type of Fee | Amount |
|---|---|
| Royalty Fee | 8% of gross sales. |
| Brand Fund Contributions | 2% of gross sales. It may be increased up to 3% of gross sales. |
| Cooperative Advertising | As determined by the Cooperative, if one is formed in the franchisee’s area. |
| 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. Meanwhile, it’s 25% of the then-current initial franchise fee for all other transfers. This is other than transfers to an entity formed to operate the studio. |
| Interest and Late Fees | Lesser of 18% per annum. Or the highest rate permitted by law. In addition, $100 per week or portion of a week that the payment or report is overdue as well. |
| Audit Expenses | The cost of audit, including any charges of independent accountants, travel expenses and per diem personnel charges. |
| Additional Initial Training | Reasonable fee, $1,000 per person per session. |
| Studio Launch Training | Reasonable fee, $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, as well as an administrative fee. |
| Products Purchases | Varies. |
| Technology Fee | $899 per month, as well as a $575 management software setup fee. |
| OT Beat Fees | $149 per month. |
| Non-Compliance Fee | Up to $1,000 per notice of violation. |
| Product/Supplier Approval Costs | Reasonable cost of inspection or testing as well as 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 as well as the franchisor’s actual costs and expenses. |
| Indemnification | Varies |
| Costs and Attorney’s Fees | Varies |
Did You Know?
- Aside from having physical fitness boutiques, Orangetheory Fitness also has an app. This way, Orangetheory Fitness members can download it and schedule class bookings ahead of time as well. Furthermore, it can even sync member’s activities and progress.
- It seems 2017 was a big year for the fitness chain because it opened its 1000th US location at Modesto, California. This location’s franchisee, Karin Neal, was an Orangetheory Fitness member before opening the studio. Then, after attending one class, she decided to franchise her own Orangetheory Fitness studio.
- They signed master franchise agreements in the U.K. and Japan to further branch out their studios in those territories.
- Back in 2017, Orangetheory Fitness raised money to aid research to help create a cure for ALS. But that’s not their only endeavor for health-related causes. They’ve also collaborated with the American Heart Association to raise awareness and pledge donations in funding research for heart disease.
- The fitness franchise has also partnered with athletes to become their ambassadors and sports teams like the New York Yankees to use their facilities for training.
Starting an Orangetheory Fitness Franchise
Now that you know the Orangetheory Fitness franchise cost, you can go to their website and fill up a form. They’ll then contact you regarding your interest in the franchise.
However, they did disclose that only 0.1% of those who inquired to franchise got that opportunity. It’s due to limited development options. Even so, they’re always open to having an Orangetheory Fitness center operating in an area where a potential franchise might be interested in establishing.