Orangetheory Fitness Franchise Costs & Fees
Date of Incorporation: 2010
Franchising Since: 2010
Headquarters: Boca Raton, Florida
Business Description: The franchisor is Ultimate Fitness Group, LLC. Orangetheory Studios are health and fitness studios that offer members access to exercise equipment, including cardio and strength equipment, in a simple, contemporary atmosphere characterized by our signature, energizing orange color scheme and trade dress.
Franchise Offer: The franchisor offers franchises to qualified individuals and entities to develop and operate fitness studios under a comprehensive system it and its affiliates have developed.
Financial Assistance: The franchisor does not offer direct or indirect financing. The franchisor does not guarantee your note, lease or obligations.
Training and Assistance: If the Franchise Agreement relates to the franchisee’s first Orangetheory Studio, franchisees, along with all signatories on the Franchise Agreement (or their managing owner, who must be a signatory on their Franchise Agreement) must successfully complete the initial training program to the franchisor’s satisfaction before the Studio opens to the public. The current initial training program lasts approximately 4 to 5 days and is presently conducted at the franchisor’s headquarters in Fort Lauderdale, Florida. Portions of the initial training program may be conducted at other Orangetheory Studios, including the Area Representative's Studio, if applicable, and via the franchisor’s online "e-learning" training modules. The franchisor will also provide training at no charge for up to 4 fitness trainers, which includes 3 to 5 days of training at the franchisee’s Studio or a designated Studio in the weeks prior to opening the Studio. The franchisor may require franchisees, their owners, their managers and other employees to attend additional, periodic or refresher training programs and seminars at the times and locations it designates or through elearning modules available on OTCONNECT.
Territory: The Franchise Agreement grants franchisees the right to operate a single Orangetheory Studio at a specific location that they select and the franchisor approves, in its sole discretion. The approved site must be located within a defined geographic area (no fixed radius) (the Territory) that the franchisor will determine based on various market and economic factors, such as population, traffic flow, presence of businesses, location of competitors (including other Orangetheory Studios), demographic and other market conditions. The Territory may be defined based on geographic boundaries, streets or other criteria, as the franchisor determines appropriate. The franchisor will not approve a Territory that encompasses less than 7,500 Qualified Households, which is determined using a third party consumer analytics report based on metrics provided by the franchisor. A “Qualified Household” is a household with a minimum combined income of $75,000, however, incomes may be adjusted by the franchisor to reflect different markets.
Term of Agreement and Renewal: The length of the initial franchise term is 10 years. If franchisees meet requirements, they can renew for 1 additional consecutive term of 10 years.
Obligations and Restrictions: The franchisor does not require, but does recommend, that franchisees (or their managing owner) personally supervise the Studio. Franchisees must designate a full-time, on-premises manager who (a) devotes his or her full working time and best efforts to the day-to-day, on-premises operations of the Studio, (b) has satisfactorily completed the management training program, and (c) is not engaged in any other business endeavor (except passive investments which do not interfere with his or her duties as manager). Franchisees must conduct the business operated at the Studio as required by the Manuals and the Franchise Agreement. All products and services must conform to the franchisor’s standards and specifications. Franchisees must offer all products and services that the franchisor periodically requires for Orangetheory Studios.
Estimated Number of Units: 465
|Name of Fee||Low||High|
|Initial Franchise Fee||$42,500||$49,500|
|Travel and Living Expenses During Training (for all attendees)||$1,200||$4,800|
|Deposit for Leasehold||$12,000||$30,000|
|3 Month's Rent||$18,000||$45,000|
|Leaseholds Improvements and Construction Costs||$152,000||$590,000|
|Reception Desk, Retail Display Wall and all Interior Logo Signage||$0||$1,200|
|Fitness Equipment (including installation) and OT Beat Start-Up System||$94,900||$113,700|
|Fitness Equipment Maintenance Contract||$900||$1,500|
|Initial Inventory of Orangetheory Fitness Retail Merchandise||$2,500||$4,500|
|AED and First Aid Equipment/Training||$1,000||$5,000|
|Audio/Video System, Other Equipment and Supplies||$20,500||$25,500|
|Business Licenses/Miscellaneous Opening Costs||$1,000||$4,000|
|Additional Funds - 3 months||$25,000||$50,000|
|ESTIMATED TOTAL (Excluding real estate purchase costs)||$424,500||$980,800|
|Type of Fee||Amount|
|Royalty Fee||7% of Gross Sales.|
|Brand Fund Contributions||Currently 1% of Gross Sales; maximum 3% of Gross Sales.|
|Local Advertising||Minimum amount that the franchisor designates, which will be between $2,500 - $4,000 per month.|
|Cooperative Advertising||As determined by Cooperative.|
|Pre-sale/Grand Opening Marketing||$20,000 - $30,000, as determined by the franchisor.|
|Pre-sale/Grand Opening Coordinator (Optional)||$3,000 - $10,000|
|Successor Franchise Fees||25% of then-current initial franchise fee for new franchisees.|
|Transfer/Assignment Fee||25% of then-current initial franchise fee for new franchisees.|
|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 $35 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 Training||Reasonable fee, currently $1,000 per person per session.|
|Refresher Training Fee||$250 per day per person trained.|
|Annual Conference||Up to $1,000 per person.|
|Annual Training Summit||Up to $500 per person.|
|Site Selection Counseling and Assistance||To be negotiated (optional).|
|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.|
|Technology-Software License Fees||Approximately $249-$749 per month (currently $249 per month), plus a $575 MindBody Online setup fee.|
|Toll 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||5% of Gross Sales plus the franchisor’s reasonable costs and expenses.|
|Costs and Attorney’s Fees||Will vary under circumstances.|
|Indemnification||Will vary under circumstances.|
|Operations Manual Replacement Charge||$250|
The above information has been taken from the FDD of Orangetheory Fitness. Year of FDD: 2016
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