Risk Score
Pending analysis
Investment Range
$252,200 - $1,182,389
Franchise Fee
$10,000
Total US Locations
719
Business Summary
HOTWORX® operates 24-hour boutique-style studios offering hot exercise services, functional training areas, and related fitness products to the general public. These locations are approximately 2,000 square feet and use an automated access system, allowing members 24/7 entry. HOTWORX® franchisees manage these studios, which aim for minimal overhead and labor costs.
Corporate History
HOTWORX Franchising, LLC was established as a Wyoming limited liability company on November 29, 2016. The company began offering franchises for HOTWORX® studio locations in January 2017. HOTWORX Franchising, LLC does not have any parent companies or predecessors. The brand operates a proprietary system of 24-hour studios that provide hot exercise services and fitness products.
Financial Overview
Investment Range
$252,200 - $1,182,389
Franchise Fee (Low)
$10,000
Franchise Fee (High)
$19,950
Marketing %
10%
Equipment Costs (Low)
$160,150
Equipment Costs (High)
$804,439
Working Capital
$45,000
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Going concern qualification
Financial Health Notes
The financial statements for HOTWORX Franchising, LLC include a going concern qualification, indicating substantial doubt about the company's ability to continue operations. The company has experienced recurring operating losses and negative cash flows from operations. As of December 31, 2024, HOTWORX Franchising, LLC had a working capital deficiency, with current liabilities exceeding current assets by $10,240,654. This financial condition raises questions about the company's long-term sustainability.
Financing Details
HOTWORX Franchising, LLC offers direct financing only in exceptionally limited circumstances and at its sole discretion, for various purposes related to the franchise license. This financing is structured as a promissory note, with loan amounts up to $65,000, repayment terms of 3 to 6 months, and an interest rate of 7% per annum. The loans are secured by the studio equipment and other assets, and a personal guaranty is required. In case of default, all amounts and accrued interest become immediately due, and the franchisee is liable for attorney's fees. The promissory note also includes a confession of judgment, allowing the franchisor to enforce a privilege in property under Louisiana executory process procedures. Additionally, HOTWORX Franchising, LLC has arrangements with third-party financing lead sources like Guidant Financial and Business Finance Depot and receives referral fees for franchisees who engage with these services, but the franchisor does not directly participate in lending decisions for these third-party options.
Performance Metrics
Total US Locations
719
Franchised Units
712
Corporate Units
7
Avg Square Footage
2,000
Franchising Since
2017
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
2
Litigation Summary
HOTWORX Franchising, LLC has disclosed two litigation cases. One pending case, filed in October 2023 by franchisees Greg and Gabriela Skistimas in Washington, alleges unconscionability, fraud, and misrepresentation regarding the franchise agreement terms and investment costs. This case is currently stayed pending arbitration, and a tentative settlement has been reached for HOTWORX to terminate the agreement and return initial franchise fees without admitting liability. The other case, a past wrongful death petition filed in February 2022 by Nazha Abdul-Hadi in Louisiana, alleged negligence and strict liability against HOTWORX Entities and a franchisee due to injuries sustained in a HOTWORX sauna that allegedly resulted in a death. This case included product liability claims against Stephen Smith and HWX, LLC and was settled for $380,000, with HOTWORX not admitting liability.
Bankruptcy History
HOTWORX Franchising, LLC has no bankruptcy information required to be disclosed in this item, indicating no bankruptcy history for the franchisor or its key personnel.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew the HOTWORX® studio license, franchisees must provide written notice of their intent to renew between 90 and 180 days before the current term expires. They must be in full compliance with the current franchise agreement and all other agreements with HOTWORX Franchising, LLC and its affiliates, ensuring all monetary obligations are satisfied. Franchisees must also have the right to remain in possession of their approved premises, agree to remodel the studio to meet current brand standards if requested, and sign HOTWORX Franchising, LLC's then-current franchise agreement, which may have different terms and fees. A general release of claims against HOTWORX Franchising, LLC and its affiliates is also required.
Training & Support Program
Franchisor Assistance
Before a HOTWORX® studio opens, HOTWORX Franchising, LLC or its designees will approve the franchisee's chosen site and designate the territory. The franchisor provides a Franchise Performance Coach who conducts virtual training. Franchisees receive access to the confidential Operational Systems Checklist and are trained using the HOTWORX® University Online Franchise and Manager Curriculum. HOTWORX Franchising, LLC also sets minimum and maximum membership pricing. Once open, HOTWORX Franchising, LLC allows franchisees to operate under its Proprietary Marks and System, offering general advisory assistance in marketing, operations, and promotion. Franchise Performance Coaches meet with franchisees at least quarterly to ensure high standards of quality and service. Franchisees receive access to updates for the Operational Systems Checklist and additional online training programs. Mandatory annual conventions are held, for which franchisees pay a fee, and secret shopper inspections are periodically conducted.
Initial Training Hours
44
Training Location
Online/virtual and from the franchisee's studio location
Ongoing Support
After opening, HOTWORX Franchising, LLC provides ongoing support to its franchisees through various means. A Franchise Performance Coach meets with franchisees at least once every calendar quarter to ensure compliance with standards and to offer general advisory assistance in marketing, operations, and promotion. Franchisees have continuous access to view updates and revisions to the Operational Systems Checklist. Additional training programs and seminars are offered at HOTWORX Franchising, LLC's discretion, primarily through online and video technology. Franchisees are required to attend mandatory annual conventions, covering travel and lodging expenses. Periodically, HOTWORX Franchising, LLC also conducts secret shop inspections to monitor studio performance.
Franchise Requirements
Ideal Candidate Profile
HOTWORX Franchising, LLC seeks individuals who have applied and been approved based on their financial resources, business experience, and interests. While personal supervision of the studio is not required, it is recommended. If an owner chooses not to personally supervise, they must designate a full-time manager who will oversee day-to-day operations and complete all required training. The FDD notes that area development rights are offered to 'certain candidates'.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Absentee Allowed
Territory Type
Protected
Territory Size Requirements
HOTWORX Franchising, LLC grants franchisees a Protected Territory, typically defined as a circle around the approved studio location. The size of this radius varies based on population density: in densely populated areas, it ranges from 0.3 miles to 1.9 miles, while in other areas, it is a 2.0-mile radius. However, certain areas are excluded from the Protected Territory, including regions across state lines, rivers, navigable waterways, interstates, highways, or other natural or man-made boundaries. Regional shopping malls, professional or collegiate athletic facilities, residences, resorts, and airports are also excluded. The final determination of the specific radius is made at the sole discretion of HOTWORX Franchising, LLC.
Staffing Notes
HOTWORX Franchising, LLC requires franchisees to be responsible for recruiting, hiring, and training their own employees. The Operational Systems Checklist provides reference material to assist in this process. While personal participation by the franchisee is recommended, it is not required. If a franchisee opts not to personally supervise the studio, they must designate a full-time manager to oversee the day-to-day operations. This designated manager, along with the franchisee, must successfully complete all components of HOTWORX Franchising, LLC's training program and sign a Confidentiality and Non-Competition Agreement before assuming managerial duties. No specific number of staff or detailed employee structure beyond the manager role is provided in the FDD.