Risk Score
Pending analysis
Investment Range
$729,352 - $1,628,992
Total US Locations
1,333
Business Summary
Orangetheory Fitness offers franchises for health and fitness studios. These studios provide members with access to exercise equipment, including cardio and strength machines, in a modern setting featuring the brand's signature orange color scheme. Orangetheory Fitness targets adults between 18 and 60, though members as young as 13 can join. The studios operate under a comprehensive system that includes specific designs, equipment, software, online booking, fitness programs, and operational standards.
Corporate History
The Orangetheory Fitness concept originated around 2009-2010, co-founded by David Long, who served as CEO of Ultimate Fitness Group, LLC (UFG). UFG, a predecessor, offered and sold Orangetheory Fitness franchises from July 2010 to March 2019. The current franchisor entity, OTF Franchisor, LLC, was formally established in December 2018. In December 2019, OTF Franchisor, LLC merged with OTF Royalties, LLC, becoming the sole franchisor for all Orangetheory Fitness franchise agreements. In April 2024, OTF Franchisor, LLC became an indirect, wholly-owned subsidiary of TGR Parent, LLC, which also includes other fitness brands like Anytime Fitness.
Financial Overview
Investment Range
$729,352 - $1,628,992
Franchise Fee (High)
$59,950
Royalty %
8%
Marketing %
3%
Equipment Costs (Low)
$219,250
Equipment Costs (High)
$313,250
Working Capital
$37,500
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
The franchisor's financial statements show a member's deficit (negative equity). In 2023, OTF Franchisor, LLC reported a member's deficit of $12,913,000, and in 2022, a deficit of $20,274,000. Additionally, the FDD explicitly states in the Special Risks section that the franchisor's financial condition 'calls into question the franchisor's financial ability to provide services and support' to franchisees. The franchisor is also a guarantor of its parent company's significant debt, which was approximately $485,000,000 in senior secured notes as of November 24, 2021 (with $483,787,500 outstanding as of December 31, 2023). The company is required to remit management fees and distribute all excess cash to its parent, making it dependent on its affiliates for cash flow. These factors suggest financial risk for potential franchisees.
Financing Details
Orangetheory Fitness does not offer any direct or indirect financing to its franchisees, nor does it guarantee any franchisee notes, leases, or other obligations.
Performance Metrics
Total US Locations
1,333
Franchised Units
1,311
Corporate Units
22
Avg Square Footage
2,900
Franchising Since
2019
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Count
1
Litigation Summary
Orangetheory Fitness has disclosed one past litigation case. The case, filed in January 2016, involved Rpash, Inc., David Regelean, and Tammie Regelean (franchisees) against Ultimate Fitness Group, LLC (a predecessor of Orangetheory Fitness) and Dan Adelstein. The franchisees alleged misrepresentations regarding the suitability of a territory's demographics for a studio. They sought damages or rescission of the franchise agreement. Orangetheory Fitness denied the claims. The dispute was settled, resulting in the transfer of the franchisees' studio and a reimbursement of $34,200 to the claimants, with transfer fees waived. The arbitration was dismissed with prejudice in January 2017. Orangetheory Fitness has no other litigation required to be disclosed.
Bankruptcy History
Orangetheory Fitness has no bankruptcy history to report for the franchisor entity or its predecessors, or for individuals identified in Item 2.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise agreement, Orangetheory Fitness franchisees must provide six months' advance notice, ensure they are not in breach of any agreements with the franchisor or its affiliates, and have satisfied all monetary obligations. They must also have the right to remain in possession of their studio premises, pay a successor franchise fee (50% of the then-current initial franchise fee for new franchisees), agree to any territorial changes, sign the franchisor's then-current franchise agreement and a general release, and complete any required retraining programs.
Training & Support Program
Franchisor Assistance
Orangetheory Fitness provides extensive support to its franchisees. Before opening, the franchisor offers site selection guidelines, counseling, on-site evaluations, and review/approval of proposed sites and lease agreements. They provide sample architectural plans, initial and final design approvals, and assist with planning pre-opening and grand opening marketing programs, including achieving a minimum of 250 presale memberships. Franchisees receive initial training for owners, presales training for owners and employees, and studio launch training for fitness coaches and sales associates. The franchisor also provides information on approved products, services, suppliers, and recommended pricing tiers, and arranges for equipment and product purchases. Ongoing support includes continuous access to updated operations manuals, training for replacement lead trainers, and written summaries of any studio evaluations. The franchisor administers a Brand Fund for system-wide advertising, reviews and approves any ancillary business operations, and oversees digital marketing activities including websites and social media accounts. They also manage a global reciprocity program for members and require participation in Group Programs.
Initial Training Hours
83
Training Location
Hybrid (Online, Franchisor Headquarters in Boca Raton, Florida, and on-site at Studio or Area Representative facility)
Ongoing Support
After opening, Orangetheory Fitness franchisees receive ongoing access to updated operations manuals and training programs for replacement lead trainers. The franchisor provides written summaries of any evaluations conducted at the studio and administers a Brand Fund for system-wide advertising. They review and approve requests for ancillary business operations and digital marketing activities, as well as product, service, and supplier approvals. Franchisees (or their Managing Owner), lead trainers, and studio managers are required to attend supplemental or refresher training programs and various conferences, such as the Annual Convention and Annual Training Summit.
Franchise Requirements
Ideal Candidate Profile
Orangetheory Fitness seeks qualified individuals or entities to operate its studios. While the franchisor recommends that the Managing Owner personally supervise the studio, it is not strictly required. Franchisees must designate a full-time, on-premises manager who dedicates their full working time to daily operations and has successfully completed the franchisor's management training program or an approved comparable program. This manager should not be engaged in other business endeavors that interfere with their duties. The franchisor does not explicitly state requirements for prior industry, management, sales, or technical experience for the franchisee owner, focusing on overall qualification and the ability to oversee a dedicated manager.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
supervisory
Territory Type
protected
Staff Count
13
Territory Size Requirements
OrangeTheory does not specify a minimum geographic or population size for its territories. Once the franchisee's site has been accepted, OrangeTheory designates a geographic territory based on factors it deems relevant, which might include population, traffic flow, presence of businesses, competitor locations (including other OrangeTheory Studios), demographics, and other market conditions. The territory may be defined using geographic boundaries, streets, or other criteria as appropriate for the area surrounding the OrangeTheory Studio. A description and map of the designated territory are then inserted into the Franchise Agreement.
Staffing Notes
Orangetheory Fitness requires franchisees to staff their studios with a sufficient number of trained employees, including at least one full-time, on-premises studio manager. This manager must devote their full working time to the daily operations of the studio and must have satisfactorily completed the franchisor's management training program. For the initial studio launch, up to eight fitness coaches and four sales associates receive specific Studio Launch Training. Fitness coaches must also pass the OTFit certificate training to be qualified. Owners are responsible for all hiring and employment decisions, including implementing a training program for all employees based on franchisor-prescribed standards and procedures.