Are you a fitness enthusiast or just someone who is thinking about investing in a fitness-related franchise? With more and more people getting conscious about fitness, this might look like a good investment opportunity.
So in this guide, we break down how much does an Orangetheory franchise owner make? The amount of investment you need, profit and revenue statistics, and everything else you need to know about Orangetheory Franchise.
So, let’s begin.
About Orangetheory
Orangetheory is an American Fitness studio based in Boca Raton, Florida, which was established in 2009 by Ellen Latham, a fitness psychologist. David Long and Jerome Kern are other co-founders who supported Ellen to make Orangetheory what it is today.
So what is Orangetheory really? Orangetheory is a science-backed, technology-tracked, and coach-inspired group 60-minute workout. During this workout, your heart-rate is monitored, and the exercises are then customized to suit your oxygen levels and hear rate.
Orangetheory was started in Ellen‘s house, and in only one decade, Orangetheory has made a comprehensive market of 1500 units in 25 countries.
The growth rate of Orangetheory clearly shows its potential. So is it a good franchise take on? Keep reading to find out!
How Much Does an Orangetheory Franchise Owner Make?
The money that you can make as an Orangetheory Franchise owner may vary based on your location, size, etc.
However, according to Glassdoor, an Orangetheory Franchise owner makes $120,000-$280,511 annually.
By looking at these numbers, we can say that Orangetheory Franchise is highly profitable, but there are certain things that you should know of before you buy this franchise.
Keep reading to find out!
Interested In Orangetheory Franchise?
How Much Does An Orangetheory Employee Earn?
According to Salary.com, on average, Orangetheory employees make $30/hour, and their hourly wage ranges from a minimum of $25/hour to a maximum of $75/hour.
So an entry-level job as Accounting Clerk at Orangetheory will pay $25/hour, while an expert-level job as let’s say, Assistant Studio Manager, will pay $73/hour.
If we see this in terms of a year, then an Orangetheory employee makes $61,378 per year on average, with $52,281 per year being the lowest salary and $71,552 per year being the highest salary.
The individual salaries vary based on the job title, skills, location, department, etc.
Pros & Cons Of Orangetheory Franchise
Pros Of Orangetheory Franchise
- Provides comprehensive corporate training & support for sales, marketing, fitness, training, equipment, construction & design.
- Offers third-party financing option.
- Franchisees can get started easily & do not require a lot of staff.
- The brand offers assistance of real estate experts to find a suitable location.
- Highly profitable franchise.
Cons Of Orangetheory Franchise
- Charge 8-10% royalty fees.
- Impose some obligations and restrictions.
- High competition from Planet Fitness and Anytime Fitness.
Orangetheory Franchise Average Revenue & Profit
The revenue and profit made by Orangetheory Franchise are not the same for all locations. Both things vary largely depending on the business size, franchise location, operating expenses, etc.
Also, Orangetheory has not disclosed any official information about the revenue and profit of its franchise.
However, it is estimated that individual Orangetheory Franchise owner makes $805,251 in sales per year on average and makes an annual profit of $ 30,000- $300,000 in the U.S.
And if we talk about the overall Orangetheory company revenue, then the current company estimated revenue is of $1.7 Billion per year.
((https://growjo.com/company/Orangetheory_Fitness))
Orangetheory Franchise Failure Rate
Orangetheory Franchise growth has declined since 2019 owing to Covid-19.
Over the year 2018-2020 Currently, Orangetheory has added 284 new locations, and currently, there are 1,348 outlets of Orangetheory in the U.S.
You can expect decent growth of this franchise but nothing exponential.
To understand the Orangetheory franchise failure rate further refer to the table below:
| Studio Type | Year | Studios at the start of the year | Studios at the end of the year | Net change |
|---|---|---|---|---|
| Franchised | 2018 2019 2020 | 754 963 1134 | 963 1134 1197 | +207 +171 +63 |
| Affiliate-owned | 2018 2019 2020 | 18 23 16 | 23 16 16 | -5 -7 0 |
| Total studios | 2018 2019 2020 | 772 986 1150 | 986 1150 1213 | +214 +164 +63 |
As you can see, in spite of Covid-19, there was not a substantial drop in the Orangetheory franchise growth rate. The data makes it clear that the Orangetheory franchise failure rate is quite low.
Orangetheory Franchise Payback Period
To find out the Orangetheory Franchise payback period, let us do some calculations:
So Orangetheory charge a franchise fee of $59,950 + a royalty fee of 8% + an advertising fee of 2%+ requires an investment of $1,381,400 on average and generate revenue of an estimated $913,155,000 per year.
Considering all these calculations and the profit margin of 15-30%, the maximum payback period of the Orangetheory franchise is 11 years on average and can be 6 years if the profit percentages goes as high as 30%. If we compare this with the industry standard of (8-9 years), then the number is on the higher end.
Having said that, you should know that your decision to buy the Orangetheory franchise shouldn’t be based on the payback period solely. This is because this data is based on the average performance of Orangetheory franchises as disclosed in the FDD, and this does not mean your outlet too will perform the same.
Orangetheory Fitness Franchise Cost
Here’s a break down of the average total cost that you need in order to open a Orangetheory Fitness Franchise:
- Initial investments: $488,405 – $994,360
- Net-worth Requirement: $500,000
- Franchise Fee: $59,950
- Liquid Cash Requirement: $150,000
- Ad Royalty Fee 2%
- Ongoing Royalty Fee: 8%
| Name of Fee | Lower end | Higher end |
|---|---|---|
| Initial Franchise Fee | $42,500 | $49,500 |
| Deposit for Leasehold | $12,000 | $30,000 |
| Travel and Living Expenses During Training (for all attendees) | $1,200 | $4,800 |
| 3 Month’s Rent | $18,000 | $45,000 |
| Reception Desk, Retail Display Wall and all Interior Logo Signage | $11,500 | $14,500 |
| Leaseholds Improvements and Construction Costs | $200,000 | $560,000 |
| Fitness Equipment (including installation) and OT Beat Start-Up System | $93,108 | $111,913 |
| Initial Inventory of Orangetheory Fitness Retail Merchandise | $4,000 | $6,000 |
| Fitness Equipment Maintenance Contract | $900 | $1,500 |
| AED and First Aid Equipment/Training | $1,000 | $5,000 |
| Audio/Video System, Other Equipment and Supplies | $20,500 | $25,500 |
| Exterior Signage | $5,000 | $7,000 |
| Pre-Sale and Grand Opening Advertising | $30,000 | $40,000 |
| Computer System | $14,000 | $18,000 |
| Pre-Sale Coordinator Program | $0 | $3,900 |
| Business Licenses/Miscellaneous Opening Costs | $1,000 | $4,000 |
| Additional Funds – 3 months | $25,000 | $50,000 |
| Insurance | $3,500 | $5,000 |
| Estimated Total (Excluding real estate purchase costs) | $488,405 | $994,360 |
((https://topfranchise.com/products/orangetheory-fitness-franchise/))
Facts About Orangetheory
- All Orangetheory coaches hold three certifications minimum.
- Orangetheory was founded by a single, unemployed motivated mother.
- There are more than 1500 Orangetheory locations around the world & you can visit any of them with your membership.
- The Orangetheory logo design represents an exploding fat cell.
- The REFLEX™ treadmill at Orangetheory was designed especially for them.
- Orangetheory is much more than a fitness class, and they host 90-minute donation classes every once in a while to promote heart health.
- Orangetheory is a science-based interval training class where your heart rate is monitored throughout the workout to find out EPOC (post-exercise oxygen consumption.)
What Is Orangetheory Known For?
Orangetheory is a 60-minute intense full-body workout that combines intense cardio sessions and high-intensity interval training (HIIT).
They are known for heart rate-based interval training which helps in burning more calories. To measure your heart rate, they give you Heart Rate monitors to wear, which are displayed on a large screen in their studio.
The intensity of the workout is tailored according to your heart rate zones which prevent under or over-training and gives out the best results.
((https://www.orangetheory.com/en-au/faq/))
Is Orangetheory Franchise Profitable?
Yes, even after taking into account the high cost of investment and high royalty fees, we can say that the Orangetheory franchise is profitable.
And as per Sharpsheets, Orangetheory franchises make $200,000 in profit each year on average, which represents a profit margin of 25%.
Here is the calculation of profit based on the estimate (Orangetheory has not disclosed information about its franchise’s revenue and profit.)
| Profit and loss | Amount | % revenue | Notes |
|---|---|---|---|
| Revenue | $805,251 | 100% | |
| COGS | $(40,263) | 5% | Industry average |
| Marketing | $(40,263) | 5% | Industry average |
| Rent | $(136,893) | 17% | Industry average |
| Staff | $(225,470) | 28% | Industry average |
| Royalty fee* | $(80,525) | 10% | As per FDD |
| Other expenses | $(80,525) | 10% | Industry average |
| EBITDA | $201,313 | 25% |
Orangetheory Franchise Earning Potential
How much you can earn as an Orangetheory Franchise owner depends on your operating costs, location, skills, etc.
From our research, we have found that Orangetheory Franchise easily generates a profit margin of 15-30% on average and has a very high earning potential.
Currently, Orangetheory franchise owners make $120,000-$280,511 annually on average, but with the increase demand in fitness and in the popularity of Orangetheory, you can expect to make more than this amount too.
Wrap Up
After looking at the revenue, sales, profit, and other essential details about Orangetheory, we can conclude a few things.
The initial investment required to open Orangetheory is high, and the repayment period is also on the higher end.
However, Orangetheory is a profitable business with high earning potential. It also has a unique selling point to sustain itself amongst its competitors. And as far as the eligibility criteria are concerned, it is also not stringent.
Overall, the Orangetheory franchise is a good opportunity to invest in.
Frequently Asked Question
Is the fitness industry profitable?
Yes, the fitness industry is quite profitable, and if you are thinking about investing in one, then now might be a good time. With decent knowledge about gym equipment and the fitness industry, you cam open your own gym or fitness center.
How many Orangetheory franchises are there in the world?
In recent years, Orangetheory has seen massive growth worldwide. At the start of 2022, there were 1,262 Orangetheory franchises globally, and now in 2023, there are more than 1500 Orangetheory locations in 25 countries around the world.
What is the requirement to open a Orangetheory franchise?
There are three requirements that you must meet to open an Orangetheory franchise:
- Solid entrepreneur experience
- No Absentee Ownership
- $350K liquid capital with a $1M net worth
Amit Gupta is the founder of DrFranchises – a digital marketing agency that helps brands rank better on Google Maps through local SEO strategies. Amit has over 11 years of experience in digital marketing, SEO, email marketing, and social media marketing. He’s also the owner of multiple franchises and has helped countless brands achieve success online. When he’s not working, Amit can be found playing with his dog.