THE ORANGETHEORY STORY – PAST, PRESENT AND FUTURE

What is the Orange Theory? Orangetheory – one word is one of the fastest growing franchises in the fitness category and Orange Theory is its foundation. Called Excess Postexercise Oxygen Consumption, the theory says that after cardiovascular or weight training, your boy remains in oxygen debt so it continues to use more oxygen and burn more calories throughout the day. Pioneered by Ellen Latham, a single club owner and physiologist, the trainer-led workout combining cardio and weight training caught the eyes of Ultimate Fitness Group owners Dave Long and Jerome Kern, who began franchising the workout under the Orangetheory name in 2010.

Visit an Orangetheory in your town and you’ll be seeing orange. It’s the orange glow of the monitors that showcase the technology of measuring and displaying heart rates and calorie burn for the class. That orange is a heart rate of 84% to 91% of maximum. Orangetheory wants you to spend time in orange – not the higher red or lower green. And, yes, we said class. Orangetheory is trainer-led group sessions because another theory – proving to be true – is that being part of a group drives each individual to their own personal best. It’s motivating. And, so is the growth of Orangetheory with revenues reported by Long to be up over 100% since 2015.

PROS AND CONS OF ORANGETHEORY

Pro’s

  • Part of the rapidly growing specialty fitness market
  • Good fitness results with a workout that is fun and group-oriented
  • Lower liquid cash requirement makes it more affordable
  • 10-year franchise term, renewable for an additional 10 years if requirements are met
  • Franchises available worldwide

Con’s

  • Location must be approved and be in a defined territory based on household income
  • Full-time, on-premise owner or manager required
  • Staffing, equipment and design all necessary

Conclusion: After 42% of health and fitness customers visited boutique studios in 2014, Clubintel predicted at the end of 2015 that “boutique” fitness would continue to grow and change the face of the fitness industry. Orangetheory is riding that wave, but it’s also providing the real results that create regular customers. Long reported that the average client came to an Orangetheory workout two or three times each week. Franchisees currently have the opportunity to buy into the franchise at a point where it is experiencing good publicity and loyal clients, but still has a good selection of available locations. It’s getting in close to the ground floor but with enough history to see the full potential.

FRANCHISE COST

Orangetheory can tip into the high range of franchises because of the investment needed in lease improvements, construction costs, audio video equipment, fitness equipment and other related expenses. Startup costs in the low range would tally in at just under a half a million but on the high end can approach the million-dollar mark. One advantage is that the liquid cash requirement is lower than many franchises although the net worth requirement is $500,000, higher than some. Royalty fees are also slightly higher than some other franchises.

Initial Franchise Fee $49,000
On-going Royalty 8%
Ad Royalty Fee 2%
Net-Worth Requirement $500,000 (with $150,000 liquid cash)
Construction & improvements $200,000 to $560,000
Audio-video and fitness equipment $113,608 to $137,413
ESTIMATED TOTAL STARTUP COSTS $488,405 to $994,360

3 BENEFITS OF AN ORANGETHEORY FRANCHISE

It’s Orange!

Orangetheory is very orange – and it was a color picked to symbolize the class-based exercise program. Don’t be surprised if you see orange everywhere you look – even on the shoes of the staff. Orange was chosen because it represents energy and that’s what Orangetheory is all about. Plus, orange is a color that denotes youthfulness, vitality and good health – all benefits that Orangetheory is set to deliver for its clients in trainer-led, group sessions.

A Solid Background

The workout that hooked Dave Long on the benefits of what would become his and his partner’s franchise was “fun and easy to get one of the best workouts I’d ever had”, according to Long. It was developed by Ellen Latham who holds a Master’s Degree in Exercise Physiology and it’s backed by Group Dynamics Theorists that know when you work out as part of a group or class, you are likely to achieve better results than going it alone.

Financing Options

While the franchisor won’t help you with funding, Orangetheory has established relationships with third-party help. The financial help isn’t limited to just the equipment. You can get help with financing the franchise fee along with that equipment and startup costs. Plus, they can even help you with accounts receivable and payroll. That and the lower liquid cash requirement may all work together to get you seeing both orange and green – with the green going in your pocket.


YOU’LL GET THE TRAINING YOU NEED

One of the requirement for an Orangetheory franchise is that either the owner or a manger is a dedicated employee who is a full-time manager on-premises. They prefer that this person be the owner. Like all franchisors, they expect that your Orangetheory will follow all the stipulations of the Franchise manuals and agreement. Training must be successfully completed before the agreement is signed. This training takes 5 days and is conducted at the headquarters in Boca Raton, FL. Up to 4 fitness coaches who will give the trainer-led classes will be trained at no additional charge. This training is done at the franchisee’s studio or a designated studio. Additional, periodic or refresher training may be required. The Orange University also offers online, e-learning modules. In short, you’ll need to know and follow the requirements, but the extensive training will make it easy!

THE RIGHT LOCATIONS

One of the advantages of an Orangetheory franchise is that your studio will be placed in an area that is prime for success. Territories must have the franchisor’s approval based on their demographics. In general, this means a territory (as defined by streets or geographical boundaries) must include 7,500 “qualified” households – or those with a minimum combined income of $75,000. It’s important to note that these requirements can change based on the community, but it show recognition by the franchisor that you want your studio to be in an area where it will succeed – and they’ll help you define that great location.

It’s the right one for you if:

  • You enjoy people who enjoy living a healthy lifestyle that includes exercise
  • You are able to work full-time at your studio – or find the right person to be there and manage the business for you
  • You like the combination of a business new enough to have room for growth but old enough to have a track record of success
  • The available third-party financing is important to help you get started, and
  • Orange is your favorite color!

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