Orangetheory Fitness Franchise Costs: Estimated Initial Investment (Item 7, 2021 FDD)

• Orangetheory does not offer direct or indirect financing for your initial investment for an Orangetheory Fitness Studio.

1.  Initial Fee:  $59,950

2.  Travel and Living Expenses During Training:  $1,200 to $4,800

• Orangetheory provides initial training for up to three trainees for no charge.

• You must arrange and pay for all travel and living expenses for the people who attend the initial training program. Costs vary depending on the distance traveled and the type of lodging. This estimate does not include the cost of transportation.

3.  Deposit for Leasehold:  $3,360 to $206,000

4.  Rent (one month):  $3,360 to $38,000

• If you do not already own suitable commercial space, the premises must be purchased or leased. Orangetheory anticipates that most franchisees will lease the premises.

• Orangetheory requires a commercial space of 2,600 to 4,000 square feet of interior space. The cost of leasing or purchasing space will vary, depending on location and other market factors, and cannot be accurately projected by Orangetheory; as a result, the costs shown above may be low or high.

• In Orangetheory’s experience, the landlord will typically offer free rent for an initial period, but it has not included the potential for free rent in the estimate.

• The initial investment includes your first month of rent and the security deposit. The amount of the security deposit may vary significantly depending on whether you provide a personal guarantee to your landlord.

• If you purchase the premises, your initial investment will increase dramatically.

5.  Leasehold Improvements and Construction Costs:  $309,000 to $1,309,000

• You will need to engage architects that Orangetheory designates or approves to adapt its prototype designs and plans for the building in which you will locate your Studio in accordance with state and local building codes. Construction costs vary depending upon numerous factors, including the size and configuration of the premises and the cost of materials and labor for construction.

• The cost shown does not include the cost to purchase the building or site for the Studio.

• The range shown includes costs for end-cap, free-standing, and in-line Studios. Orangetheory has based its estimate on its affiliates’ experience constructing Studios. The cost of leasehold improvements depends on the condition and size of the site, the local cost of contract work, and the location of the Studio.

• Some landlords provide a tenant improvement allowance that will cover some of these costs. In the last fiscal year, Orangetheory franchisees reported receiving tenant improvement allowances ranging from $0 to $330,000, with $150,000 as the average reported allowance. The estimate has not been adjusted to reflect any potential tenant improvement allowances.

• The high estimated figures include remodeling walls, ceilings, floors, and other construction, including electrical, plumbing, HVAC, and carpentry work.

• This estimate also takes into account the cost of permitting.

6.  Fitness Equipment (including installation) and OT Beat Start-Up System:  $140,000 to $210,000

• This includes selectorized equipment, free weights, cardiovascular equipment, and installation; and the proprietary OT Beat System equipment; OT Connect tablets and displays; and an initial inventory of heart rate monitors and straps for membership presales.

• The cost will vary based on the size of your Studio.

• Additional heart rate monitors range from $32 to $70 each and additional straps cost approximately $10 each, each of which must be ordered for all members.

• This estimate does not include monthly OT Beat Fees that must be paid to OTF Sourcing for the OT Beat System.

7.  Technology – Software Licensing Fee (3 months):  $3,272

• Orangetheory charges a monthly Technology Fee to all franchisees for all Required Software. The Technology Fee is currently $899 per month and must be paid one month in advance, commencing with the month that you set up your Management Software account for membership presales for your Studio.

• This estimate includes three months of fees, as well as the $575 fee to set up the Management Software.

8.  Fitness Equipment Maintenance:  $900 to $2,400

• An equipment maintenance contract is required prior to opening your Studio and evidence of such must be provided to Orangetheory. The current cost of the maintenance contract is $300 to $800 per month. This fee is charged by a third-party provider and is subject to change. Neither Orangetheory nor its affiliates currently provide any equipment maintenance services.

9.  Initial Inventory of Orangetheory Fitness Retail Merchandise:  $4,000 to $6,000

• This estimate includes an initial mandatory start-up kit of inventory of branded merchandise, which includes items such as shirts, hats, shorts, gym bags, water bottles, towels, and related items as Orangetheory Fitness determines.

• You should not assume that you can purchase inventory or other supplies on credit.

10.  AED and First Aid Equipment/Training:  $1,000 to $5,000

• This estimate includes the cost of one automated external defibrillator (“AED”) and training for CPR and AEDs, which every Studio must have.

11.  Exterior Signage:  $5,000 to $14,000

12.  Technology System:  $60,000 $88,500

• You must obtain, maintain, and use the hardware, software, other equipment, and network connections that Orangetheory specifies periodically in the Manuals necessary to operate the point-of-sale system, the membership management system, the accounting system, the OT Beat System, the training system, the online reservation system, the audio-visual system, and other technology systems that Orangetheory Fitness designates (collectively, the “Technology System”).

• This estimate includes the cost of acquiring the required equipment in the Technology System, including three desktop computers; three to six televisions; two to three Apple TVs; a laptop or tablet; three to four tablets for member check-in, other in-studio activities, and challenge tracking; proprietary tablets for all rowers and treadmills; and all audio equipment for your sound system. This also includes music licensing fees paid to third-party music licensors.

13.  Pre-Sale and Grand Opening Advertising:  $30,000 to $40,000

• You must conduct a pre-sale/grand opening program Orangetheory approves, with a minimum cost of $30,000, as determined by Orangetheory.

14.  Pre-Sales Training Program:  $0 to $4,900

• For your first Studio, Orangetheory requires you to participate in the Pre-Sales Training Program. For your subsequent Studios, Orangetheory may require you to use this service in its sole discretion.

15.  Business Licenses/Miscellaneous Opening Costs:  $1,000 to $3,000

• This estimate is subject to any state and local requirements for licenses and permits.

16.  Insurance:  $3,500 to $5,000

• Insurance must be obtained to meet the minimum requirements established by the System Standards.

17.  Additional Assistance:  $0 to $5,500

• At your reasonable request, Orangetheory may, in its sole discretion and subject to the availability of its personnel, furnish you with additional site selection and/or development guidance and assistance which is beyond the nature and scope of the services it is then providing to new Orangetheory franchisees as part of the Initial Franchise Fee.

• Orangetheory estimates that the fee will range from $2,500 to $5,500. The low estimate assumes that you do not request additional assistance.

18.  Additional Funds – 3 Months:  $32,000 $100,000

• This is an estimate of the amount of additional operating capital that you may need during the first three months after opening your business based on the costs Orangetheory’s affiliates have incurred opening and operating similar Studios.

• This estimate includes additional funds you may need to pay employee salaries and wages, utilities, payroll taxes (including payroll to cover the pre-opening training period for your staff), fees payable to Orangetheory, legal and accounting fees, additional advertising, health and workers’ compensation insurance, bank charges, miscellaneous supplies and equipment, staff recruiting expenses, state tax and license fees, deposits, prepaid expenses, and other miscellaneous items.

19.  Total Estimated Initial Investment (excluding real estate purchase costs):  $657,542 to $2,105,322

• The estimated initial investments shown are based primarily on the costs Orangetheory’s affiliates have incurred in constructing and operating similar Studios, encompassing approximately 2,600 to 4,000 square feet. Your Studio may be larger or smaller, and your actual costs will vary depending on the size and location of your Studio.

• The total actual cost to construct and operate each Affiliate-Owned Studio has varied from the estimated costs shown above, and no particular Studio has experienced the low or the high estimate for every category shown above.

• The amounts shown are estimates only and may vary for many reasons.