Start an orangetheory franchise by following these 10 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your orangetheory franchise. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening an orangetheory franchise?
The costs to open an Orangetheory franchise are quite high. On the low end, the costs are just over $488.000, while on the high end, the costs can reach almost 1 million dollars. The majority of the cost of opening an Orangetheory franchise goes toward leasehold improvements, rent and the purchase of workout equipment. This cost includes everything except for ongoing fees.
Franchisees must have a net worth of over $500,000 and have liquid assets of $150.000 minimum to qualify for a franchise opportunity.
What are the ongoing expenses for an orangetheory franchise?
There are many ongoing expenses associated with an Orangetheory franchise. Besides the cost of labor, rent, utilities, insurance and other common business expenses there are franchise-specific costs. Orangetheory franchisees must pay an 8% royalty and a 1% brand fund contribution of gross revenue. If a franchise falls below a certain level of gross sales for the year, the franchisee must make up the difference in these fees. Besides these fees, there is also the monthly advertising fee of up to $4,000, a $250 per year per person refresher course fee, a $1000 per person cost to attend the annual conference and other assorted costs.
Who is the target market?
Orangetheory is not a run-of-the-mill gym. It attracts clients who are health conscious, but definitely not gym rats. Due to the class format, many Orangetheory customers are working people who are more serious about getting fit than hanging out.
How does an orangetheory franchise make money?
Owners of an Orangetheory franchise makes money through the sale of different tiers of memberships. These three different membership levels give members a set number of classes per month. Members can purchase additional classes at a discounted rate compared to non-members.
In addition to earning money on memberships, an Orangetheory studio can sell the brand's clothing and accessories.
How much can you charge customers?
The average cost of a membership at Orangetheory is between $59 - $200 a month depending on the membership level. Non-members can take a single class for $28.
How much profit can an orangetheory franchise make?
Revenue for Orangetheory is up overall, but there is no information on average revenue for individual franchisees. The number of franchises continues to grow and many franchisees have multiple units.
How can you make your business more profitable?
Franchise owners can make additional money through the sale of Orangetheory clothing and accessories. Additional add-on services are restricted according to the franchise agreement.
The best way to increase profits would be to open up another Orangetheory gym in a populated area far enough away from your first location that it would be able to develop its own local membership.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Orangetheory Franchise Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your orangetheory franchise is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a Orangetheory franchise business, if you’re opening your own studio. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Certificate of Occupancy
Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a Orangetheory franchise business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your Orangetheory franchise business will be in compliance and able to obtain a CO.
To avoid liability and potential lawsuits, Orangetheory franchise business should have their clients sign waivers.
An example of an appropriate waiver can be found here.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
How to promote & market an orangetheory franchise
Part of the contract between franchisees and the corporation requires owners to spend between $2.500 and $4,000 every month on local advertising. Franchisees need to adhere to corporate standards to retain their licenses.
How to keep customers coming back
One of the best ways to keep customers coming back is to provide a clean, welcoming exercise studio with a top-notch staff. Concentrate on providing individual attention to each member and ensure they have the best possible experience by making sure classes run on time.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start An Orangetheory Franchise In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
An Orangetheory franchise makes sense for anyone looking for a full-time opportunity in the popular health club industry. Owning an Orangetheory gym is the perfect match for someone who is interested in combining a healthy, active lifestyle with a well-known and respected business.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at an orangetheory franchise?
While some Orangetheory studio owners have a background as trainers and continue to teach classes after starting their own franchise, most owners fill their days by taking care of the same daily administrative and managing tasks which every business requires. There is one difference. Since Orangetheory franchise owners receive extensive support from the corporate headquarters, most franchisees find they can devote more time to promoting a welcoming atmosphere at their studios and are able to handle their customers' needs better than independent business owners.
What are some skills and experiences that will help you build a successful orangetheory franchise?
A background in physical fitness or strength training can be beneficial for new owners, but this does not mean that people new to the fitness market are unqualified to own an Orangetheory franchise. Although experience within the fitness industry is not mandatory, franchise owners need to have a solid business background, a passion for promoting a healthy lifestyle, and enough available funds to qualify.
What is the growth potential for an orangetheory franchise?
There is a huge potential for growth of the Orangetheory concept. As the only health club of its kind, Orangetheory franchisees are in the unique position of being able to offer a service with no real competition. Orangetheory began in 2010 with only one studio. Now there are over 525 gyms open with another 520+ gyms in development. The best news is that no Orangetheory studio has closed due to lack of members. Ever.
Since 2015, Orangetheory revenue has been up over 100 percent, and there is no reason to believe the business can not continue to grow.
Owning an Orangetheory gym is a great opportunity with a solid future.
TRUiC's YouTube Channel
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting an orangetheory franchise?
One benefit of purchasing a franchise is the ability to take advantage of an established brand and business plan. Orangetheory has a very successful business model, and the best thing for a new franchise owner to do is to learn as much as he can about the business from the people who started the company.
How and when to build a team
A great team is essential to the success of an Orangetheory franchise. Everyone from instructors to reception needs to be friendly, helpful, passionate about fitness and focused on helping your franchise succeed. Franchisees should take advantage of the training program the corporate office offers to ensure every member of the staff knows how to do his job the right way.