Orangetheory Fitness: A Franchise HIIT - [Business Breakdowns, EP. 94]

This is Matt Reustle and today we are breaking down the fitness franchise, Orangetheory. I have wanted to do a deep-dive on franchising for a while now and I always knew who the guest would be. I’m joined by a man fully dedicated to all things franchisee and franchisor - the Wolf of Franchises. We talked through the origin story of Orangetheory and the tech-enabled concept that helped differentiate them during the boutique group fitness boom. Wolf walks me through the economics for both the franchisees and the franchisor – and he helps compare this to the rest of the franchise system throughout the conversation. If you’re in any way curious about franchises – I think you’ll enjoy this episode. And if you do, make sure to check out Wolf’s work at wolfoffranchises.com – it’s the exact type of niche dedicated content that I love. Enjoy this breakdown of Orangetheory. For the full show notes, transcript, and links to the best content to learn more, check out the episode page here. ----- Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt Show Notes [00:02:55] - [First question] - What makes Orangetheory unique from their competitors [00:04:47] - Orangetheory’s founder and origin story [00:06:53] - What it looks like going from an initial concept to a franchise [00:08:56] - Whether or not early franchises have pricing and adjacent benefits [00:11:17] - How their franchisee numbers rank compared to their competitors [00:13:09] - How their location numbers rank compared to their competitors [00:15:39] - What it would look like applying for and becoming an Orangetheory franchisee [00:17:52] - How much Orangetheory cares about their franchisees being good operators [00:20:35] - Upfront franchise fees and other parent company revenue streams [00:23:15] - How much revenue is actually going back to the Orangetheory parent company [00:25:41] - Whether or not the parent company helps with upfront costs [00:28:01] - Overcoming the barrier of up front capital for a franchise [00:29:33] - Unit economics and business models for fitness instructors [00:30:53] - Rules of thumb and variables to break even on an Orangetheory franchise [00:34:04] - The average cash flow generated by a mid-tier Orangetheory franchise [00:35:16] - Where an owner might have to reinvest their profits into the business [00:37:14] - Additional marketing and mandatory costs required of an owner [00:38:47] - How franchisees are protected by new locations [00:40:47] - The main risks to an ecosystem like Orangetheory over the next five years [00:44:17] - Key takeaways for operators and investors from Orangetheory’s story