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Orangetheory Fitness Franchise Aims For 1000 Clubs In 2017

One of Australia’s newest franchise players on the fitness block – Orangetheory Fitness – has confirmed their global success with an upcoming relocation of their corporate headquarters, to a new 77,000-square-foot space in Boca Raton, Florida (USA), which reportedly cost $13.9 million.

Dave Long CEO said to Club Industry, “We knew at some point we were going to outgrow our existing space. We had really been looking for a larger office building to buy or rent the last couple of years, and fortunately the timing came together with the right size building and the right environment for us.”

Scheduled to occur on 1 September 2016, the move will see 100 corporate employees travel 20 miles north to a larger building, which will be better equipped to enable the brand to focus on its plans for international expansion.

The new HQ will comprise of collaborative work spaces, common areas, relaxation areas. Also included will be a full-size Orangetheory Fitness studio, which will be used for programming development, product testing and franchisee training, as well as classes for employees to participate in (due to the lack of availability in Orangetheory Fitness classes in the area around the Fort Lauderdale office).

Fort Lauderdale was the location where Orangetheory Fitness was originally founded. In 2009 and as a single club owned by Ellen Latham, Orangetheory Fitness and its heart-rate based workout grew as a result of the Ultimate Fitness Group LLC founders Dave Long and Jerome Kern coming on board.

In 2010 Orangetheory Fitness started franchising and in 2012 they had 26 clubs. In 2013 they’d expanded to 61 clubs, and then in 2014 they’d clocked up 157 clubs. The following year the brand totalled 338 sites and today, Orangetheory Fitness boasts more than 400 studios in 38 US states and seven countries.

Club Industry says the brand’s revenue in 2015 was reported to have grown to $47.5 million in corporate club revenue and franchisee fees – a whopping 208 percent over 2014 (this information is based on the brand’s application for the Club Industry Top 100 Clubs list – available late July – which does not allow individual franchisee revenue to be reported).

Expansion plans

In 2015 when Long discussed Orangetheory’s growth with Club Industry, he forecast 500 to 550 global locations in operation by the end of 2016. This week he confirmed that by August or September, there’ll be 500 Orangetheory Fitness clubs open, with a total of 600 open by the end of the year.

Long said to Club Industry, “Our interest in the US and international continues to grow to the point where it’s almost challenging because there’s so much interest in the US right now. We still have quite a few areas for people to develop, but in the next 12 to 18 months, that’s going to get fairly tight.”

In 2017 the brand aims to open 150 international clubs and 250 US locations, which would give the franchise 1,000 locations worldwide by the end of 2017. In April, Orangetheory Fitness received a growth equity investment in an undisclosed sum from an affiliate of an Atlanta-based private equity firm who has a focus on the franchise industry.

Said Long, “Every year we think it can’t get much more exciting and the growth can’t get more rapid, but every year we continue to outpace the previous year. That’s what we intend to do in 2017. What will change in 2017 is there will be a lot more international growth.”

In Japan in April, the first Orangetheory Fitness master franchisee signed to open 70 studios. International expansion coming in 2017 also will see Orangetheory Fitness set up shop in Germany and Hong Kong. Internationally, at present there are clubs operating in Australia, England, Canada, Colombia, the Dominican Republic and Mexico.

In Australia, there are three Orangetheory Fitness clubs operating, and there are currently up to six more sites in development or undergoing the approval process. The Chairman of Orangetheory Fitness Australia tells us they’re aiming for around 100 to 120 local clubs in the future, but they’re not in a rush to set them up.

“When it comes to the business side of things, the number one goal for Orangetheory Fitness is to ensure the franchisees are set up for success,” he says. “The support and training they receive is extensive and is specifically designed to ensure they succeed. To date, no Orangetheory Fitness franchise in the world has ever closed down, and we want to keep it that way. The most important thing is that the franchise is profitable, so in order to achieve this we approve territories based on due diligence that involves ensuring that area is a qualified region that will contribute to ensuring the business is successful right from the start. Training for franchisees is extensive and ongoing. It initially occurs in the States to ensure each business owner is trained properly, from the source.”

Embracing trends

Typically an Orangetheory Fitness member visits trains two to three times a week in the studio. “We know that there is still a large percentage of our consumers that still have their big-box membership as well and they probably use it less, but they keep it and they still use it. We’re seeing them do cross-training, use their big-box gym, and also there’s yoga/Pilates offerings and even group cycling that we’re seeing are part of their regime. I think the trend is still people are decentralising, and they’re okay with going to a few different outlets to meet their overall fitness and wellness needs,” said Long.

Orangetheory Fitness launched its Mio-manufactured OTBeat Link wrist heart rate tracker and integrated it with the Netpulse-designed OTbeat app platform in March this year. Since the launch, the app has been downloaded more than 200,000 times and Long confirmed that more than 80 percent of users are tracking a workout or multiple workouts outside the Orangetheory Fitness walls with this app.

“It has been received really well,” Long said. “When given an option, typically they [Orangetheory Fitness members] would prefer to slap on a wrist strap or a bracelet if they don’t have to deal with a chest strap. What we’re seeing is that we’re producing a lot of quantity, and we’re more or less selling through everything coming from the factory at the studio level.”

The growth in using heart rate monitor technology as part of a programming model has grown in recent times. Historically, heart rate monitor training was a bit niche so Orangetheory Fitness studios have focused on educating their customers about its use as an integral part of an exercise plan. Long believes the growing awareness and utilisation of heart rate technology is good for the health club industry and the consumer.

“The fact there’s a lot of other players in the industry that are integrating heart rate into their existing programming or integrating a heart rate system into a larger club – we think that is a good thing. We’ve got a lot of other kind of unique points of why people want to come to an Orangetheory facility. It’s not just about the heart rate monitoring. But the fact that the consumer is getting more educated on it and has more buy-in on just how good it is – we think that is good for everybody. The reality is that if you’re tracking heart rate during your workouts, you’re typically going to get better results because you’re going to understand how to work out more efficiently,” Long explained.

The Chairman of Orangetheory Fitness Australia adds, “Our classes are not just classes. We are a community-based business that focuses on having fun and creating a place where people want to come. Results are a sure thing as we run new challenges every month; our personal training really IS personal; and people may never do the same workout twice when they come to Orangetheory Fitness; we’re all about technological advancements, which is shown by the millions of dollars a year that are invested to ensure we are leading the way in fitness innovation.”

To learn more about Orangetheory Fitness, watch our exclusive chat below with David Hardy, who is a partner in Orangetheory Fitness International and the Head Franchisor for Canada.

Information in above article sourced from Club Industry.

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