F45: When Things Get Tight, Whose Side Is the Math On?

The Zorzee Report | Issue #9 | Boutique HIIT, Part 4 of 4

Note: figures are from the F45 Training Incorporated US FDD dated April 2026, financial performance period March 1, 2025 to February 28, 2026.

The first three brands in this series were about where the money is and how to find it. This one is about what happens when the franchisor's economics and yours don't line up. That's the whole story of F45, and its own filing tells it plainly.

F45 runs a similar strength-and-conditioning circuit to Sweat440 from last week, but the system is far larger, with 706 US franchised studios (Item 20). It also has the heaviest fee structure in the category, a franchisor that has been through a reset, and a litigation section that shows it in disputes with its own franchisees. Read together, they point at one question: when things get tight, whose side is the math on?

Out of 676 F45 studios that ran a full year in 2025, the best did $1,879,753 and the weakest barely cleared six figures at $114,491. The top third averaged $724,472, the bottom third $281,691. The number most buyers plan around is the systemwide average of $480,832, and only 42% of studios beat it (Item 19). The filing reports the top line and nothing about the bills. For the 58% selling under that average, what comes off the top decides everything.

The fees sit in Item 6. The royalty is the greater of 7% of sales or $2,500 a month. Next to it, a flat $2,500 monthly marketing fee and a $500 monthly technology fee. That's roughly $66,000 a year in fixed fees to the franchisor, not including the brand fund, and due whether the studio thrives or not. It's the most predictable revenue in the system, and none of it is yours.

The structure decides who feels it. On the top-third studio at $724,472, those fixed fees are a rounding error, a busy studio barely feels them. On the bottom-third studio at $281,691, they eat more than 23% of sales before a dollar of rent or payroll. A percentage royalty falls when a studio struggles, which is the whole point of a percentage: the franchisor earns less when the operator sells less. A fixed floor doesn't move. On that same studio, 7% of sales would have run $19,718 against a floor that asks $30,000, so the weakest operators pay as though they sold more than they did. Those figures are my math off Items 5, 6, and 19, not numbers F45 prints. The floor is heaviest exactly where an operator can least afford it.

None of that is a reason to walk. A fixed floor rewards the operator who picked a trade area that fills the room, where the fees disappear into a busy studio. It punishes the one who hoped the brand would generate the volume for them. Treat the fee structure as a test of your market: can it realistically produce the sales that make this floor small? If the honest answer is no, this is the wrong brand for that corner.

The money starts moving toward the franchisor before the doors open. Total investment runs $362,300 to $857,700, and at least $190,100 of it goes to F45 or its affiliates no matter what else you spend: a $60,000 establishment fee, $115,000 for the Equipment Pack you must buy from them, $7,500 of royalty prepaid before you've collected a dollar, plus document, seminar, and merchandise fees (Item 7, Item 5). Several other lines can also be bought from F45 or its affiliates: the architectural drawings, the computer system, the body fat scanner, and your grand opening spend. The real figure runs higher.

None of that is buying you a lease, a location, or a single member. It's the price of being allowed to open the doors.

Compare that to Sweat440, where $86,500 to $117,100 went to the brand and the equipment came from outside suppliers.

In October 2024 a multi-unit franchisee dragged F45 into Delaware Chancery Court over more than a million dollars the franchisor said it was owed, and tucked inside that fight was a smaller complaint that matters more to you: the operator said it had already paid for equipment packages that arrived late. They settled in January 2026, and F45 agreed to a $50,000 royalty credit for equipment it would not be delivering at all (Item 3). The complaint is one side's story. The $50,000 credit is what both sides signed.

That's the only equipment dispute in the filing, so read it as one data point rather than a trend. It's still reason to read the pack terms closely. As you research this brand, find out what the $115,000 buys, when it ships, and what happens if it doesn't, then ask current franchisees how delivery went.

Every brand in this series except Sweat440 shrank last year. F45 shrank the hard way.

Its US count peaked at 789 studios in 2023 and fell to 706 by the end of 2025. The number matters less than how it happened. When Orangetheory shrank, it terminated nobody: studios went dark on their own, and owners at the end of a term declined to sign another. F45's decline came the other way. In 2025 alone the franchisor terminated 54 franchise agreements, usually for default or non-payment, while opening 26, and another 13 owners let their terms lapse (Item 20). More agreements ended that year than began.

That cuts both ways. A franchisor willing to terminate is also a franchisor willing to clear out studios that were never going to work, and the operator who came capitalized into a market that fills the room is not the one getting the letter. Still, every one of those 54 was an operator who fell far enough behind to lose the agreement, and 54 in a single year out of roughly 700 is too many to wave off as housekeeping. Carry it into your validation calls: find the operators who struggled and ask what F45 did when they did.

F45's ultimate parent is F45 Training Holdings Inc., doing business as FIT House of Brands (Item 1). The people running it are relatively new to their chairs. Tom Dowd became CEO in March 2023. Patrick Grosso became CFO in December 2023, having served as Chief Legal Officer since 2019 (Item 2). A new CEO and CFO within the same year, at a brand that has been shedding units and terminating agreements, reads as a franchisor working through a reset.

A reset can go either way, and from the outside both versions look alike for about a year. The good one is a sharper operator pruning what wasn't working and tightening the model. The bad one is your field rep changing twice while the playbook gets rewritten underneath you. Either version is a long way from the steady, founder-run picture you saw at Sweat440 last week, where the people who built the brand still run studios themselves. The team selling F45 today did not build it, and the brand is still working through whatever made the reset necessary in the first place. Ask anyone who opened since 2023 whether field support held through the change.

Sweat440's Item 3 was empty. Orangetheory's held one arbitration from 2017. F45's runs to nine matters, ranging from a securities class action to a suit the franchisor filed against one of its own multi-unit franchisees to shut down a competing gym the operator had opened inside an F45 studio. The three worth your attention are the franchisees who say they were sold the franchise on claims that weren't true.

Functional HIIT Fitness sued in Michigan federal court in 2022, alleging fraudulent inducement and negligent misrepresentation alongside violations of the Michigan and California franchise investment laws, and settled confidentially in 2024. Nascot Enterprises filed in the same court the following year with a nearly identical claim set, naming the same former F45 salesperson. A third former franchisee, in Tennessee, alleges F45 promised a uniform system it did not intend to enforce and failed to disclose information about a prior lawsuit (Item 3). F45 denied the allegations in each. Settlements are not admissions, and none of these claims has been proven in court.

Three operators filing the same complaint proves nothing on its own. Take it to validation instead: ask operators who signed during the expansion years what they were told the numbers would be, and whether the system matched the pitch.

On territory, like Orangetheory, you don't get an exclusive one, only a protected area (Item 12). In a 700-studio system, ask precisely what stops another F45 from opening near you.

I want to be fair here. F45 is a real brand with real programming and a top-third studio doing over $700,000. Plenty of operators run it well. F45's structure puts more of the risk and more of the fixed cost on the operator's side of the table than the other two, and its recent history shows what happens to the operators who can't carry it. That's a statement about the structure, not the workout.

Four issues, one pattern. The brand is almost never the variable.

The category map showed you that two of the three biggest names were shrinking while everyone called it a boom, and that the spread between a $1.2M studio and a dark one comes down to location, system, and the operator. Orangetheory showed you healthy sales and a saturated, shrinking map with no territory protection. Sweat440 showed you the only full P&L in the category, a 31% top margin and a six-figure loss at the bottom, and a genuine sales edge that isn't a moat. F45 showed you what it looks like when the franchisor's economics and yours pull in different directions.

Across all four filings, the numbers isolate the same variable. Same brand, same programming, same fee schedule, and at F45 the best studio did $1,879,753 while the weakest did $114,491. Every filing in this series shows that shape. None of them record who ran the front desk, who came capitalized, or who picked the corner. The rest is my read, not a disclosure. The studios that work have someone accountable for the member count every day, enough capital to survive the ramp, and a trade area chosen on real traffic rather than on the map the brand showed them. The FDD never told anyone which brand to buy. It told them what a winning studio looks like, what a losing one costs, and which questions to ask long before they signed.

That's the whole use of the document. Read it like an investor, not a consumer, and the boutique fitness boom stops being a story someone sells you and starts being a decision you can underwrite.

For Pro readers, the inversion deep-dive drops next Tuesday. I take the numbers that ran through these four issues, the fixed fee, the terminations, the missing territory, the six-figure loss, the shrinking maps, and run each one backward to find where the flinch was right and where it was hiding the opportunity. Read it on Pro.

If you are looking at F45 or any boutique fitness brand, that is what I do. I have read every FDD in this series. I can tell you in 15 minutes whether the numbers support the pitch. My consulting costs you nothing. Book the Free Zorzee Clarity Call.

Grab the free Five Signals Franchise Audit Guide: 30 signals across 5 buckets that tell you whether any franchise document holds up. Royalty Burden, Unit Economics, Litigation Risk, Validation Risk, Term and Exit Risk. Same framework Zorzee applies to every brand.

Already own a franchise, or deep into the validation process and the numbers aren't matching what you were told? Books Brothers does a free 15-minute Cash Flow Audit. See how it works at booksbrothers.co.