The Best Sales in Boutique Fitness Belong to a Shrinking Brand

The Zorzee Report | Issue #7 | Boutique HIIT, Part 2 of 4

Note: figures are from the 2026 Orangetheory FDD (OTF Franchisor, LLC), financial performance period ended February 28, 2026.

ILast week I told you two of the three biggest names in boutique high-intensity interval training (HIIT) shrank last year, and one of them did it with the healthiest sales in the category. This is Orangetheory Fitness (OTF).

You know a brand has made it when multiple generations in the same family know the name, or hold memberships. That's what Orangetheory has become, and why everybody wants in. It's the studio people reorganize their week around, the coach on the mic and a room full of members chasing a heart-rate number on a screen like it owes them money. People don't just belong to this brand, they identify with it, and that head start is something most businesses can't hand you.

The money is real too. The average studio did $802,145 in sales last year, and the best one rang up $2,870,191 (Item 19). This is the marquee name in the category, and by the top-line numbers it looks like the safest bet on the board. Top-line numbers are also the only ones that make it to Discovery Day.

Then you read the unit counts. The US franchised system fell from 1,283 studios to 1,209 in 2025, and the franchise disclosure document (FDD) separately discloses 95 studios that permanently closed during the reporting year, every one of them open at least twelve months first (Item 20, Item 19).

Healthy sales, a shrinking system. The most recognized name in boutique fitness, quietly getting smaller. The filing shows both and doesn't tell you how they fit together. This issue does.

The good is real. Orangetheory's Item 19 reports gross sales for 1,189 studios open the full year. The average did $802,145. The top quartile averaged $1,205,826, and the single best studio rang up $2,870,191 (Item 19). This brand has built genuine operator wealth, and more of it than anything else in the category.

But the average hides how wide the range is. The bottom quartile averaged $475,979, and the lowest studio did $156,118 (Item 19). Only 44% of studios hit or beat the system average. Build your plan on that $802,145 and you're quietly betting you'll land in the better half, against a majority who came in under.

Membership is the name of the game. It's the one number that tells you why the range is that wide, and OTF is the only brand in this series to publish it in its FDD. The average studio carries 444 monthly members, the busiest quartile around 630, the slowest around 284 (Item 19). Same brand, same equipment, same programming, and the busy studio holds more than twice the members of the slow one. The membership count is the business, and the brand doesn't set it. The corner and the operator do.

This is where the healthy-sales and shrinking-system stories finally meet.

Orangetheory terminated zero franchises in 2025. It didn't pull a single agreement (Item 20). The 74-studio decline came from 61 studios that ceased operations and 26 owners who chose not to renew, against only 13 new openings (Item 20). This isn't a franchisor forcing anyone out. It's a mature system where studios quietly go dark and owners at the end of their term decide not to sign up for another ten years.

That's the tell of a saturated brand. With more than 1,200 studios already open, the easy corners are taken. New openings have slowed to a trickle while the tail of older, weaker locations closes. The $802,145 average is held up by the strong studios that were planted years ago in the right markets. The closures are the ones that were not. Brand recognition gets a member through the door once. It doesn't renew a lease in a trade area that never had the traffic.

A shrinking system is a red flag. For a new operator, though, it can cut the other way. The brand isn't adding many corporate-owned competitors, and the closures are clearing the weakest sites. If you can find an underserved market the brand hasn't saturated, you're buying the most recognized name in boutique fitness into a spot where it can still fill a room. The catch is that those markets are getting harder to find, and the FDD won't tell you whether yours is one of them. That's a phone call to the franchise development team and a drive around the trade area, not a number on a slide.

Orangetheory is the Cadillac of the category, not the Buick. The premium name, the premium box, and the premium bill. Total investment runs $764,577 to $1,104,920 for a single studio, of which $182,658 to $237,994 goes to the franchisor or an affiliate (Item 7). The initial franchise fee is $59,950 (Item 5). You're funding a larger footprint packed with treadmills, rowers, and a weight floor, and every square foot is rent you carry for a ten-year term (Item 17).

The ongoing load is the heaviest straight percentage in the series: an 8% royalty on gross sales, plus a brand fund currently at 3% that can rise to 5%, plus a required local marketing spend of at least 2% (Item 6). On the average $802,145 studio, the royalty alone is roughly $64,000 a year, and the brand-plus-local marketing adds tens of thousands more. The fee schedule is the one part of the model that performs exactly as advertised.

The premium cuts both ways. A premium box in a strong market supports premium dues, and 630 members paying a real monthly rate cover that 8% and the rent with room to spare. That's the top-quartile studio at $1.2M. The same fee structure on a 284-member studio in a soft market is the bottom quartile, and the FDD shows you plenty of those. The name and the buildout raise both your ceiling and your break-even. Which one you get is decided before you open, by the trade area you choose.

You also don't get an exclusive territory. Under a single-unit agreement there's no protected area at all; only an Area Development Agreement carries a protected Development Territory (Item 12). In a system this dense, ask exactly what stops another studio, corporate or franchised, from opening near yours, and get the answer in writing before you sign.

Orangetheory is no longer the founder's shop. The brand sits under Purpose Brands, the group formed when the owners of Anytime Fitness and Orangetheory combined, and OTF Franchisor is a subsidiary inside that structure (Item 1). This is a large, private-equity-backed platform, not a family business. That buys you professional systems and deep pockets. It also means you're one brand in a portfolio, not the whole show. In a portfolio, capital and attention chase the performers, and the question worth asking is whether this group is investing behind Orangetheory or letting it coast. A shrinking unit count is a reason to ask.

The leadership has turned over recently, and the pattern matters. Thomas Leverton became CEO of the parent companies in November 2024. Lauren Cody became Brand President in January 2025 (Item 2). Co-founder David Long remains a Manager, but the people running the brand today are mostly new to their chairs in the last year and a half. A fresh professional team installed at a brand that's shrinking usually means one thing: a turnaround. Cost discipline, a hard look at unit economics, sometimes a repricing or a repositioning. That can sharpen the brand, or it can mean disruption and shifting support while you're the one mid-ramp trying to fill a studio. The diligence here is specific: watch for announced changes to the model or the fees, and ask franchisees who opened since 2024 whether field support and training held up through the change, not just whether they like the workout.

On litigation, the news is good, and worth naming as such. Item 3 discloses a thin record: one arbitration a franchisee brought over a Texas location, settled and dismissed with prejudice back in 2017. In a brand that's run more than 1,200 studios for years, that's close to spotless. In the five-signal frame it reads as low Litigation Risk, and that's a real green flag. Operators who feel cheated eventually sue, and Orangetheory's mostly haven't. Read Item 3 yourself anyway. That's what it's there for.

The data supports a real opportunity. The most recognized brand in boutique fitness, an $802,145 average with a $2.87M ceiling, the only member data in the category, and a large enough system to compare studios before you buy.

The same data cuts the other way. A majority of studios come in under the average. Ninety-five closed last year and the US system is shrinking. Entry runs past a million dollars, the royalty is the heaviest in the series, and you get no exclusive territory in a saturated map. The brand carries you to the front desk. It doesn't fill the room, hold the members, or pick your corner.

The operator this rewards is specific. Someone with the capital to fund a million-dollar build and ride the ramp. Someone who does the market work the FDD can't do, finding a trade area the brand hasn't saturated, and treats the recognition as a head start rather than a guarantee. In the right corner, run full-time, this is the strongest name in the category. In the wrong one, the same name and the same fees produce a studio in that bottom quartile, or one of the 95.

Next Tuesday is the newcomer, the smallest brand in the series and the only one that prints its full profit-and-loss, top studio to bottom. It's also the only one whose signature move was unusual enough that the brand tried to patent it. One of its quartiles keeps a 30% margin. Another loses six figures. Same brand, same year.

The FDD shows you both. Next week we read them.

If you are looking at Orangetheory or any boutique fitness brand, or just want to understand the category before you take a Discovery Day, 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.

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