$143

Business Description

We are a Delaware limited liability company formed on August 4, 2009. We do business under our company name and under the trade and service marks ORANGETHEORY®, OT FIT®, OTF® and related trademarks, service marks and logos listed in Item 13 (collectively, the “Marks”). Our principal business address is 6000 Broken Sound Parkway NW, Suite 200, Boca Raton, Florida 33487. Our agents for service of process and state administrators, if applicable, are listed in Exhibit A to this Disclosure Document.

Prior Experience

We began to offer franchises in July 2010. We are not engaged in any other business activities and have never offered franchises in any other lines of business, except ORANGETHEORY® Studio franchises, which we offer under a separate Disclosure Document. We do not operate any AR Businesses or Studios.

Business Offered

We and our affiliates have developed valuable and proprietary business formats and systems (collectively, the "System") used by AR Businesses in developing, operating, selling, and supporting health and fitness studios that operate under the ORANGETHEORY® mark (“Studios”). Studios are identified by an orange color scheme and trade dress and offer members access to exercise equipment, including cardio and strength equipment, and other related services and ancillary merchandise related to the ORANGETHEORY® concept. The distinguishing characteristics of the System include, but are not limited to, our Studio and business designs, layouts, and identification schemes (collectively, the “Trade Dress”); our specifications for equipment, inventory, and accessories; our website or series of websites for the promotion of the brand and the Studios (the “System Website”); our relationships with vendors; our software and computer programs; our online booking system; our reservation procedures; any fitness programs and classes that we have developed or may develop; the accumulated experience reflected in our training program, operating procedures, customer service standards methods, and marketing techniques; and the mandatory and suggested policies, procedures, standards, specifications, rules, and requirements (“System Standards”) set out in our operations manuals for the operation of Studios and area representative businesses (“AR Manuals”) and otherwise in writing. We may change, improve, add to, and further develop the elements of the System from time to time. We identify businesses operating under the System by means of the trade and service marks “ORANGETHEORY®,” “OT FIT®” and “OTF®” and certain other trademarks, service marks, trade names, signs, associated designs, artwork, and logos described in Item 13 of this Disclosure Document (collectively, the “Marks”). We may designate for your use other trade names, service marks, and trademarks as Marks from time to time. The Studios include (i) Studios owned and operated by us or our Affiliates (“CompanyOwned Studios”), and (ii) Studios owned and operated by third-party franchisees (“Franchised Studios”).

Initial Fees

You must pay us an initial area representative fee (the “AR Fee”) calculated at the rate of $10,000 per Studio to be developed in your Territory. The AR Fee will generally range from $50,000 (for five potential Studios) to $300,000 (for 30 potential Studios). The amount of the AR Fee depends on the size of your Territory, its demographic characteristics, your capacity to recruit and provide services in the Territory, and the number of Studios we believe the Territory can sustain. We identify the Territory, Development Schedule, and AR Fee in the AR Agreement before you sign it. You must pay the initial AR Fee in a lump sum when you sign the AR Agreement. In consideration for this initial AR Fee, we grant you a franchise to operate an AR Business in an exclusive Territory and provide you with initial training. The initial AR Fee is fully earned and non-refundable, except that we will refund an amount equal to 50% of the then-current initial franchise fee for each Company-Owned Studio that we or our affiliates develop in your Territory. The number of Studios you are required to develop will also be reduced accordingly. Company Studios will not count towards any compensation we owe you for services, including initial franchise fees, royalties, transfer fees and renewal fees. We did not collect any AR Fees during the fiscal year ended December 31, 2017. We have no intention, now or in the future, of reducing the initial AR Fees for any prospective Area Representative, although we reserve the right to do so in our sole discretion, on a case-by-case basis. We may, at our option, require you to purchase a demographic analysis and/or map for the Territory upon signing the Area Representative Agreement from us or our designated vendor, which will cost between $1,000 and $3,000. The demographic analysis will contain demographic statistics such as population density, average household income and other factors. We will use this information in helping to determine the number and location of Studios to be developed in the Territory. As an Area Representative, you must own and operate a Pilot Studio. We will not charge an initial franchise fee for your Pilot Studio. For your second or subsequent Studio, you must pay the standard, then-current initial franchise fee for such Studios. The franchise for your Pilot Studio will be offered to you under a separate Disclosure Document.

Financing

We do not offer direct or indirect financing. We do not guarantee your note, lease or obligations.

Franchisee Revenue and Profit

We do not make any representations about a franchisee’s future financial performance or the past financial performance of company-owned or franchised outlets. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor’s management by contacting David Carney, 6000 Broken Sound Parkway NW, Suite 200, Boca Raton, Florida 33487, (954) 530- 6903, the Federal Trade Commission, and the appropriate state regulatory agencies.