Hotworx Franchise Cost, Revenue & Review 2026
- Investment
- $289K – $830K
- Disclosed sales
- partial, no system average
- SBA charge-off
- 1.9%
- on 444 loans
Data from FDD filing + SBA 7(a) records
Analysis by FranchiseVerdict Research · Methodology
FranchiseVerdict summary · 2026
A Hotworx franchise requires a total initial investment of $289K – $830K, including a $20K franchise fee. The 2026 FDD on file does not yield a unit-revenue figure we can publish. SBA 7(a) loans show a 1.9% charge-off rate across 444 loans[1]. FranchiseVerdict grade: A (Strongest tier), an editorial assessment, not investment advice. Run a live ROI scan →
Sources, dates and evidence
FDD issued: · Data extracted: · Last cited check: · Staleness risk: low - issued within the last 12 months
Evidence: strong✓ Investment (Item 7)✓ Item 19 status✓ Units and owners (Item 20)✓ SBA loan coverage✓ Litigation (Item 3)✓ Financial statements (Item 21)✓ Franchisor identityhow this is scored3 of 3 headline figures on this page cite a page of the filing.
Overview
- Investment
- $289K – $830K
- 23rd pct Recreation & …
- Avg gross sales
- N/A
- Partial period
- Royalty
- Flat fee
- Units
- 812
- 54th pct Recreation & …
- SBA charge-off
- 1.9%
- % of SBA 7(a) loans not repaid · median varies by category
Quick verdict · Recreation & Entertainment · color = vs category peers
Green = favorable by >10% vs Recreation & Entertainment median · No shading = within ±10% · Red = unfavorable by >10% · Source: FDD filings + SBA 7(a)
Data from public FDD filings and SBA records. Not financial advice. Methodology
Bottom line
- COSTTotal investment $289K – $830K including a $20K franchise fee.
- RETURNSItem 19 Table 19.1/19.2/19.3 numeric average/median revenue and EBITDA figures were not captured in extracted text (tables rendered as images); only narrative min/max ranges by cohort were available. All Fully Operational Studios (n=700, opened 2017-2024, operational 12 months in 2025): Total Revenue range $163,899 (Ann Arbor MI) to $901,879 (Midland TX); EBITDA range $(92,530) to $554,589; 88.7% profitable. First-Year Studios (n=149, opened and operational all of 2025): Total Revenue range $147,932 (Shawnee OK) to $696,487 (Chula Vista CA); EBITDA range $(85,268) to $321,028; 82.5% profitable. Corporate-Owned Studios (n=15): Total Revenue range $313,809 (New York NY) to $1,146,455 (Oxford MS); EBITDA range $(130,125) to $708,002; 86.6% profitable.
- RISKVerdict A (Strongest tier), verdict score 88/100 (higher is better). SBA loan charge-off rate of 1.9% across 444 loans (well below the franchise average, based on all SBA 7(a) franchise lending, 2010–2025).
- GROWTHPositive: net +85 franchised outlets in the latest year (95 opened, 10 closed) (Item 20).
- GROWTHSystem growing at 38.4% CAGR over 3 years with 812 total units. Strong expansion trajectory.
Item 1 · who you're contracting with
The Franchisor
Corporate structure & franchisor financials
- Legal entity
- HOTWORX® Franchising, LLC
- Parent company
- HOT Brands, LLC
- FDD Item 1, page 8 of the 2026 FDD
- CEO title
- Chief Executive Officer
- Stephen P. Smith
- Incorporated in
- Wyoming
- HQ
- 5161 Taravella Road, Marrero, Louisiana 70072
Overview
About
24-hour hot exercise / infrared sauna fitness studios offering isometric exercise services and fitness products in a small-footprint (approximately 2,000 sq ft) boutique format
- CEO
- Stephen P. Smith
- Headquarters
- Louisiana
- Founded
- 2016
- FDD year
- 2026
Can you afford it, and what does the money buy?
Entry cost is about typical for a recreation & entertainment franchise (near the category median).
Source: FDD 2026 · Items 5–7
FDD Item 7 · 2026 filing
Initial investment breakdown
| Cost component | Low | High |
|---|---|---|
| Initial franchise fee | $20K | $20K |
| Working capital (3–6 mo) | $36K | $55K |
| Equipment, build-out, other | $233K | $756K |
| Total initial investment | $289K | $830K |
Source: Hotworx 2026 FDD, Items 5 and 7[2]. “Equipment, build-out, other” is computed as total minus disclosed line items above.
Item 7 · what it costs to open + operate
The Vitals
- Total investment
- $289K – $830K
- Top 40% of category vs category
- Liquid capital req'd
- $36K – $55K
- Top 40% of category vs category
- Franchise fee
- $20K
- Top 40% of category vs category
- Royalty
- $695.00 per month flat fee (increased from $550 in 2022 t…
- Ad fund
- No national ad fund; local advertising requirement of $2,…
Ongoing fees · Item 6
| Fee | Amount |
|---|---|
| Royalty (flat) | $695 per month flat royalty fee, billed monthly starting the first calendar month after opening |
| Technology fee | $150 |
| Transfer fee | $20K |
| Inventory (initial) | $20K – $28K |
What do units actually make?
Source: FDD 2026 · Item 19
ROI & LBO modelsSingle-unit · 25-unit portfolio · editable
No Item 19 revenue figure for Hotworx is on file. The return models need a revenue figure to start from, and the operating costs that turn gross sales into a profit are in no FDD. Enter your own and the calculator runs on your assumptions — nothing here is modelled until you do.
Returns model · single-unit ROIC
What would one Hotworx unit return on the cash you put in?
Illustrative category typicals — not sourced to any filing, survey or sample. Replace them with figures from franchisee validation calls before you rely on the output.
Unlevered ROIC · per unit
Your modelled return on total invested capital, before any debt financing.
—
An FDD discloses gross sales, not profit. We hold no sourced figure for annual revenue, royalty rate, ad fund rate, COGS, labour, rent / occupancy and other operating costs, and will not substitute an assumed one. Enter your own and the model runs on your assumptions.
These models are for research and scenario planning only. Not investment advice. Actual results depend on your specific location, management, and market conditions. Consult a franchise attorney and accountant before signing any franchise agreement.
Item 19 · Source: 2026 FDD
Financial Performance
Item 19 Table 19.1/19.2/19.3 numeric average/median revenue and EBITDA figures were not captured in extracted text (tables rendered as images); only narrative min/max ranges by cohort were available. All Fully Operational Studios (n=700, opened 2017-2024, operational 12 months in 2025): Total Revenue range $163,899 (Ann Arbor MI) to $901,879 (Midland TX); EBITDA range $(92,530) to $554,589; 88.7% profitable. First-Year Studios (n=149, opened and operational all of 2025): Total Revenue range $147,932 (Shawnee OK) to $696,487 (Chula Vista CA); EBITDA range $(85,268) to $321,028; 82.5% profitable. Corporate-Owned Studios (n=15): Total Revenue range $313,809 (New York NY) to $1,146,455 (Oxford MS); EBITDA range $(130,125) to $708,002; 86.6% profitable.
Covers a partial period, not a full year
- Item 19 type
- historical - EBITDA-based, segmented by cohort (first-year outlets, all fully operational outlets, corporate outlets)
- Sample size
- 700
- vs category median 5 · large
- Reporting year
- 2025
- Fiscal year the figures cover
- Source filing
- FDD 2026
- Disclosed in the 2026 filing, covering 2025
Compared against 165 Recreation & Entertainment brands
Operator outlook
What the numbers say
Data-driven interpretation of this brand's financial disclosures, fee structure, and system trajectory.
Disclosure
Item 19 reports revenue for a partial period rather than annual gross sales, so unit revenue is not directly comparable.
Operator retention
System expanding at 38.4% CAGR over 3 years across 812 units — operators are staying and new ones are joining.
Source: FDD Item 19 financial performance representations and publicly filed FDD data. Past performance is not indicative of future results. Verify all figures with the franchisor and current franchisees before making any investment decision.
vs Recreation & Entertainment medians
How Hotworx Compares
Category median of published Recreation & Entertainment brands that report the figure; the middle half spans the 25th to 75th percentile and n counts the brands behind it. Medians are used because a few very large systems pull an average far from the typical brand. Revenue is disclosed gross sales, not profit.
Is the system healthy?
Source: FDD 2026 · Item 20
Unit growth
Item 20 · unit dynamics
The Growth Chart
- Total units
- 812
- Opened
- 95
- Last reporting year
- Closed
- 10
- Turnover rate
- 1.2%
- Company-owned
- 15
- Corporate units in the system
- % franchised
- 98%
- vs corporate-owned
- Net growth (3-yr)
- +38.4%
- Net unit change over 3 years
- 3-yr CAGR
- +38.4%
- Compounded over last 3 years
Last fiscal year · Item 20 exits and transfers
- Transferred
- 40
- Reacquired
- 9
- Franchisor bought back
Year-over-year franchised unit counts and net change. Source: FDD Item 20.
SBA loan performance
Government records
SBA Loan Data
Aggregated from SBA 7(a) and 504 loan disclosures, public data unique to FranchiseVerdict.
- Total loans
- 444
- Loan volume
- $159.2M
- Median loan
- $350K
- 50th percentile
- Charge-off rate
- 1.9%
- on 444 loans · rates vary by category · see methodology
Historical SBA 7(a) lending data, not predictive of future performance. How SBA charge-off rates are calculated
- Repayment rate (PIF)
- 98.1%
- 5-yr charge-off
- 2.4%
- Loans approved 2021+
- Active lenders
- 110
- Defaults
- 2
- Typical loan rate
- 8.4%
- avg rate to borrowers
- vs industry
- N/A
- NAICS 7139
- Jobs supported
- 3,211
- 2.0 per loan
- Lender concentration
- 22%
- top lender's share
Borrower mix: 94% went to startups / new businesses, 6% to established operators
Vintage analysis
Hotworx charge-off rate by loan vintage
Top lenders financing Hotworx franchisees
Showing 3 of 110 lenders. The full breakdown — every lender, state distribution, interest rates & risk ratings — is in the SBA Lending Report below.
Explore lender portfolios on Bank Reports or regional data on State Reports.
Lender network · 7(a) + 504
SBA Lending Report
Full lending analysis for Hotworx from SBA 7(a) FOIA data.
- Principal loss rate
- 0.0%
- Avg SBA guarantee
- 73%
- Avg interest rate
- 8.45%
- Avg chargeoff amount
- $35K
- Lender concentration
- 21.6%
- Job velocity
- 2.0 per $100K
- Startup risk premium
- +2.1pp
- Jobs supported
- 3,211
Top SBA lendersTop lender holds 22% of loans
| # | Lender | Loans | Volume | Default % |
|---|---|---|---|---|
| 1 | 96 | N/A | N/A | |
| 2 | 73 | N/A | N/A | |
| 3 | 15 | N/A | N/A | |
| 4 | 14 | N/A | N/A | |
| 5 | 13 | N/A | N/A |
Geographic failure vector
| State | Loans | Defaults | Rate |
|---|---|---|---|
| TXTexas | 105 | 1 | 3.4% |
| FLFlorida | 32 | 0 | 0.0% |
| GAGeorgia | 30 | 0 | 0.0% |
| NCNorth Carolina | 24 | 0 | 0.0% |
| CACalifornia | 22 | 0 | 0.0% |
| COColorado | 18 | 0 | 0.0% |
| ILIllinois | 16 | 0 | 0.0% |
| TNTennessee | 13 | 0 | 0.0% |
| IAIowa | 12 | 0 | 0.0% |
| NENebraska | 12 | 0 | 0.0% |
SBA 7(a) lending trend
Borrower profile
Source: SBA 7(a) + 504 FOIA loan-level data, matched by FranchiseVerdict
With a 1.9% charge-off rate across 444 loans, banks have historically viewed this brand favorably for lending.
What could kill this investment?
SBA loans charge off at 1.9% — 88% below the 16.0% national norm, i.e. lower lender-observed risk.
Source: SBA 7(a) FOIA · FDD Items 3, 21
Risk analysis
FranchiseVerdict rating + FDD Items 3, 4, 8, 16, 21
Risk & Legal
Litigation (Item 3)
Subject: the franchisor is a named party (defendant).
Skistimas v. HOTWORX Franchising et al. (W.D. Wash., filed 2023) - franchisee suit alleging unconscionability, fraud, misrepresentation re investment costs; compelled to arbitration, settled with $39,950 franchise fee returned. Abdul-Hadi v. HOTWORX International et al. (LA state court, filed 2022) - wrongful death suit re sauna use at a franchisee location; settled for $380,000.
Bankruptcy (Item 4)
None disclosed
Audited financials (Item 21)
Yes
Franchisor revenue (Item 21)
Franchisor entity revenue (not unit-level)
Supplier relationship · Items 8 & 16
- Franchisor sells you products: Yes
- Kickbacks from required suppliers: Yes
- Must buy proprietary products: Yes
- Restricted to system-approved products: Yes
- Can negotiate own supplier terms: No
What are you signing up for?
Source: FDD 2026 · Items 11, 12, 17
FDD Items 12, 15, 17 · continued from Risk & Legal
Contract & Territory Detail
| Initial term | 10 years |
|---|---|
| Renewal term | 10 years |
| Territory type | Protected territory |
| Protected territory | Yes |
| Exclusive territoryℹ | No |
| Territory radius | 2 mi |
| Franchisor can compete | Yes |
| Hire a manager? | Allowed |
| Owner-operator | Optional |
| Non-compete (years)ℹ | 2 years |
| Right of first refusalℹ | Yes |
| Transfer requires consent | Yes |
| Termination notice | 30 days |
| Mandatory arbitration | Yes |
| Governing law | Louisiana |
| Litigation count | 2 |
View Item 3 litigation summary
Skistimas v. HOTWORX Franchising et al. (W.D. Wash., filed 2023) - franchisee suit alleging unconscionability, fraud, misrepresentation re investment costs; compelled to arbitration, settled with $39,950 franchise fee returned. Abdul-Hadi v. HOTWORX International et al. (LA state court, filed 2022) - wrongful death suit re sauna use at a franchisee location; settled for $380,000.
Items 10, 11
Training & Operations
- Classroom training
- 35 hrs
- Training location
- Virtual (from franchisee's HOTWORX studio)
- Ongoing training
- Required
- Time to open
- 9 mo
- From signing to launch
- Site selection
- Franchisor approves site proposed by franchisee
- Franchisor financing
- Offered
- Item 10
- POS system
- Proprietary POS Software (Note: monthly fee)
- Operating tech stack
Items 5 & 11
Franchisor Support
Technology: Proprietary POS Software (Note: monthly fee)
Frequently asked questions
Frequently Asked Questions
How much does it cost to open a Hotworx franchise?
The total investment to open a Hotworx franchise ranges from $289K – $830K, with an initial franchise fee of $20K. This includes real estate, equipment, inventory, and working capital as disclosed in their Franchise Disclosure Document (FDD).
What do Hotworx franchise owners earn?
Item 19 of the Hotworx FDD discloses figures for part of the system but no single average across all outlets. These are gross sales figures, not profit; the Revenue section shows what the filing reports and on what basis. Item 20 of the FDD lists current and former franchisees; asking them directly is the standard way to fill this gap.
Who owns Hotworx?
Hotworx is franchised by HOTWORX® Franchising, LLC. Its parent company is HOT Brands, LLC. Source: FDD Item 1, 2026 filing.
What is Item 19 in the Hotworx FDD?
The FDD section where a franchisor may disclose financial performance of its outlets. Disclosure is optional and formats vary; figures are typically gross sales, which is revenue before expenses, not profit. FranchiseVerdict extracts these figures directly from the Hotworx FDD and qualifies whose outlets they describe.
What is Hotworx's franchise failure rate?
Based on SBA 7(a) loan data, Hotworx has a charge-off rate of 1.9% across 444 loans, meaning 1.9% of franchise loans were charged off. Charge-off rates are one proxy for franchise risk, though they do not capture all closures. This data comes from FOIA-sourced SBA lending records.
How many Hotworx franchise locations are there?
As of their most recent FDD filing, Hotworx has 812 total units in the United States, including 797 franchised units and 15 company-owned units. 95 new units were opened in the latest reporting year.
Is Hotworx a good franchise to buy?
FranchiseVerdict rates Hotworx as a A-grade franchise with a verdict score of 88 out of 100 (higher is better). The grade is a deterministic score built from six weighted dimensions — financial health, unit economics, unit growth, scale, legal, and transparency — then calibrated against SBA loan charge-off rates and FDD age. Transparency is one of the six, so a filing that discloses less scores lower on that dimension than one that discloses more. Our rating is based solely on publicly available FDD and government data; we recommend speaking with current franchisees before making any investment decision. This is not investment advice.
Data sourced from public FDD filings and SBA 7(a) FOIA records. Not financial advice.
For franchisors
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Data extracted from public FDD filings and SBA 7(a) loan disclosures (FOIA). This information is provided for research purposes only and does not constitute financial, legal, or investment advice. Verify all figures with the franchisor's current Franchise Disclosure Document before making any investment decision.