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Start for freeThe Orange Theory Journey Begins
Christie's journey with Orange Theory Fitness began when she first noticed their unique logo and branding. As she started seeing Orange Theory locations popping up everywhere, she realized this was an incredible business opportunity. Christie decided to get in early as an area developer for Orange Theory, securing the rights to a large territory in North Carolina.
Taking the Leap into Franchising
Opening that first Orange Theory location was one of the hardest things Christie had ever done professionally. She had to wear many hats - from marketing to payroll to construction management. But she was determined to execute the Orange Theory playbook perfectly.
A key part of the strategy was running a 12-week pre-sale campaign before the studio even opened. This allowed Christie to sign up hundreds of members and start generating revenue from day one. Within 30 days of opening, the first location was already profitable.
Rapid Expansion
With the success of the first studio, Christie quickly moved to open a second location just 8-9 months later. She was able to secure a $500,000 loan from a successful entrepreneur friend to help fund the expansion.
From there, Christie continued rapidly growing the business:
- By the 3rd location, she realized she needed to hire studio managers for each location
- Around the 5th-6th location, she brought on a regional manager to oversee multiple studios
- Within 4 years, Christie had grown to 13 corporate-owned locations plus 1 franchised location
The Challenges of Scaling
As the business expanded, Christie faced numerous challenges:
- Finding and retaining quality employees
- Developing systems and processes to manage multiple locations
- Balancing time between operating existing studios and opening new ones
- Personally guaranteeing leases and taking on significant financial risk
Despite the challenges, Christie remained laser-focused on growth. She reinvested profits into opening new locations as quickly as possible.
Preparing for a Sale
Around the 5th-6th location, Christie started to realize the significant value she had built in the business. After conversations with investment bankers, she began seriously considering selling the company.
Key factors that made the business attractive to buyers:
- Strong unit economics with 40%+ EBITDA margins
- Proven ability to rapidly scale and open new locations
- Rights to a large territory with room for continued expansion
- Passionate and experienced management team
The Sale Process
Christie engaged investment bank Fifth Third to run a formal sale process. Key steps included:
- Preparing marketing materials (teaser, CIM)
- Soliciting initial indications of interest from potential buyers
- Hosting management presentations for serious bidders
- Negotiating letters of intent
- Selecting a buyer and negotiating final deal terms
The company received 15-20 initial indications of interest, which was narrowed down to 7 management presentations. Ultimately, they received multiple formal offers with a spread of $7-8 million between the lowest and highest bids.
Selecting the Right Buyer
While one group came in with the highest offer, Christie ultimately chose a different private equity firm, KarpReilly, as the buyer. Key factors in the decision:
- Strong cultural fit and alignment on future vision
- Thoughtful and communicative throughout the process
- Flexibility in deal structure and terms
- Positive references from other portfolio companies
The final deal structure:
- KarpReilly acquired 70% of the business
- Christie rolled 30% of her proceeds into the new entity
- Christie remained CEO to continue growing the business
Life After the Sale
Initially, Christie enjoyed aspects of partnering with private equity:
- Financial security from the sale proceeds
- Ability to pursue larger acquisitions
- Professional development opportunities
However, she also found it challenging at times:
- Less autonomy in decision making
- More consensus-driven processes
- Different risk tolerance than she was used to as an entrepreneur
Impact of COVID-19
In early 2020, Christie was preparing to sell the business again at a much larger scale. However, those plans were derailed by the COVID-19 pandemic. The prolonged gym closures and restrictions took a major toll on the business.
After a difficult two years, Christie realized her skills and interests were no longer aligned with what the company needed. In 2022, she stepped down as CEO to make way for new leadership better suited for the challenging environment.
A New Chapter
To reward themselves after the struggles of the pandemic, Christie and her husband took their kids on a 6-month world tour. This experience helped Christie reconnect with her passion for creating memories with loved ones.
While her Orange Theory journey had come to an end, Christie emerged with invaluable experience, financial security, and a renewed sense of purpose. Her story serves as an inspiring example of entrepreneurial success in the fitness industry.
Key Takeaways
- Follow the franchise system and execute the playbook flawlessly
- Reinvest profits to fuel rapid growth and build scale
- Develop strong unit economics and proven systems for expansion
- Time your exit to maximize value, but be prepared for unexpected setbacks
- Choose the right buyer based on cultural fit, not just price
- Have a post-sale plan aligned with your personal and professional goals
- Be willing to step aside if your skills no longer fit the company's needs
Christie's journey with Orange Theory Fitness showcases the immense potential of the franchise model when combined with strong execution and a growth mindset. Her ability to rapidly scale the business created tremendous value, ultimately leading to a successful exit. While the pandemic presented unforeseen challenges, Christie's story remains an inspirational example of entrepreneurial success in the fitness industry.
Article created from: https://www.youtube.com/watch?v=qKGd1AfjyhM
