Axios Pro Exclusive Content

Exclusive: Fitness studio franchiser Hotworx weighs financing options

Illustration of George Washington meditating. 

Illustration: Aïda Amer/Axios

Hotworx, formerly Planet Beach Franchising, is working with investment bank Houlihan Lokey as it weighs a capital raise, its CEO Stephen Smith tells Axios exclusively.

Why it matters: Asset-light franchise models have become increasingly popular through the pandemic because they boost profit margins, allow for more rapid growth, and limit operational risk.

Of note: Smith spoke to Axios from the sidelines of the ICR Conference that took place last week in Orlando.

Details: Hotworx, which provides workouts such as hot yoga in a heated environment with infrared, is exploring different financing options, Smith says.

  • During a presentation he said the company could achieve its goals without taking on debt or additional financing, but to get to "warp speed," it would need extra cash.
  • Smith also said the company would welcome private equity interest in becoming or investing in a multi-unit franchisee of Hotworx.

By the numbers: Last year Hotworx hit 500 locations and will surpass 600 locations by the end of this month, with Smith noting that in 2023 alone it opened 174 locations.

  • Each of its franchisees has an average net worth of $2.5 million, he says.
  • The company generates income not only from royalties and franchise fees, such as franchisees using its in-house retail tech stack but also from selling consumer products and equipment, Smith adds.
  • He declined to comment further on the company's financials.

Editor's note: The headline has been updated to clarify that Hotworx is weighing a range of financing options.

Go deeper