The 2026 Hotworx FDD Breakdown: What Item 19 Actually Reveals (And What It Hides)

The Franchise Disclosure Document is the single most important document in any franchise evaluation. It's also the most misunderstood. Franchise aggregator sites pull the headline number from Item 19 — Hotworx's Financial Performance Representations — and present it as if it tells you what you'll make. It doesn't.

Item 19 is a legal document, not a business plan. It's designed to disclose what the franchisor chooses to disclose, within the bounds of what the FTC requires. What it includes matters. What it excludes matters more.

Here's how to actually read it.

The 2025 FDD (the most recent available as of this writing, covering 2024 performance data) reports average gross sales of $330,476 across reporting franchised units. That number — widely cited by sites like 1851 Franchise — deserves immediate scrutiny on three dimensions.

Which units are included?

Not all 712 franchised locations make it into the Item 19 calculation. Franchisors typically exclude units that were open for less than a full calendar year, units that were temporarily closed, and units in non-traditional locations. The denominator matters as much as the numerator.

What to ask your franchise attorney: Request the exact inclusion criteria. How many of the 712 units are represented in this average? If 200 units opened in 2024 and are excluded, the average reflects only the mature, stabilized locations — which will look better than your Year 1 reality.

Is this a mean or a median?

An average (mean) is pulled upward by high performers. If 10% of Hotworx studios do $500K+ while 30% do under $250K, the $330K average doesn't represent a typical studio's experience. The median — the midpoint where half the studios are above and half below — is a more useful benchmark.

What to look for: Some franchisors disclose quartile breakdowns (top 25%, middle 50%, bottom 25%). If Hotworx provides this in Item 19, pay close attention to the bottom quartile. That's your downside scenario. If they don't provide quartile data, that absence is itself informative.

What does "gross sales" actually include?

Gross sales typically means total revenue before any expenses. It includes membership dues, retail product sales, ancillary revenue, and potentially one-time initiation fees. It does not tell you about:

• Collection rates (revenue booked vs. revenue collected)
• Membership churn (how many members cancel each month)
• Revenue mix (recurring vs. one-time)
• Seasonal patterns

A studio could report $330K in gross sales while collecting $290K after failed credit card charges, chargebacks, and refunds. The gap between booked and collected revenue is real and rarely disclosed in Item 19.

This is where the analysis gets critical. Item 19 is not required to include — and Hotworx's typically does not include — the following:

No standardized expense disclosure

The FTC does not require franchisors to disclose franchisee expenses in Item 19. Hotworx may provide revenue data but leave it to you to model costs. This is standard practice across the franchise industry, but it means the $330K figure tells you nothing about profitability.

Your expenses will include:

• Royalty: 6% of gross sales ($19,829 on $330K)
• Ad fund contribution: 2% of gross sales ($6,610)
• Rent: $2,500–$7,000/month depending on market ($30,000–$84,000/year)
• Staffing: 2–3 FTEs at $15–$22/hour plus benefits
• Equipment maintenance and replacement: Infrared sauna units are the core asset and have defined lifespans
• Insurance, utilities, software, supplies
• Debt service if you financed the opening

We model these expenses in detail in our unit economics analysis.

No breakout by geography or market size

A Hotworx studio in suburban Dallas operates in a fundamentally different market than one in rural Mississippi. Same brand, same equipment, dramatically different revenue potential. If Item 19 reports a single national average without geographic segmentation, a prospective franchisee in any specific market can't benchmark against comparable locations.

What to ask: During validation calls with existing franchisees (which you should absolutely be doing), ask owners in markets similar to yours about their revenue trajectory. The FDD won't segment for you, so you have to do it yourself.

No ramp-up timeline

How long does it take a new Hotworx studio to reach the $330K average? Six months? Eighteen months? Three years? If the average reflects mature units with 3+ years of operation, your Year 1 will look nothing like it. The ramp period is when most franchise owners burn through their working capital — and it's almost never disclosed in Item 19.

The FDD's Item 7 estimates working capital at $35,500–$54,500. That needs to cover your living expenses, marketing ramp, and any revenue shortfall during the months before membership base stabilizes. For many first-time franchisees, this estimate is dangerously optimistic.

No closure or transfer context

The FDD does disclose unit openings, closings, and transfers in Item 20 — but not in connection with financial performance. Hotworx reports a very low closure rate (one reported closure out of 630+ locations at one point). But Item 19 won't tell you whether the units that closed were below-average performers whose revenue would have dragged down the average. It also won't tell you about franchisees who sold at a loss — a "transfer" in FDD language, not a "closure." Independent reviews on Franchise Grade can provide additional context on system-wide performance patterns.

After reading Item 19, schedule a session with a franchise attorney (not a general business attorney — someone who reviews FDDs professionally). Bring these questions:

1. "How many units are excluded from the Item 19 calculation, and why?" Every excluded unit is a data point you're not seeing.
2. "Does the FDD provide median revenue, quartile breakdowns, or distribution data?" If not, the average is unreliable as a planning figure.
3. "What does 'gross sales' include — and does the FDD define how Hotworx calculates it?" Definitions vary across franchisors. Your attorney should compare this to other FDDs they've reviewed.
4. "Are there any footnotes, caveats, or qualifying language in Item 19 that change the meaning of the headline number?" There almost always are. They matter.
5. "Based on Item 20's unit transfer and closure data, what's the implied dissatisfaction rate?" Your attorney may not answer this directly, but the question frames the FDD as a risk document, not a sales document — which is what it is.

The $330K average is a starting point, not a forecast. Here's how to use it responsibly:

• Conservative model: Use the bottom-quartile figure (if available) or discount the average by 25–30% for Year 1
• Base case: Use the average, but apply a 12–18 month ramp-up to reach it
• Optimistic model: Use the top-quartile figure, but only if your market, location, and capital position support it

Then subtract every expense line item you can identify. The result is your projected owner take-home — and the number your SBA lender will want to see when underwriting your loan.

For the complete expense model, see our unit economics deep dive. For context on how this revenue compares to other boutique fitness franchises, see our market comparison page. You can also compare franchise cost structures across the industry on Franchise Payback.

Item 19 is disclosure, not prediction. It tells you what happened to a subset of existing franchisees under specific conditions that may or may not resemble yours. Treat the $330,476 figure as one input among many — not as a promise.

The quality of your investment decision will depend far more on your local market analysis, your capital structure, and your operating assumptions than on any single number in the FDD. Read Item 19 carefully, question it aggressively, and build your financial model from the ground up.

That's what serious due diligence looks like.