The Xponential Fitness Scandal Uncovered: Allegations, Closures, and Controversy

Introduction

In a shocking turn of events, the fitness franchising industry has been rocked by a scandal that has unveiled an alleged web of deception and financial turmoil at a major fitness franchise brand. At the center of this controversy lies Xponential Fitness, a company well-known for its diverse portfolio of Boutique Fitness Brands, including Stretch Lab, Club Pilates, CycleBar, Pure Barre, Row House, Yoga Six, and Stride Fitness.

Xponential Fitness Overview

Xponential Fitness stands as a leading health wellness franchisor, boasting a diverse portfolio of boutique fitness brands that cater to a wide range of fitness enthusiasts. Among its notable brands are Club Pilates, Pure Barre, and Body Fit Training, each offering unique, community-based, and engaging small group class experiences. With a focus on delivering high-quality fitness and wellness programs, Xponential Fitness has established over 2,700 studios worldwide. This extensive network provides a variety of classes and programs tailored to meet different fitness goals and preferences, making it a prominent player in the boutique fitness health wellness industry.

The Allegations Against Xponential Fitness Founder, Anthony Geisler

Investigative work by Fuzzy Panda Research has revealed a potentially troubling history surrounding Xponential Fitness’s CEO and founder, Anthony Geisler. These revelations include his alleged involvement in a boiler room operation and questionable business practices earlier in his career. Geisler’s credibility has come under scrutiny due to accusations of dishonesty and misleading behavior towards franchisees and investors. Notably, these allegations extend beyond Xponential Fitness, encompassing Geisler’s time in other fitness companies and the online gaming software sector.

Over 30 Stores Permanently Closed Contrary to Claims

Contrary to Xponential Fitness’s assertion of never having closed a store under its management, investigations by Fuzzy Panda Research have unveiled a startling reality. Records indicate that over 30 stores have permanently shuttered, casting doubt on the company’s transparency. The study meticulously examines Google reviews, shedding light on the circumstances of these closures.

Troubled Past: Alleged Schemes and Scandals

Geisler’s past ventures, including Interactive Solutions and LA Boxing, have been marred by allegations of scams and illegal practices. These incidents have earned him a reputation in some circles as unscrupulous. Notably, a lawsuit related to LA Boxing can be found online. Moreover, the report highlights that more than half of Xponential studios fail to generate positive financial returns, resulting in significant losses for franchisees.

Disparities Among Boutique Fitness Franchisees

Not all franchisees under the Xponential Fitness umbrella are experiencing the same level of success. A successful fitness franchise owner shares valuable insights and advice, offering tips and strategies for achieving success in the industry. While Club Pilates and Yoga Six franchisees seem to be thriving, others, such as CycleBar, are reportedly struggling to turn a profit. The report raises concerns about Xponential Fitness potentially fabricating financial metrics, selectively excluding underperforming stores from their calculations in their Franchise Disclosure Documents (FDDs). You can check those on our FDD marketplace!

Financial Struggles and Overcharging Complaints

Franchisees have reported being overcharged for various expenses, including exercise equipment. This information, shared in the company’s quarterly reports, reveals significant revenue generated from equipment sales annually. The report suggests that over 90 percent of franchisees resort to SBA Loans, jeopardizing their savings and retirements. This figure, based on the research, is considered quite high.

Evolving Definitions: Closures and Terminations

Xponential Fitness’s claim, as of October 2022, of never having closed a studio is disputed. At Vetted Biz, we define a closure as a unit ceasing operation and not immediately transferring to another location. Terminations of license agreements are also considered closures. The discrepancy lies in Xponential Fitness’s definition, which excludes some instances from their closure count.

High Commissions and Insider Activities

Xponential Fitness offers substantial referral fees for new franchisees and for finding buyers for their corporate-owned and managed locations. Commissions for brokers can range from $30,000 to over $100,000, depending on the size of the territory. Insiders, including Anthony Geisler, have engaged in significant share transactions in 2023, with millions of dollars’ worth of shares being sold.

Franchisee Experiences and Concerns

As a leading health and wellness franchisor, Xponential Fitness places a high priority on supporting its franchise owners. Many franchisees have reported positive experiences, attributing their success to the comprehensive support system and resources provided by the company. However, some franchisees have raised concerns about the significant initial investment required to open a studio and the ongoing fees associated with the franchise model.

Xponential Fitness Responds

Despite the scandal, Xponential Fitness has reported remarkable revenue growth and expansion in 2022. Looking ahead, the company projects a twofold increase in profits by 2024, painting a hopeful outlook for its future. However, the ultimate trajectory of this brand remains uncertain, and time will reveal its fate. It is worth noting that insiders within the firm have made substantial sell-offs of shares over the past year, which may indicate underlying concerns. While there were some buy actions in August, they pale in comparison to the significant sell orders executed earlier in the year, adding a layer of complexity to the brand’s ongoing narrative.

Expert Fitness Instructors and Programs

At the heart of Xponential Fitness’s boutique fitness brands are its expert fitness instructors. These professionals bring years of knowledge and experience to the table, ensuring that members receive safe and effective workout experiences. Xponential Fitness offers a diverse range of programs, including boxing, barre, and yoga, each designed to cater to different fitness goals and preferences. Unlike social media influencers, Xponential’s instructors are dedicated professionals who provide personalized guidance and support to help members achieve their fitness objectives. This commitment to quality instruction and varied programming sets Xponential Fitness apart in the fitness industry.

About the fitness industry

The fitness industry has undergone a remarkable transformation over the past few decades, evolving from a niche pursuit to a global phenomenon that touches the lives of millions. It encompasses a diverse array of offerings, catering to individuals seeking everything from cardiovascular health to strength training, flexibility, and mindfulness.

Notably, several franchise brands have emerged as front-runners in this ever-expanding market, democratizing access to quality fitness experiences. Names like Anytime Fitness, with its 24/7 accessibility and community-driven approach, and OrangeTheory Fitness, known for its science-backed interval training, have become household names.

Conclusion

In conclusion, the fitness franchising industry has been jolted. The allegations against founder Anthony Geisler, spanning his involvement in a boiler room operation to questionable business practices, have cast a shadow on the company’s reputation. Contrary to claims, records indicate that over 30 stores have permanently closed, prompting questions about transparency.

Geisler’s history have been marred by allegations of scams. Disparities among franchisees, financial struggles, and overcharging complaints have also surfaced, raising concerns about the company’s practices. Additionally, the discrepancy in defining closures and terminations has created further ambiguity. As time unfolds, the ultimate trajectory of Xponential Fitness remains uncertain.