Get HCM digital magazine and ezines FREE
Sign up here ▸
Jobs   News   Features   Products   Magazine      Advertise  
NEWS
Xponential dumps Geisler as company faces investigation by US Attorney’s Office
POSTED 11 May 2024 . BY Liz Terry
Anthony Geisler has been removed as CEO of boutique specialist Xponential 'indefinitely' Credit: Xponential Fitness Inc
Anthony Geisler has been suspended indefintely as CEO of Xponential Fitness Inc, the company he founded
He will be replaced by interim Brenda Morris
His departure follows news that Xponential is facing a legal challenge by the United States Attorney’s Office for the Central District of California
The board has stated it will cooperate with the investigation, while also reaffirming its financial targets
Xponential Fitness today indefinitely suspended founder and CEO, Anthony Geisler, saying it had been notified on 7 May that the company is facing a legal challenge by the United States Attorney’s Office for the Central District of California.

The challenge comes as a result of a filing that was first made in February this year.

Brenda Morris, who has been on the Xponential board since 2019, will act as interim CEO, while a replacement is found.

Xponential had also recently disclosed that it's under investigation by the US Securities and Exchange Commission.

Members of the company’s board say they will ‘cooperate with both the US Attorney’s Office and the Securities and Exchange Commission,’ establishing a committee to investigate all allegations. This group will include independent directors Chelsea Grayson, Jair Clarke and Jeffrey Lawrence.

The challenge filed on 9 February was a class action lawsuit brought against the company for financial damages.

The suit – City of Taylor General Employees Retirement System v Xponential Fitness Inc – was filed in the state of California.

Fifteen American law firms, including Robbins Geller Rudman & Dowd and Levi & Korsinsky, also speculatively sought engagement with complainants in a bid to gather a substantial enough cohort to represent Xponential Fitness shareholders in the case in a bid to recover funds. The deadline for them to come forward to participate in the legal action was 9 April. It’s understood some of the law firms had up to 70 participants.

At the time, Xponential told HCM the company would vigorously defend itself against the claims that certain executive officers violated the Securities Exchange Act between 26 July 2021 and 7 December 2023.

The company has been fighting to stave off rumours of problems since June 2023 when Fuzzy Panda Research published a damning report on its prospects.

Fuzzy Panda made a series of allegations about Geisler and the general trading position of the business, including that in spite of claims by the company it had “never closed” a location, 30 had been permanently closed.

It also said it had evidence that eight out of ten Xponential brands were losing money, calling the business “an abusive franchisor that is a house of cards.” 

Shares in the company – the largest global franchisor of boutique fitness brands – fell 37 per cent on the day Fuzzy Panda published, but a fast response from Xponential directors, who called the report ‘misleading’ and ‘inaccurate’ and positive statements from other analysts, such as Raymond James – who said the response of the market was ‘overdone’ – saw them rebound.

Further signs that all was not well came on the day of the deadline for legal action (9 April), when two widely respected Xponential execs – John Kersh and Garrett Marshall – both exited the business on the same day to take up other senior positions in the sector.

Now, a month later, Anthony Geisler has departed.

At the time of the Fuzzy Panda report, Mark Grabowski, chair of the board and founder of Snapdragon Capital Partners – the company’s largest investor – said: “I’ve known and worked closely with Anthony Geisler… since investing in Club Pilates at my prior firm. I couldn’t speak more highly of his passion, commitment to excellence and professionalism.”

However, in announcing Geisler’s ousting today, Grabowski said: “The Board has determined that appointing Brenda Morris to serve as Interim CEO is in the best interest of Xponential, its employees, customers, franchisees and shareholders.”

In a bid to steady the ship, Xpontential also re-affirmed it stands behind its full-year 2024 guidance which was originally announced on 2 May 2024.

Background notes
Details of the lawsuit brought on 9 February 2024

City of Taylor General Employees Retirement System v Xponential Fitness Inc.

The allegations are that:
- False and/or misleading statements were made relating to the closure of 30 Xponential Fitness franchise locations.

- Xponential’s reported same-store sales and average unit volume metrics had been exaggerated by the company excluding details about underperforming stores.

- Eight out of 10 of Xponential’s brands at that point in time were losing money each month and more than 50 per cent did not make a positive financial return overall.

- More than 60 per cent of the company’s revenue was one-time and non-recurring.

- More than 100 franchises were for sale at a price that was at least 75 per cent less than their initial cost.

- The court action will also contend that Xponential misled some franchisees into taking on franchises by misrepresenting the financial profile and profitability of existing studios, as well as the expected rate of return for new openings.

- As a result, court papers contend that some franchisees are substantially in debt, suffering high attrition rates and running non-viable studios that have no realistic path to profitability.

RELATED STORIES
  John Kersh and Garrett Marshall leave Xponential Fitness


John Kersh has announced he is leaving boutique franchisor, Xponential Fitness, after eight years with the company – seven of the driving international growth across multiple brands and the best part of a year with Pure Barre.
  Xponential Fitness tells HCM it will vigorously defend itself as class action lawsuit is filed in California


Xponential Fitness has told HCM it will vigorously defend itself against claims made in a class action lawsuit being brought against the company for financial damages by shareholders.
  Xponential fights back from damning Fuzzy Panda report


Xponential Fitness shares are recovering following a fightback by the directors after the publication of a damning report on its prospects and conduct from Fuzzy Panda Research.
MORE NEWS
Nike and Hyperice collaborate on Paris 2024 recovery concept
Nike and recovery brand, Hyperice, have partnered to create two tech-driven recovery products – a vest and boots – ahead of Paris 2024.
Heartcore ordered to pay damages in Coreformer collapse case, with lessons for the sector
Boutique operator Heartcore is paying damages to a violinist whose career was cut short following an accident during a class in 2019.
Colruyt Group is using retail insight to drive its health club business, says PJ Nuitten
Belgian retail giant, Colruyt Group, is challenging the status quo of the fitness industry in Belgium.
Paying men to lose weight could help fix obesity crisis
According to a year-long study, offering financial incentives to people to encourage them to lose weight is effective and could be a low-cost solution to support health service in tackling obesity.
+ More news   
LATEST JOBS
Centre Manager - dual site
Brio Leisure
Salary: £35,745pa + excellent benefits
Job location: Chester and Frodsham , United Kingdom
+ More jobs  

FEATURED SUPPLIERS

CoverMe Fitness launches in Australian market
CoverMe Fitness, the studio management app for the fitness industry, has launched in Australia, with industry veteran Tony Zonato as managing director for the region. [more...]

Explosion of passion for fitness at RiminiWellness 2024 and record success for Panatta
The passion for fitness and bodybuilding reached new heights at the Panatta stands during RiminiWellness (30 May – 2 June 20204) – the largest fitness event in Italy – which this year exceeded the 100,000 visitor mark. [more...]
+ More featured suppliers  
COMPANY PROFILES
Alliance Leisure

Alliance Leisure Services was specifically established to respond to the changing development need [more...]
Safe Space Lockers

We provide a full turn-key solution for clients from design and consultation, through to bespoke man [more...]
+ More profiles  
CATALOGUE GALLERY
 
+ More catalogues  

DIRECTORY
+ More directory  
DIARY

 

23-25 Jun 2024

Spa Life International (UK)

The Old Thorns Hotel & Resort, Liphook, United Kingdom
03-04 Jul 2024

Technogym Education Event 2024

Goodwin Sport Sheffield, Sheffield, United Kingdom
+ More diary  
 
ABOUT LEISURE MEDIA
LEISURE MEDIA MAGAZINES
LEISURE MEDIA HANDBOOKS
LEISURE MEDIA WEBSITES
LEISURE MEDIA PRODUCT SEARCH
 
HCM
LEISURE OPPORTUNITIES
HEALTH CLUB HANDBOOK
PRINT SUBSCRIPTIONS
FREE DIGITAL SUBSCRIPTIONS
ADVERTISE . CONTACT US

Leisure Media
Tel: +44 (0)1462 431385

©Cybertrek 2024
Get HCM digital magazine and ezines FREE
Sign up here ▸
Jobs    News   Products   Magazine
NEWS
Xponential dumps Geisler as company faces investigation by US Attorney’s Office
POSTED 11 May 2024 . BY Liz Terry
Anthony Geisler has been removed as CEO of boutique specialist Xponential 'indefinitely' Credit: Xponential Fitness Inc
Anthony Geisler has been suspended indefintely as CEO of Xponential Fitness Inc, the company he founded
He will be replaced by interim Brenda Morris
His departure follows news that Xponential is facing a legal challenge by the United States Attorney’s Office for the Central District of California
The board has stated it will cooperate with the investigation, while also reaffirming its financial targets
Xponential Fitness today indefinitely suspended founder and CEO, Anthony Geisler, saying it had been notified on 7 May that the company is facing a legal challenge by the United States Attorney’s Office for the Central District of California.

The challenge comes as a result of a filing that was first made in February this year.

Brenda Morris, who has been on the Xponential board since 2019, will act as interim CEO, while a replacement is found.

Xponential had also recently disclosed that it's under investigation by the US Securities and Exchange Commission.

Members of the company’s board say they will ‘cooperate with both the US Attorney’s Office and the Securities and Exchange Commission,’ establishing a committee to investigate all allegations. This group will include independent directors Chelsea Grayson, Jair Clarke and Jeffrey Lawrence.

The challenge filed on 9 February was a class action lawsuit brought against the company for financial damages.

The suit – City of Taylor General Employees Retirement System v Xponential Fitness Inc – was filed in the state of California.

Fifteen American law firms, including Robbins Geller Rudman & Dowd and Levi & Korsinsky, also speculatively sought engagement with complainants in a bid to gather a substantial enough cohort to represent Xponential Fitness shareholders in the case in a bid to recover funds. The deadline for them to come forward to participate in the legal action was 9 April. It’s understood some of the law firms had up to 70 participants.

At the time, Xponential told HCM the company would vigorously defend itself against the claims that certain executive officers violated the Securities Exchange Act between 26 July 2021 and 7 December 2023.

The company has been fighting to stave off rumours of problems since June 2023 when Fuzzy Panda Research published a damning report on its prospects.

Fuzzy Panda made a series of allegations about Geisler and the general trading position of the business, including that in spite of claims by the company it had “never closed” a location, 30 had been permanently closed.

It also said it had evidence that eight out of ten Xponential brands were losing money, calling the business “an abusive franchisor that is a house of cards.” 

Shares in the company – the largest global franchisor of boutique fitness brands – fell 37 per cent on the day Fuzzy Panda published, but a fast response from Xponential directors, who called the report ‘misleading’ and ‘inaccurate’ and positive statements from other analysts, such as Raymond James – who said the response of the market was ‘overdone’ – saw them rebound.

Further signs that all was not well came on the day of the deadline for legal action (9 April), when two widely respected Xponential execs – John Kersh and Garrett Marshall – both exited the business on the same day to take up other senior positions in the sector.

Now, a month later, Anthony Geisler has departed.

At the time of the Fuzzy Panda report, Mark Grabowski, chair of the board and founder of Snapdragon Capital Partners – the company’s largest investor – said: “I’ve known and worked closely with Anthony Geisler… since investing in Club Pilates at my prior firm. I couldn’t speak more highly of his passion, commitment to excellence and professionalism.”

However, in announcing Geisler’s ousting today, Grabowski said: “The Board has determined that appointing Brenda Morris to serve as Interim CEO is in the best interest of Xponential, its employees, customers, franchisees and shareholders.”

In a bid to steady the ship, Xpontential also re-affirmed it stands behind its full-year 2024 guidance which was originally announced on 2 May 2024.

Background notes
Details of the lawsuit brought on 9 February 2024

City of Taylor General Employees Retirement System v Xponential Fitness Inc.

The allegations are that:
- False and/or misleading statements were made relating to the closure of 30 Xponential Fitness franchise locations.

- Xponential’s reported same-store sales and average unit volume metrics had been exaggerated by the company excluding details about underperforming stores.

- Eight out of 10 of Xponential’s brands at that point in time were losing money each month and more than 50 per cent did not make a positive financial return overall.

- More than 60 per cent of the company’s revenue was one-time and non-recurring.

- More than 100 franchises were for sale at a price that was at least 75 per cent less than their initial cost.

- The court action will also contend that Xponential misled some franchisees into taking on franchises by misrepresenting the financial profile and profitability of existing studios, as well as the expected rate of return for new openings.

- As a result, court papers contend that some franchisees are substantially in debt, suffering high attrition rates and running non-viable studios that have no realistic path to profitability.

RELATED STORIES
John Kersh and Garrett Marshall leave Xponential Fitness


John Kersh has announced he is leaving boutique franchisor, Xponential Fitness, after eight years with the company – seven of the driving international growth across multiple brands and the best part of a year with Pure Barre.
Xponential Fitness tells HCM it will vigorously defend itself as class action lawsuit is filed in California


Xponential Fitness has told HCM it will vigorously defend itself against claims made in a class action lawsuit being brought against the company for financial damages by shareholders.
Xponential fights back from damning Fuzzy Panda report


Xponential Fitness shares are recovering following a fightback by the directors after the publication of a damning report on its prospects and conduct from Fuzzy Panda Research.
MORE NEWS
Nike and Hyperice collaborate on Paris 2024 recovery concept
Nike and recovery brand, Hyperice, have partnered to create two tech-driven recovery products – a vest and boots – ahead of Paris 2024.
Heartcore ordered to pay damages in Coreformer collapse case, with lessons for the sector
Boutique operator Heartcore is paying damages to a violinist whose career was cut short following an accident during a class in 2019.
Colruyt Group is using retail insight to drive its health club business, says PJ Nuitten
Belgian retail giant, Colruyt Group, is challenging the status quo of the fitness industry in Belgium.
Paying men to lose weight could help fix obesity crisis
According to a year-long study, offering financial incentives to people to encourage them to lose weight is effective and could be a low-cost solution to support health service in tackling obesity.
Influencer Anna Lewandowska reveals plans for a new 'wellness paradise' called Edan Studios in Barcelona
Fitness influencer and karate champion, Anna Lewandowska, has announced the launch of a multi-concept boutique in Barcelona called Edan Studios based on HIIT, Pilates and dance.
The Health & Fitness Association appoints Sean Tan as Asia advocate
The Health & Fitness Association (formerly IHRSA) has hired Singapore-based attorney and international industry advocate, Sean Tan, as the senior representative in Asia.
+ More news   
 
FEATURED SUPPLIERS

CoverMe Fitness launches in Australian market
CoverMe Fitness, the studio management app for the fitness industry, has launched in Australia, with industry veteran Tony Zonato as managing director for the region. [more...]

Explosion of passion for fitness at RiminiWellness 2024 and record success for Panatta
The passion for fitness and bodybuilding reached new heights at the Panatta stands during RiminiWellness (30 May – 2 June 20204) – the largest fitness event in Italy – which this year exceeded the 100,000 visitor mark. [more...]
+ More featured suppliers  
COMPANY PROFILES
Alliance Leisure

Alliance Leisure Services was specifically established to respond to the changing development need [more...]
+ More profiles  
CATALOGUE GALLERY
+ More catalogues  

DIRECTORY
+ More directory  
DIARY

 

23-25 Jun 2024

Spa Life International (UK)

The Old Thorns Hotel & Resort, Liphook, United Kingdom
03-04 Jul 2024

Technogym Education Event 2024

Goodwin Sport Sheffield, Sheffield, United Kingdom
+ More diary  
 


ADVERTISE . CONTACT US

Leisure Media
Tel: +44 (0)1462 431385

©Cybertrek 2024

ABOUT LEISURE MEDIA
LEISURE MEDIA MAGAZINES
LEISURE MEDIA HANDBOOKS
LEISURE MEDIA WEBSITES
LEISURE MEDIA PRODUCT SEARCH
PRINT SUBSCRIPTIONS
FREE DIGITAL SUBSCRIPTIONS