Xponential Fitness fires its CEO as federal investigation expands | Franchise news

Anthony Geisler, who founded multi-brand platform company Xponential Fitness in 2017 and has served as CEO since then, has been removed from his position effective immediately and suspended indefinitely, the company announced Friday.

The decision comes as the parent company of boutique fitness brands such as Club Pilates, CycleBar and StretchLab faces an expanded federal investigation that now includes the U.S. Attorney’s Office for the Central District of California. Brenda Morris, an Xponential board member since 2019, will replace Geisler as interim CEO, the company said.

Xponential said it received notice of an investigation by the U.S. Attorney’s Office on May 7. In December, it announced an investigation by the U.S. Securities and Exchange Commission, and the company is facing multiple class action lawsuits alleging it defrauded its investors by making “materially false and misleading statements and omissions regarding the Xponential’s business, financial results and prospects.

The company “intends to continue to cooperate with the SEC and USAO,” Xponential said in a statement. Its board also formed a special committee consisting of independent directors Chelsea Grayson, Jair Clarke and Jeffrey Lawrence “to investigate these matters.”

Shares of Xponential, which went public in 2021 and trades under the ticker symbol XPOF, closed May 10 down nearly 32 percent to $8.48. They have fallen by more than 70 percent in the last 12 months.

Geisler founded Xponential two years after purchasing Club Pilates, which at the time had 30 units. The franchisor has grown to 10 brands, primarily through the acquisition of studio fitness concepts led by the founder. Earlier this year, the company acquired Lindora, a weight loss clinic company, and its 31 clinics. In February, the company divested the running-focused concept Stride, selling it to Shaun Grove, who left his position as president of another Xponential brand, Rumble Boxing.

Xponential’s board said it has hired a search firm to help find a new CEO. Morris is a partner at CSuite Financial Partners, an executive services firm.

“The board has determined that the appointment of Brenda Morris as interim CEO is in the best interests of Xponential, its employees, customers, franchisees and shareholders,” Mark Grabowski, chairman of Xponential and also managing partner of founding investor Snapdragon Capital, said in a statement . “Over the past five years, Brenda has been an extremely dedicated board member as we have pursued Xponential’s mission of making health and wellness accessible to everyone. The Board and I are confident that Brenda will be an outstanding leader during this time and we look forward to working with her.”

Xponential said in its most recent earnings release that it operates 3,156 studios worldwide.