Xponential Fitness suspends CEO and discloses investigation

Xponential Fitness is under the microscope.

The news: The boutique studio franchisor suspended CEO and founder Anthony Geisler amid mounting federal investigations.

The United States Attorney’s Office (USAO) for the Central District of California notified the company of an investigation on May 7. This complements an ongoing investigation by the US Securities and Exchange Commission (SEC).

XPOF board member Brenda Morris will do it substitute Geisler as interim CEO. The company’s shares fell 30% on this news.

Ups and downs. Xponential owns 10 fitness and wellness brands including Club Pilates, CycleBar, Rumble, StretchLab, Row House, Pure Barre, AKT, YogaSix, BFT and Lindora.

With its IPO in 2021, the company has grown to over 3,000 studios worldwide and annual revenue of over $1 billion. But behind the scenes, insiders have raised warning signs.

Last year, Bloomberg reported that some franchisees felt they had been “intentionally misled” about the strength of the XPOF brands while concealing the losses of other operators. Around the same time, the SEC opened an investigation into the company.

Now that the USAO is following suit and Geisler is being forced out, Xponential’s problems are increasing.

Looking ahead: Details are sparse and the company plans to cooperate with investigators, but smoke is forming. In the best case scenario, they are free from any wrongdoing. Worst case scenario, we have another one F45 situation on our hands. We will see.