The boutique fitness and wellness franchisor disclosed a proposed FTC consent agreement and franchisee settlement alongside a weak earnings report<\/p>\n
Xponential Fitness has agreed to pay $17 million to resolve a previously disclosed Federal Trade Commission investigation. The boutique fitness and wellness franchisor also finalized a $22.75 million settlement with more than 500 current and former franchisees for a combined $39.75 million in legal payouts the company says will \u201csubstantially reduce\u201d regulatory and legal uncertainty.<\/p>\n
The franchisor, which operates Club Pilates, Pure Barre and YogaSix among other brands, disclosed the agreement in its fourth-quarter 2025 earnings release.\u00a0Xponential reported revenue of $314.9 million, down 2% from the prior year, and a net loss of $53.7 million for the full year. For the fourth quarter, revenue was $83 million, with a net loss of $45.6 million and a 4% decline in same-store sales.<\/p>\n
The company also disclosed that approximately 30% of its contractually obligated studio licenses are currently more than 12 months behind their development schedules and classified as inactive.<\/p>\n
Shares of Xponential fell more than 40% Friday in response. <\/p>\n
Xponential<\/a> agreed to the $17 million payment over 12 months without admitting liability. The franchisee settlement will be paid out over 35 months.\u00a0<\/p>\n The consent agreement remains subject to approval by FTC commissioners and a court. The specific allegations underlying the FTC\u2019s investigation have not yet been made public.<\/p>\n Xponential disclosed it received a civil investigative demand from the FTC on July 29, 2024. Prior to that, the company disclosed a separate investigation by the U.S. Attorney\u2019s Office for the Central District of California on May 7, 2024. The U.S. Attorney\u2019s Office declined to comment.<\/p>\n The Securities and Exchange Commission had opened its own investigation in December 2023, following a short-seller report by Fuzzy Panda Research that alleged Xponential had misled investors and franchisees about the company\u2019s financial performance. The SEC closed its investigation without action in July 2025.<\/a><\/p>\n \u201cThe fourth quarter capped a year of progress as we refined the strategic priorities that will drive Xponential\u2019s long-term growth,\u201d Xponential CEO Mike Nuzzo said. \u201cWith strong franchise partner engagement and disciplined execution across our brands, we are continuing to reinforce our industry-leading position and capitalize on the opportunities ahead.\u201d<\/p>\n He added that the franchisor is making \u201cintentional investments\u201d this year to drive member acquisition and retention.<\/p>\n Nuzzo was appointed CEO of Xponential last August<\/a>, succeeding Mark King, who resigned<\/a> after announcing that he would retire.<\/p>\n