Sunday, June 16, 2024

Top fitness company CEO suspended amid federal probes, allegedly threatened to decapitate franchisee: report

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The nation’s largest fitness company “indefinitely” suspended its allegedly menacing CEO amid a growing number of federal investigations into possible fraud, according to multiple reports.

Xponential Fitness – which has more than 3,000 boutique studios under brands such as PureBarre, Rumble and CycleBar — is under federal scrutiny over allegations that the company misled both franchisees and investors about its financial health, according to people who have spoken with the investigators.

More shockingly, XPonential boss Anthony Geisler, who founded the company in 2017 and took it public in 2021, allegedly threatened to decapitate a franchise owner during a contentious mediation session, according to a Businessweek report and confirmed by the owner to The Post.

Anthony Geisler founded Xponential in 2017 and took it public in 2021. Xponential Fitness

He allegedly told the mediator to relay the following warning: that his head would be cut off and mounted on a spike with a note saying, “This is what happens when you f— with Anthony Geisler,” Businessweek reported.

The franchisee told The Post the mediator told him: “Anthony was very explicit about what I should tell you.”

Geisler denied making the comment, Businessweek reported.

He had first made headlines in 2009 when he challenged Chris Brown to a fight after the R&B singer allegedly assaulted his then-girlfriend Rihanna. Geisler launched a Facebook page entitled “I want to fight Chris Brown.”

On Friday, Geisler was suspended after the Irvine, Calif.-based company revealed that it received notice of a probe by the US Attorney’s Office for the Central District of California last week.

Xpotential operates 10 boutique, fitness brands. Getty Images

The news came on the heels of a Dec. 5 disclosure that the company was the target of a Securities and Exchange Commission investigation. 

“The investigators are focusing on how Xponential allegedly misled franchisees into agreements and then essentially trapped them,” a source with knowledge of the situation told The Post.

The New York State Attorney General’s office and the Washington State Attorney General’s office have also interviewed franchisees – many of whom have lost their life savings –  and others with knowledge of Xponential’s business practices, sources who have spoken with state and federal investigators told The Post.

There are more than a dozen Pure Barre studios in New York City. Denver Post via Getty Images

The company allegedly required prospective business owners “to enter into 10-year leases with landlords and give personal guarantees and they were stuck in equipment leases that caused some of them to file for bankruptcy,” David Bovino, a lawyer representing several hundred franchisees, told The Post.

Many also learned after the fact that the buildouts of the studios took “substantially longer than they were told,” Bovino added.

One of the boutique studios, PureBarre, has more than a dozen locations in New York City.

Franchise owners allege that they were misled by Xpotential and several hundred have retained legal counsel. NurPhoto via Getty Images

According to an explosive report last year by short seller Fuzzy Panda Research, more than 50% of the franchise-operated studios are losing money and the company allegedly misrepresented the number of failed studios to its investors.

The report described Xponential as a “house of cards” and an “abusive” company.

Xponential did not immediately respond to The Post.

Geisler did not return calls for comment.

The Post reached out to the AGs in New York and Washington state.

The California District Attorney’s Office declined to comment.

The company named board member Brenda Morris interim CEO. She had been an Xponential director since 2019.

Brenda Morris, who has been a director of Xpotential since 2019, was named interim CEO. Facebook/Brenda Morris

Geisler, 44, began his fitness empire in 2001 when he bought LA Boxing and franchised the kickboxing brand. 

He acquired other boutique fitness studio brands, eventually forming Xponential – which operates 10 brands.  

Xponential franchisees said they are “terrified” to speak out against Geisler, according to the Business Week report. 

“He’ll tell you what you want to hear at the beginning, but when push comes to shove, he’s real quick to be the 800-pound gorilla. It’s his way or the highway,” Gary Stinnett, a former CycleBar franchisee, told the publication.

Rumble Boxing is among the 10 brands Xpotential operates. San Francisco Chronicle via Getty Images

Hundreds of franchisees have sought legal counsel about getting out of their deals, but their agreements with the company require them to go through mediation, Bovino said.

Mediation starts on May 29.

We are prepared to file a lawsuit if the mediation doesn’t produce an acceptable resolution,” said Bovino, whose firm is one of four law firms representing disgruntled franchisees.

”We believe the termination of the CEO is a demonstration that the board of directors is motivated to make comprehensive reforms and make restitution and to allow the struggling franchisees to get out with Xponential assuming liabilities,” Bovino said.

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