Sunday, June 16, 2024

Xponential Dismisses CEO Anthony Geisler Amid Investigations

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Geisler, who founded Xponential Fitness and grew it into the world’s largest franchisor of boutique fitness brands, has been relieved of his duties and suspended following notice of a USAO investigation

Anthony Geisler, who has served as CEO of Xponential Fitness since he founded the brand in 2017, has been removed from his duties by Xponential’s board and is suspended indefinitely, effective immediately.

The move comes as the boutique fitness franchisor confirms receipt of a May 7 notice of an investigation by the United States Attorney’s Office (USAO) for the Central District of California. 

Xponential has named Brenda Morris as interim CEO while it searches for a permanent CEO replacement for Geisler, the company announced.

The news has caused a significant blow to shares of XPOF, which have sunk almost 32% after the news broke on Friday.

Xponential had previously disclosed an SEC investigation in December of 2023. Last summer, Xponential was the target of a scathing short-seller report by Fuzzy Panda Research that called the franchisor a “house of cards” on the verge of collapse and alleged that the fitness company was an “abusive franchisor.” Xponential vigorously refuted the claims, but the report caused shares of Xponential to lose over one-third of their value. They still hadn’t fully recovered when Friday’s news sent shares of XPOF even lower.

Around the time of the SEC investigation announcement, Bloomberg reported that some of Xponential’s franchisees, including those who owned Pure Barre and Club Pilates locations, had suffered significant financial losses.

During his time overseeing Xponential, Geisler led the acquisitions of several brands such as Body Fit Training (BFT), Row House, YogaSix, CycleBar, StretchLab and, most recently, Lindora. 

He has already been removed from Xponential’s management team page and replaced by Morris.

Morris, who has served on Xponential’s board of directors since 2019, is currently a partner at CSuite Financial Partners and has over 35 years of experience in finance, accounting and operations roles.

“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,” said Mark Grabowski, chairman of Xponential. “Over the last five years, Brenda has been a deeply involved Board member as we have pursued Xponential’s mission to make health and wellness accessible to everyone.”

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Xponential’s board said it has retained a leading executive search firm to assist in the search for a new CEO.

Xponential says it has been cooperating with the SEC and intends to cooperate with the USAO. It has formed a Special Committee of Directors, consisting of independent directors Ms. Grayson, Jair Clarke and Jeffrey Lawrence.

The executive change won’t impact Xponential’s full-year 2024 guidance, which it announced earlier this month.

Xponential had 3,156 boutique fitness and wellness studios operating globally with 6,365 franchise licenses sold across its portfolio, the company said on its most recent earnings call.

Courtney Rehfeldt has worked in the broadcasting media industry since 2007 and has freelanced since 2012. Her work has been featured in Age of Awareness, Times Beacon Record, The New York Times, and she has an upcoming piece in Slate. She studied yoga & meditation under Beryl Bender Birch at The Hard & The Soft Yoga Institute. She enjoys hiking, being outdoors, and is an avid reader. Courtney has a BA in Media & Communications studies.

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