The nation’s largest fitness company has suspended its allegedly threatening CEO “indefinitely” amid a growing federal investigation into possible fraud, according to multiple reports.
Xponential Fitness, which operates more than 3,000 boutique studios under brands such as PureBarre, Rumble and CycleBar, is under federal scrutiny for allegedly misleading both franchisees and investors about its financial health. , according to people involved in the investigation.
Even more shocking, XPonential boss Anthony Geisler, who founded the company in 2017 and took it public in 2021, threatened to decapitate franchise owners during a controversial settlement, Business Week reported. Reported. report The owner confirmed to the Post.
According to a report in Business Week magazine, he gave the arbitrator a note that read, “This is what happens when you have sex with Anthony Geisler,” along with a warning that his head would be cut off and attached to a spike.
“Anthony told me very clearly what I needed to say” from the mediator, the franchisee told the Post.
Geisler denied making the comments, according to Business Week.
He first hit the headlines in 2009. he challenged chris brown to a fight This comes after the R&B singer allegedly assaulted his then-girlfriend Rihanna. Geisler started a Facebook page titled “I Want to Fight Chris Brown.”
Mr. Geisler was suspended Friday after the Irvine, Calif.-based company said it received notice of the investigation last week from the U.S. Attorney’s Office for the Central District of California.
The news comes on the heels of the Dec. 5 announcement that the company is the subject of a Securities and Exchange Commission investigation.
“Investigators are focused on how Xponential allegedly tricked franchisees into signing contracts, essentially trapping them,” a person familiar with the matter told the Post. .
The New York State Attorney General’s Office and the Washington State Attorney General’s Office also interviewed state and federal investigators, many of whom lost their life savings, and other people familiar with Xponential’s business practices. A person familiar with the matter told the Post.
The company allegedly required prospective business owners to “sign 10-year leases with landlords and provide personal guarantees, leaving them stuck with equipment leases and causing some franchisees to It caused them to file for bankruptcy,” said attorney David Bovino, who represents hundreds of franchisees. post.
Bovino added that many later learned that building the studio addition “took a lot longer than we were told.”
PureBarre, a boutique studio, has more than a dozen locations in New York City.
An explosive report released last year by short seller Fuzzy Panda Research found that more than 50% of franchised studios were losing money, and that the company misrepresented to investors the number of failed studios. He is said to have conveyed this.
The report describes Xponential as a “house in the sand” and a “fraudulent” company.
Xponential did not immediately respond to the Post.
Geisler did not respond to a request for comment.
The newspaper contacted the AGs in New York and Washington.
The California District Attorney’s Office declined to comment.
The company has appointed director Brenda Morris as interim CEO. She was the director of her Xponential since 2019.
Mr. Geisler, 44, began building his fitness empire in 2001 by purchasing LA Boxing and franchising the kickboxing brand.
He acquired other boutique fitness studio brands and eventually founded Xponential, which operates 10 brands.
Business Week reports that Xponential franchisees said they were “afraid” to speak out against Geisler.
“He tells you what you want to hear at first, but when push comes to shove, he’s as quick as an 800-pound gorilla. It’s his way or the highway,” says former Cycle Bar franchisee. Gary Stinnett told the magazine.
Bovino said hundreds of franchisees have consulted lawyers to get out of their contracts, but the company’s contracts require mediation.
Mediation begins on May 29th.
“If mediation does not yield an acceptable solution, we are prepared to litigate,” Bovino said.
“We believe the CEO’s removal demonstrates the board’s desire to make comprehensive reforms, provide reparations, and enable distressed franchisees to exit Xponential responsibly. “There are,” Bovino said.
