FTC Hits Xponential Fitness With Record $17M Franchise Settlement

The Federal Trade Commission secured a $17 million settlement against Xponential Fitness for Franchise Rule violations and related deceptive practices, with the full amount to be returned to franchisees in what the agency called the largest consumer redress ever in a franchise case. For anyone in the yoga world who has ever dreamed of owning a YogaSix studio, or enrolled in a Club Pilates class down the street, the action lands close to home: Xponential is the Irvine, California-based parent company behind both brands, along with Pure Barre, StretchLab, and BFT.

The FTC alleged that Xponential misrepresented key information about the costs, risks, time to open and operate studios, and essential details about the company's operations, leaving many franchisees and prospective franchisees in the dark about their investment. The complaint, filed in the U.S. District Court for the Central District of California on a 2-0 Commission vote, identifies the deception as systematic and ongoing across several years.

The most striking specific allegation involves opening timelines. The FTC alleged Xponential falsely claimed franchisees typically get their studios up and running within six months of signing the franchise agreement, when in reality franchisees have typically taken more than a year to open, if they opened at all, a fact Xponential knew well. As a result, franchisees paid substantial license fees and incurred unexpected costs due to delayed openings.

The FTC also alleged Xponential failed to disclose to prospective franchisees that former CEO Anthony Geisler was involved in the sale or operation of franchises and that he was involved in litigation that Xponential was legally required to disclose under the Franchise Rule. Geisler, who founded Xponential, was its CEO until being forced out in May 2024 amid the federal probe.

With an initial fee averaging $45,000, not to mention the tens of thousands of dollars required to build out and operate a studio, consumers who purchase a franchise from Xponential take on significant financial risk. Failure to provide accurate and timely franchise disclosure documents left franchisees without a full opportunity to meaningfully review crucial information about Xponential's offerings and the risks involved before entering into a 10-year franchise agreement.

"Americans invest their life savings into franchises with high hopes of launching a financially prosperous business," said Christopher Mufarrige, Director of the FTC's Bureau of Consumer Protection. "Xponential's failure to provide prospective franchisees with legally mandated information denied American workers and potential employers the ability to evaluate the costs and risks involved. The Trump-Vance FTC will continue to bring actions to stop deceptive practices that harm American workers."

Under the proposed FTC consent agreement and without admitting liability, Xponential agreed to pay $17 million over 12 months to resolve an investigation first disclosed in July 2024. Xponential also finalized a separate settlement that will pay $22.75 million over 35 months to 509 existing and former franchisees who alleged they were aggrieved by purported misstatements and omissions by the company or an affiliate. Together, the two agreements account for the nearly $40 million in total settlements Xponential announced.

In its investor statement, the company said the resolution "closes a historical chapter for the Company and allows it to focus on future growth and continued support for its franchisees under new management." CEO Mike Nuzzo was appointed in August after a turbulent leadership transition.

The stipulated final order imposes the $17 million monetary judgment and prohibits Xponential from making misrepresentations to prospective franchisees in the promotion, sale, or offering for sale of any franchise, and requires Xponential to comply with the Franchise Rule, including by providing complete, accurate, and timely franchise disclosure documents to prospective franchisees.

The financial backdrop is complicated. Xponential reported systemwide same-store sales fell 4.3 percent in the fourth quarter, with a global studio count of 3,097 and 140 total unit closures last year against 341 gross new openings. The consent agreement is also subject to approval by a court, and it comes as Xponential remains under investigation by the United States Attorney's Office for the Central District of California.

For the broader franchise industry, the precedent matters. Legal commentary from franchise practitioners noted the enforcement action was welcomed as an important step toward eliminating sharp practices in franchise sales, while also emphasizing that Xponential represents an outlier rather than the norm, and that the vast majority of franchisors comply with disclosure requirements in good faith. For the hundreds of instructors, studio owners, and aspiring entrepreneurs who make up the boutique fitness world, the FTC's record redress fund signals that the 14-day disclosure window the Franchise Rule mandates is not fine print. It is the floor.