Xponential to Pay NY $3.9M for Allegedly Misleading Franchisees

New York’s state attorney general says Xponential Fitness misled prospective studio owners, the franchisor’s third major settlement this year as a strategic review continues

Xponential Fitness, the parent company of popular boutique fitness brands such as Club Pilates and Pure Barre, will pay more than $3.9 million to resolve a New York investigation that found the franchisor misled prospective franchisees about how long it would take to open their studios, state Attorney General Letitia James announced this week.

The settlement is the largest the state has ever secured under its Franchise Sales Act, according to the attorney general’s office, and covers Xponential and its current and former subsidiary brands, including Club Pilates, Pure Barre, StretchLab, YogaSix, Body Fit Training (BFT), AKT, CycleBar and Rumble.

The California-based company has offloaded several of those brands over the last couple of years, including Rumble Boxing and CycleBar, which were acquired by Extraordinary Brands. 

It had divested Row House and Stride in 2024, wound down AKT, its dance-based fitness format and sold weight management brand Lindora to Next Health last fall.

What remains now is Club Pilates, Pure Barre, StretchLab, YogaSix and Body Fit Training. 

According to the attorney general’s office, Xponential and its brands filed roughly 33 Franchise Disclosure Documents in New York between January 2020 and December 2024 that estimated studios would open within three to six months. The office found the actual average exceeded 13 months from the date franchisees signed their agreements.

Additionally, the office asserts that Xponential was aware the timelines it reported to the state and franchisees were misleading, as the company had reported “substantially longer time periods in annual reports with the U.S. Securities and Exchange Commission (SEC),” the office said in a statement.

In those annual reports, Xponential disclosed it would take up to 12.2 months in 2022, 10.5 months in 2023 and 15 months in 2024.

“Xponential’s misleading timelines led to significant financial losses for some franchisees, while others were ultimately never able to open their locations,” the attorney general’s office said.

The $3.9 million will be placed in a restitution account for affected franchisees. Of that, $3 million goes to 70 franchisees harmed by the delays, while 25 who never opened a studio will receive $971,250 to recover franchise and transfer fees paid to the company.

Franchisees eligible for restitution under the settlement will be contacted directly by Xponential, the office said.

“New Yorkers who take the risk of opening a local franchise should be able to trust that the companies they are going into business with will treat them fairly,” Attorney General James said in a statement. “Xponential misled small business owners with false promises and caused them to lose significant amounts of money. My office has secured restitution for the business owners who were misled by Xponential, and I will continue to enforce the law to ensure small businesses in New York have a fair shot at success.”

The office’s findings arrive at a sensitive moment for the franchisor and follow a $17 million Federal Trade Commission penalty announced in March and a $22.75 million settlement with more than 500 current and former franchisees finalized earlier this year.

CEO Mike Nuzzo, who took over last August following Mark King’s departure, is nearing his one-year anniversary as the company undergoes a formal strategic review and rebuilds its executive ranks, naming former McAlister’s Deli president Danielle Porto Parra as president last month.

Xponential engaged Jefferies LLC in April to evaluate options including a sale or merger, following pressure from shareholders Voss Capital and Kanen Wealth Management.

Club Pilates, in particular, remains the gem of the Xponential portfolio. The brand delivers one of the franchisor’s strongest three-year member lifetime values, at over $2,300, and has a growing international footprint, Nuzzo told investors last month. 

Notably, the settlement is the New York office’s second action against a fitness company in the last 13 months, after James secured $600,000 from Equinox Group in May 2025 over hard-to-cancel memberships

Xponential Fitness didn’t immediately respond to ATN’s request for comment.