Former Xponential CEO Anthony Geisler Talks Fitness Franchising, Rise of GLP-1s

In this exclusive interview, Geisler addresses his recent departure from Xponential, analyzes the current fitness and wellness landscape, and shares his predictions for the future

Anthony Geisler founded Xponential Fitness in 2017, building it into the world’s largest fitness and wellness franchisor. Under Geisler’s watch, Xponential acquired brands including Club Pilates, StretchLab and Pure Barre, growing them into household names across the globe.

Earlier this year, Geisler resigned from his role as CEO of Xponential, telling Athletech News the timing was right for him to step aside.

Geisler won’t be on the sidelines for long; he’s planning to stay in the fitness and wellness space, although he can’t yet publicly disclose his next move.

Geisler sat down with Athletech News for an exclusive interview, speaking on his departure from Xponential and sharing his thoughts on the business of fitness franchising , the rise of GLP-1 weight-loss drugs , and the challenges and opportunities facing the industry in 2024 and beyond.

The following conversation has been lightly edited for clarity and length

Athletech News: We know there are still a lot of moving parts, but what can you say about your recent departure from Xponential?

Anthony Geisler: I’m proud of all that we built at Xponential Fitness , and I continue to wish the company well. The time had come for me to move on.

ATN: Since leaving Xponential, how have you been spending your time?

AG : I’m balancing spending a lot of time with my family, staying fit and working – just like I have for many years.

ATN: You’re not the type of person to sit still. What’s next for you in your career? Are you planning to stay involved in the fitness and wellness industry?

AG : Yes, absolutely. There’s a tremendous amount of opportunity in the fitness and wellness space, particularly in the area of technology. I’m excited about my next moves.

ATN: We’ve seen so many new fitness and wellness franchise concepts pop up over the past few years. Is the market too saturated or is there still room for new concepts?

AG : The market is always going to have room for sound concepts. Does that mean that we’re going to see explosive growth of successful goat yoga or ‘boxilates’ studios? I don’t think so. However, there’s a lot of opportunity for concepts that have broad appeal to the large – and quickly growing – market of people who are focused on staying fit and eating right.

ATN: There’s speculation that Solidcore is exploring a sale at a potential valuation of $750 million . Is such a large valuation justified?

AG : Let me say a few things about this deal.  First, Solidcore has a great banker involved in the sale. Second, Pilates has massive upside. We saw this with (Xponential Fitness-owned) Club Pilates, which has more than ten times as many open locations as Solidcore – and Solidcore is the second largest player in the space.

Third, although I’m partial to franchise models, I do believe that there’s a lot of room to grow in the Pilates space, especially for a differentiated concept like Solidcore.

ATN: Do you expect to see a lot of M&A activity in the second half of 2024 and into 2025?

AG : No. M&A activity has been fairly light in recent years because of high interest rates.

I’ve spent most of the last two decades looking at acquiring concepts and making M&A decisions – the underlying dynamics of those decisions have been dramatically changed by interest rate hikes over the last few years. It’s so much harder to pencil deals when the basis on your debt financing is several points higher. Your business strategy has to change as a result.

Even if the Fed makes big moves in the coming months, I don’t expect that rates will move down enough to change these fundamentals.

ATN: What are the biggest headwinds facing the fitness and wellness industry right now?

AG : I see three major headwinds. First, interest rates are a major drag on M&A.

Second, operators are finding it difficult to access quality real estate. Location is so incredibly important when it comes to launching and maintaining a successful fitness business. This has always been a challenge, and it will remain one for the foreseeable future. This is one area where it benefits to be a franchisee in a high-quality system. Top franchisors should have relationships with REITs (Real Estate Investment Trusts) across the country which allow their franchises to get the looks at quality real estate that others will not have. If you’re in the right system, this is a benefit of buying a franchise concept as opposed to starting your own.

Third, we need access to a quality labor pool. This is true about any business, whether it’s running Google or running a gym. However, I think too many in our space take this lightly and do not invest in the highest quality talent possible. That is a big mistake.

At the end of the day, our businesses rely on good rates, great locations and great people to be successful.

ATN: What’s your opinion on the at-home fitness space? Can brands like Peloton, Tonal and Hydrow continue to survive or even thrive?

AG : There has always been a place for at-home concepts –  and there always will be. You can go back to the late Richard Simmons’ and Suzanne Somers’ video tapes to understand that some people will work out at home because it’s convenient or makes sense for their lives.

However, outside of a global pandemic – when there was no choice but to be at home – these concepts are destined to be a small part of the overall market.

There’s a simple reason for this: It is very hard to build community digitally. People are social animals. They get better results and more satisfying workouts when they’re in the same room together and can create community. Their lives are enriched when they live them with other people, and that’s usually the case when it comes to how they work out.

ATN: What impact will GLP-1 weight-loss drugs have on the fitness and wellness industry? Could they create a new class of consumers for operators?

AG : We don’t know how GLP-1s will be regulated or how many people will be on these medications, so it’s hard to assess how big an impact they’ll have on the market.

That said, GLP-1s cause patients to burn 50 percent muscle mass. That is a huge issue that (fitness brands) need to address — and can help offset — with weight training. Of course, this ultimately will benefit the gym sector, particularly those that focus on weight training and building lean muscle mass.

At some point, I think the American Medical Association and/or insurance providers will require patients to put a holistic plan in place surrounding the use of these medications. In the future, you will not be able to take the script without an approach to rebuilding the 50 percent of lean muscle mass that you will lose while on (GLP-1s) because if left unaddressed, this loss creates a whole host of other health issues.

ATN: What are your three fitness and wellness predictions for 2024 and beyond?

AG : First, we’ll see better technology enter the marketplace and make a significant impact in areas like point-of-sale and CRMs. You’ll see the integration of AI into customer management and other functions. The fitness and wellness spaces have been decades behind other sectors in the economy when it comes to technology and I think the gap is finally going to close. The success of businesses in this space will depend on it.

Second, we’ll see an alignment between an increase in GLP-1s and individuals thinking holistically about their weight-loss and muscle-gain journeys.

Third, we’ll see a growth in weight training, both as a modality on its own and as a feature added to other fitness concepts as people become educated about its benefits. This is certainly a trend we are seeing across many different concepts – and I think it is just the beginning.

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