Xponential Fitness Lands $25M in New Term Loans

The franchisor behind Club Pilates, Pure Barre and more admitted last month that it’s facing some short-term disruptions following an ongoing investigation, but remains resolute in the future

Following lowered studio openings and revenue guidance for 2024, boutique fitness and wellness franchisor Xponential Fitness has entered into a seventh amendment to its existing financing agreement from April 2021 with Wilmington Trust, National Association, according to a filing with the Securities and Exchange Commission dated Aug. 23.

The agreement provides Xponential Fitness with additional term loans of $25 million — funds that will be used for general corporate purposes, including working capital, lease liabilities, and legal expenses “arising from previously disclosed regulatory matters.”

The franchisor has amassed a portfolio of brands over the years, including Club Pilates, Pure Barre, StretchLab, BFT and added metabolic health clinic Lindora last year.

The filing was signed by Xponential CFO John Meloun, who has served in his role since 2018. Meloun noted the franchisor’s retail softness, leadership transition and regulatory investigations on Xponential’s Q2 earnings call last month , stating that the circumstances led to tempering Xpof’s prior outlook.

Meloun was forthright regarding “short-term” disruptions that Xponential has been facing in light of an ongoing investigation by the United States Attorney’s Office for the Central District of California. The notice was received by Xpof in May and followed an SEC investigation that the franchisor had announced late last year — around the same time Bloomberg reported some Pure Barre and Club Pilates franchisees were navigating considerable financial losses.

In June, the leading boutique fitness and wellness franchisor welcomed a new CEO, Mark King — formerly Taco Bell’s CEO and president of Adidas. King succeeds Brenda Morris, who served as interim CEO following founder and former CEO Anthony Geisler’s swift departure in May.

King told investors last month that Xponential has been streamlining its operations and focusing on its existing portfolio of brands and franchisees. The franchisor had divested from Row House and Stride , a rowing and HIIT concept, respectively, earlier this year. It was also recently announced that Xponential would wind down AKT, a dance-based cardio brand with eight studios. A previous deal that Xponential forged with Kinrgy, Julianne Hough’s dance and fitness platform , has also been terminated — a deal that would have rebranded up to three AKT studios to Kinrgy.

King was adamant, however, that despite the current challenges, Xponential is on solid footing and will focus on franchisee development and further international opportunities.

“When I went to the Adidas business, it was very broken,” King said last month. “So it really was a turnaround, which – this is nothing like a turnaround … I came here because there was so much good about this business. The brands are great. The momentum is very positive, and if you really look at the numbers of Q2, most of the big indicators are very positive.”

Lindora – which offers GLP-1 weight loss medication services and hormone replacement therapy – is set to expand nationwide beyond its West Coast roots, with some locations slated to open in Q4.

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