AG James Recovers $3.9M from Xponential Fitness for Deception

New York Attorney General Reaches a Historical Settlement with Xponential Fitness

New York Attorney General Letitia James has announced a monumental financial settlement resulting from violations of New York’s Franchise Sales Act. The settlement is linked to investigations into Xponential Fitness, Inc., a California-based fitness studio company, and its current and former subsidiaries. They are to pay a record $3,971,250 for misleading small business owners. The investigation revealed that Xponential and its subsidiaries deceived prospective franchise owners about the franchise opening timeline while selling them franchise licenses.

Xponential Subsidiary Brands and their Misleading Timelines

Xponential’s subsidiaries include fitness brands that sell franchises of boutique exercise studios such as AKT, Body Fit Training, Club Pilates, CycleBar, Pure Barre, Rumble, StretchLab, and YogaSix. These brands collectively own thousands of fitness studios across the country. The investigation concluded that on several occasions, these fitness brands misrepresented the franchise opening timeline to small local business owners.

Protection for Small Business Owners Against Misrepresentation and Fraud

Small business owners depend on a clear timeline from franchising companies to estimate costs, apply for loans, and make revenue projections. When franchisors like Xponential mislead potential franchisees, it can lead to dire financial consequences. Attorney General James reassured that her office would continue to enforce the law to ensure fair treatment for small businesses in New York.

How Xponential Misled Franchisees

Xponential and its brands provided misleading timelines in their Franchise Disclosure Documents (FDDs). From January 1, 2020, to December 31, 2024, Xponential and its subsidiary brands submitted about 33 FDDs to the Attorney General’s office. These documents estimated studio opening times of three to six months. However, the investigation showed that these fitness studios took more than 13 months on average to open.

Financial Impact of Misleading Timelines

As a result of these misleading timelines, some franchisees faced significant financial losses, while others couldn’t open their locations. In response to the investigation and settlement, Xponential will pay $3,971,250 into a restitution account. This sum will be allocated to impacted franchisees with $3,000,000 to be distributed among 70 franchisees who experienced longer-than-disclosed opening timelines. A further 25 franchisees who never opened a studio will receive $971,250 as compensation for franchise and transfer fees they had paid to Xponential.

Attorney General James’ Track Record of Protecting Small Business Owners

Attorney General James has a strong history of safeguarding small business owners from fraud and exploitation. Examples include signing a legislation to protect consumers and small businesses from fraud in December 2025, securing a $1 billion settlement with predatory lender Yellowstone Capital in January 2025, and acquiring $4.6 million for small businesses from Northern Leasing Affiliates in September 2024. She also shut down two fraudulent websites in April 2023 that overcharged small business owners for services offered free by the state government.