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What changed in Xponential Fitness, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Xponential Fitness, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+969 added−1043 removedSource: 10-K (2026-03-04) vs 10-K (2025-03-14)

Top changes in Xponential Fitness, Inc.'s 2025 10-K

969 paragraphs added · 1043 removed · 707 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

115 edited+11 added−56 removed77 unchanged
Biggest changeFinally, Lindora complements our existing fitness brands and will help us deliver on consumers’ increasing demand for a holistic approach to health. As a franchisor, we benefit from multiple predictable and recurring revenue streams that enable us to scale our franchised studio base in a capital efficient manner.
Biggest changeAs a franchisor business, we benefit from multiple predictable and recurring revenue streams that enable us to scale our franchised studio base in a capital efficient manner. As of December 31, 2025, franchisees were contractually committed to open an additional 832 studios in the United States, Canada and U.S. territories (referred to as the “North America Region”).
We divide the franchisee selection process into five distinct stages: • Inquiry stage: Potential new franchisees complete and submit a confidential questionnaire form to our franchise development team for consideration. • Preliminary screening stage: Our franchise development team conducts a call with potential franchisees to determine their level of financial, cultural and geographical fit. 13 • Introduction stage: If preliminarily approved, potential franchisees schedule a call with our brand managers to discuss next steps and take part in a number of foundation calls to learn more about the brand. • Approval stage: Following validation calls and potential franchisees’ personal due diligence, potential franchisees are invited to a discovery day, either virtually or at our headquarters in Irvine, California, to meet with the corporate team as a final step in the approval process. • Contract sold stage: Following the completion of the above steps and once internally approved, potential franchisees sign a franchise agreement.
We divide the franchisee selection process into five distinct stages: • Inquiry stage: Potential new franchisees complete and submit a confidential questionnaire form to our franchise development team for consideration. • Preliminary screening stage: Our franchise development team conducts a call with potential franchisees to determine their level of financial, cultural and geographical fit. • Introduction stage: If preliminarily approved, potential franchisees schedule a call with our brand managers to discuss next steps and take part in a number of foundation calls to learn more about the brand. • Approval stage: Following validation calls and potential franchisees’ personal due diligence, potential franchisees are invited to a discovery day, either virtually or at our headquarters in Irvine, California, to meet with the corporate team as a final step in the approval process. • Contract sold stage: Following the completion of the above steps and once internally approved, potential franchisees sign a franchise agreement.
The key pillars of our Xponential Playbook include: • optimizing the studio prototype and investment cost; • thoroughly vetting franchisee candidates; • real estate identification, site selection, studio build-out and design assistance; • comprehensive pre-opening support, including membership sales, marketing support, employee training and programming development; • detailed studio-level operational framework and best practices; • intensive instructor and studio-level management training; • our robust digital platform offerings that allow franchisees to generate incremental revenue; • data-driven analytical tools to support marketing strategies, member acquisition and retention; • sophisticated technology systems, including uniform point-of-sale and reporting systems, to drive studio-level performance; • centralized model capable of providing resources to franchisees in the event of exceptional crises; and • ongoing monitoring and support to promote success.
The key pillars of our Xponential Playbook include: • optimizing the studio prototype and investment cost; • thoroughly vetting franchisee candidates; • real estate identification, site selection, studio build-out and design assistance; • comprehensive pre-opening support, including membership sales, marketing support and programming development; • detailed studio-level operational framework and best practices; • intensive instructor and studio-level management training; • our robust digital platform offerings that allow franchisees to generate incremental revenue; • data-driven analytical tools to support marketing strategies, member acquisition and retention; • sophisticated technology systems, including uniform point-of-sale and reporting systems, to drive studio-level performance; • centralized model capable of providing resources to franchisees in the event of exceptional crises; and • ongoing monitoring and support to promote success.
We intend to continue to utilize insights from our consumer management dashboard to refine our sales strategy and offer a variety of flexible membership options to attract consumers at different engagement levels and price points, including our existing four, eight and unlimited classes per month recurring membership options. • Driving increased spend from consumers: We expect to increase spend from consumers by utilizing dynamic pricing tiers across markets and brands, up-tiering memberships, cross-selling memberships across our brands, driving further digital penetration and enhancing our membership engagement.
We intend to continue to utilize insights from our consumer management dashboard to refine our sales strategy and offer a variety of flexible membership options to attract consumers at different engagement levels and price points, including our existing four, eight and unlimited classes per month recurring membership options. 8 • Driving increased spend from consumers: We expect to increase spend from consumers by utilizing dynamic pricing tiers across markets and brands, up-tiering memberships, cross-selling memberships across our brands, driving further digital penetration and enhancing our membership engagement.
Beginning on the day that a studio starts generating revenue from its business operations, franchisees are required to pay us a monthly royalty fee based on gross sales. Attractive Franchisee Return Profile The Xponential Playbook is designed to help franchisees achieve compelling AUVs, strong operating margins and an attractive r eturn on their invested capital.
Beginning on the day that a studio starts generating revenue from its business operations, franchisees are required to pay us a monthly royalty fee based on gross sales. 12 Attractive Franchisee Return Profile The Xponential Playbook is designed to help franchisees achieve compelling AUVs, strong operating margins and an attractive r eturn on their invested capital.
We believe this is a powerful marketing tool as it allows us to increase brand awareness in new and existing markets. Local marketing . Our franchise agreements require franchisees to spend at least $1,500 per mo nth on approved local marketing to support promotional sale periods throughout the year and continue to build the brand in local markets.
We believe this is a powerful marketing tool as it allows us to increase brand awareness in new and existing markets. Local marketing . Our franchise agreements generally require franchisees to spend at least $1,500 per mo nth on approved local marketing to support promotional sale periods throughout the year and continue to build the brand in local markets.
See “Risk Factors — Risks Related to our Business and Industry — We operate in a highly competitive market and we may be unable to compete successfully against existing and future competitors.” Suppliers We require franchisees to make most purchases related to the build out and operation of their studios from us or our approved vendors.
See “Risk Factors — Risks Related to our Business and Industry — We operate in a highly competitive market and we may be unable to compete successfully against existing and future competitors.” 16 Suppliers We require franchisees to make most purchases related to the build out and operation of their studios from us or our approved vendors.
These methods typically include media vehicles that are effective on a local level, including direct mail, outdoor (including billboards), social media and radio advertisements and local partnerships and sponsorships. Social media. We have an engaged social media platform for each of our brands, which we believe further raises brand awareness and creates a community among our members.
These methods typically include media vehicles that are effective on a local level, including direct mail, outdoor (including billboards), social media and radio advertisements and local partnerships and sponsorships. 15 Social media. We have an engaged social media platform for each of our brands, which we believe further raises brand awareness and creates a community among our members.
This helps us ensure the timelines of build outs and the maintenance of consistent studio quality within each brand. We sell equipment purchased from third-party equipment manufacturers to franchised studios in North America. Franchisees outside North America must purchase equipment from third-party equipment manufacturers approved by us. We also have various approved suppliers of fitness accessories and apparel.
This helps us ensure the timelines of build outs and the maintenance of consistent studio quality within each brand. We sell equipment purchased from third-party equipment manufacturers to franchised studios in North America. Franchisees outside North America must purchase equipment from third-party equipment manufacturers approved by us. We also have suppliers of fitness accessories and apparel.
We believe there is significant opportunity for further international growth, underscored by our track-record of successful expansion across a diverse array of North American markets and our expansion into multiple international markets. We are focused on expanding into territories with attractive demographics, including household income, level of education and fitness participation.
We believe there is opportunity for further international growth, underscored by our track-record of successful expansion across a diverse array of North American markets and our expansion into multiple international markets. We are focused on expanding into territories with attractive demographics, including household income, level of education and fitness participation.
We cover the cost of production for our digital content. Pure Barre members who purchase a “ LifeStyle ” membership, as well as all Stretch Lab, BFT, and Lindora members, receive a subscription at no additional cost. Other members across our brands may purchase a digital subscription from a studio or directly from us.
We cover the cost of production for our digital content. Pure Barre members who purchase a “ LifeStyle ” membership, as well as all Stretch Lab and BFT members, receive a subscription at no additional cost. Other members across our brands may purchase a digital subscription from a studio or directly from us.
Technological Disruption and Innovation The rapid evolution of technology continues to reshape the fitness industry, requiring us to build a strong foundation for future innovation and resilience. To address these challenges, we have initiated a strategic shaping of our technology organization, establishing three core pillars: 1.
Technological Disruption and Innovation 17 The rapid evolution of technology continues to reshape the fitness industry, requiring us to build a strong foundation for future innovation and resilience. To address these challenges, we have initiated a strategic shaping of our technology organization, establishing three core pillars: 1.
We have developed strong relationships and executed master franchise agreements with master franchisees to propel our international growth. These master franchise agreements contractually obligate master franchisees to arrange the sale of licenses to franchisees in one or more countries outside North America.
We have developed strong relationships and executed master franchise agreements with master franchisees to propel our international growth. These master franchise agreements contractually obligate master franchisees to arrange the sale of licenses to franchisees in one or more countries outside of the North America Region.
There is also the option to purchase single walk-in classes, as well as one-on-one private training classes. The typical studio is approximately 1,500 square feet and is designed to allow up to 12 people to work out together.
There is also the option to purchase single walk-in classes, as well as one-on-one private training classes. The typical studio is approximately 1,500 square feet and is designed to allow usually up to 12 people to work out together.
We believe that local social media pages are additive to the studio-level community and deepen our brands’ connection with consumers. 17 Digital. We utilize digital advertising at the corporate level to drive awareness for our digital platform offerings.
We believe that local social media pages are additive to the studio-level community and deepen our brands’ connection with consumers. Digital. We utilize digital advertising at the corporate level to drive awareness for our digital platform offerings.
Our Growth Strategies We believe we are well-positioned to capitalize on multiple opportunities to drive the long-term growth of our business: Grow our franchised studio base across all brands in North America.
Our Growth Strategies We believe we are well-positioned to capitalize on multiple opportunities to drive the long-term growth of our business: Grow our franchised studio base across all brands in the North America Region.
Refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Indicators”, of this Annual Report on Form 10-K for information regarding our key performance metrics and how they are defined. Our Mission : Our mission is to bring the talents, assets, and capabilities that franchise brands need to grow successfully.
Refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Indicators”, of this Annual Report on Form 10-K for information regarding our key performance metrics and how they are defined. Our Mission : Our mission is to deliver the talents, assets, and capabilities that franchise brands need to grow successfully.
Our Values : Integrity, Excellence, Fun!, Connection We believe our unique combination of a scaled multi-brand offering, resilient franchise model with strong unit economics and integrated platform has enabled us to build our leading market position in the large and growing U.S. boutique fitness industry.
Our Values : Integrity, Excellence, Fun!, Connection We believe our unique combination of a scaled multi-brand offering, resilient franchise model with the potential for strong unit economics and integrated platform has enabled us to build our leading market position in the large and growing U.S. boutique fitness industry.
In conjunction with our scale, we have been able to achieve broad geographic diversification across the United States with franchise agreements in 49 states, Puerto Rico and the District of Columbia as of December 31, 2024.
In conjunction with our scale, we have been able to achieve broad geographic diversification across the United States with franchise agreements in 49 states, Puerto Rico and the District of Columbia as of December 31, 2025.
In the remaining states that require registration of the FDDs, we will continue to pause all sales until registration is obtained from the relevant regulatory agencies, except in cases where an exemption permits sales to persons who met specific criteria. Sales will resume promptly following such approvals, subject to any applicable waiting periods.
In the remaining states that require registration of the FDDs, we will continue to pause all sales until registration is obtained from the relevant regulatory agencies, except in cases where an exemption permits sales to persons who meet specific criteria. Sales will resume promptly following such registration, subject to any applicable waiting periods.
Franchisees compete with other health and wellness industry participants, including: • other national and regional boutique fitness offerings, some of which are franchised and others of which are owned centrally at a corporate level; • other health and fitness centers, including gyms and other recreational facilities; • individually owned and operated boutique fitness studios; • personal trainers; • racquet, tennis and other athletic clubs; • at-home fitness offerings; • online fitness services and health and wellness apps; • participants in the home-use fitness equipment industry; • other weight management and metabolic health providers; and • businesses offering similar services.
Franchisees compete with other health and wellness industry participants, including: • other national and regional boutique fitness offerings, some of which are franchised and others of which are owned centrally at a corporate level; • other health and fitness centers, including gyms and other recreational facilities; • individually owned and operated boutique fitness studios; • personal trainers; • racquet, tennis and other athletic clubs; • at-home fitness offerings; • online fitness services and health and wellness apps; • participants in the home-use fitness equipment industry; and • businesses offering similar services.
We currently have in place master franchise and international expansion agreements that grant master franchisees the right to sell licenses to potential franchisees in 30 countries that we have targeted for near-term expansion.
We currently have in place master franchise and international expansion agreements that grant master franchisees the right to sell licenses to potential franchisees in 28 countries that we have targeted for near-term expansion.
Additionally, we leverage shared corporate services across franchise sales, real estate, supply chain, merchandising, information technology, finance, accounting and legal. As an integrated platform, we utilize technology to provide improved functionality, drive efficiency and access compelling data across our brands.
Additionally, we leverage shared corporate services across franchise sales, real estate, supply chain, outsourced retail merchandising, information technology, marketing, finance, accounting and legal. As an integrated platform, we utilize technology to provide improved functionality, drive efficiency and access compelling data across our brands.
The SEC maintains an Internet site (http://www.sec.gov) containing reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 23
The SEC maintains an Internet site (http://www.sec.gov) containing reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 20
In partnership with its franchisees and master franchisees, XPO LLC offers energetic, accessible, and personalized workout experiences led by highly qualified instructors in studio locations throughout North America and internationally, with franchise, master franchise and international expansion agreements in 49 U.S. states, Puerto Rico, and 30 additional countries as of December 31, 2024.
In partnership with its franchisees and master franchisees, XPO LLC offers energetic, accessible, and personalized workout experiences led by highly qualified instructors in studio locations throughout North America and internationally, with franchise, master franchise and international expansion agreements in 49 U.S. states, Puerto Rico, and 28 additional countries as of December 31, 2025.
The typical studio is approximately 2,000 square feet and is d esigned to allow up to 40 people to work out together. BFT BFT, founded in 2017 and acquired in 2021, offers community-based 50-minute functional, high-energy strength, cardio and conditioning-based classes across multiple workout programs, each designed to achieve the unique health goals of its members.
The typical studio is approximately 1,500 to 1,800 square feet and is d esigned to allow up to 40 people to work out together. BFT BFT, founded in 2017 and acquired in 2021, offers community-based 50-minute functional, high-energy strength, cardio and conditioning-based classes across multiple workout programs, each designed to achieve the unique health goals of its members.
As of December 31, 2024, we estimate approximately 30% of our licenses contractually obligated to open in North America are over 12 months behind the applicable development schedule due to various circumstances and are currently inactive. 5 Recent Developments Refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Recent Developments”, of this Annual Report on Form 10-K for information regarding significant developments in our business.
As of December 31, 2025, we estimate approximately 30% of our licenses contractually obligated to open in these locations are over 12 months behind the applicable development schedule due to various circumstances and are currently inactive. 5 Recent Developments Refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Recent Developments”, of this Annual Report on Form 10-K for information regarding significant developments in our business.
Upon the issuance of the 2025 FDDs, the franchisors will begin offering and selling franchises in states that do not require registration of the FDDs.
Upon the issuance of the 2026 FDDs, the franchisors will begin offering and selling franchises in states that do not require registration of the FDDs.
As of December 31, 2024, there were 194 operational studios and 635 licenses sold globally. There are six signature YogaSix class formats: introductory, slow flow, stretching, hot yoga, cardio and strength training. YogaSix offers an extensive accredited teacher training program for Registered Yoga Trainers. The 200-hour program includes both classroom and on-the-job training.
As of December 31, 2025, there were 194 operational studios and 637 licenses sold globally. 10 There are six signature YogaSix class formats: introductory, slow flow, stretching, hot yoga, cardio and strength training. YogaSix offers an extensive accredited teacher training program for Registered Yoga Trainers. The 200-hour program includes both classroom and on-the-job training.
We also have direct sales of display cases, engraved wood signs, point of sale displays, custom acrylic panels, and other products to franchisees in North America. Vendors arrange for delivery of products and services either directly to our warehouse or to franchisee studios.
Additionally, we have direct sales of display cases, engraved wood signs, point of sale displays, custom acrylic panels, and other products to franchisees in the North America Region. Vendors arrange for delivery of products and services either directly to our warehouse or to franchisee studios.
Our Vision : Become a world class platform of premium franchise brands, offering curated experiences throughout our members fitness journeys.
Our Vision : Become a world class platform of premium franchise brands, offering curated experiences throughout our members' fitness journeys.
Our Brands We have a curated a portfolio of eight brands that span a variety of popular fitness, wellness, and health verticals, including Pilates, barre, cycling, stretching, yoga, boxing, metabolic health and functional training. Collectively, our fitness brands offer consumers specialized and personalized workout experiences that appeal to a broad range of ages, fitness levels and demographics.
Our Brands We have a curated a portfolio of five brands that span a variety of popular fitness, wellness, and health verticals, including Pilates, barre, stretching, yoga and functional training. Collectively, our fitness brands offer consumers specialized and personalized workout experiences that appeal to a broad range of ages, fitness levels and demographics.
Club Pilates, our first acquisition in 2017, is fueled by the vision of making Pilates more accessible, approachable and welcoming to everyone. Our Club Pilates franchises offer consistent, high-quality Reformer-based Pilates workouts in an uplifting and supportive atmosphere. As of December 31, 2024, there were 1,200 operational studios and 1,856 licenses sold globally.
Club Pilates, our first acquisition in 2017, is fueled by the vision of making Pilates more accessible, approachable and welcoming to everyone. Our Club Pilates franchises offer consistent, high-quality Reformer-based Pilates workouts in an uplifting and supportive atmosphere. As of December 31, 2025, there were 1,414 operational studios and 1,996 licenses sold globally.
Our inability to sell licenses for an extended period has slowed our growth and could result in a reduction in our anticipated royalty or franchise revenue, which in turn may materially and adversely affect our business, results of operations, cash flows and financial condition. We and franchisees are also subject to the U.S.
Any inability to sell franchises for an extended period can result in slowed growth and could result in a reduction in our anticipated royalty or franchise revenue, which in turn could materially and adversely affect our business, results of operations, cash flows and financial condition. We and franchisees are also subject to the U.S.
The smaller box format contributed to a weighted average initial franchisee investment of approximately $560,000 in 2024. We believe our integrated platform, which supports our eight brands, is a unique compe titive advantage in the boutique health and wellness industry and enables us to accelerate growth and enhance operating margins.
The smaller box format contributed to a weighted average initial franchisee investment of approximately $554,000 in 2025. We believe our integrated platform, which supports our five brands, is a unique compe titive advantage in the boutique health and wellness industry and enables us to accelerate growth and enhance operating margins.
We are building the foundational capabilities to harness data and artificial intelligence for decision-making and establishing a strong culture of innovation, whereby people, processes and technology will evolve to modernize and optimize our franchising business. • Drive international expansion.
We are building the foundational capabilities to harness data and artificial intelligence for decision-making and establishing a strong culture of innovation, whereby people, processes and technology will evolve to modernize and optimize our franchising business. 4 • Expand our International Footprint.
For the quarter ended December 31, 2024, run-rate AUVs increased 9% compared to the quarter ended December 31, 2023. We were able to deepen our consumer loyalty over the past few years through our robust digital platform offering, as well as the personal efforts of exceptional franchisees to strengthen their studio communities.
For the quarter ended December 31, 2025, run-rate AUVs decreased -2% compared to the quarter ended December 31, 2024. We were able to deepen our consumer loyalty over the past few years through our robust digital platform offering, as well as the personal efforts of exceptional franchisees to strengthen their studio communities.
Training sessions are overseen by highly qualified coaches in a dynamic group environment. As of December 31, 2024, there were 331 operational studios and 766 licenses sold globally. 11 There are fourteen signature BFT class formats, consisting of cardio, high intensity interval training and strength, which are programmed in specific layouts to progress members through a strength training program.
Training sessions are overseen by highly qualified coaches in a dynamic group environment. As of December 31, 2025, there were 333 operational studios and 790 licenses sold globally. There are fourteen signature BFT class formats, consisting of cardio, high intensity interval training and strength, which are programmed in specific layouts to progress members through a strength training program.
Our and franchisees’ development of properties depends to a significant extent on the selection and acquisition of suitable sites, which are subject to zoning, land use, environmental, traffic and other regulations and requirements. We and franchisees are responsible at the studios we operate for compliance with state laws that regulate the relationship between health clubs and their members.
Our and franchisees’ development of properties depends to a significant extent on the selection and acquisition of suitable sites, which are subject to zoning, land use, environmental, traffic and other regulations and requirements. We (for the single studio we operate) and franchise es are responsible for compliance with state laws that regulate the relationship between health clubs and their members.
Our franchise agreements require franchisees to contribute 2% of their monthly gross sales to the marketing fund of their respective brand. Our marketing funds have enabled us to spend approximately $26.7 million, $22.7 million and $17.3 million in 2024, 2023 and 2022, respectively, to increase national awareness of our brands.
Our franchise agreements require franchisees to contribute 2% of their monthly gross sales to the marketing fund of their respective brand. Our marketing funds have enabled us to spend approximately $40.5 million, $26.7 million and $22.7 million in 2025, 2024 and 2023, respectively, to increase national awareness of our brands.
In addition, we offer competitive salaries, retirement benefits including 401(k), healthcare and insurance benefits, health savings accounts, paid time off, and paid parental leave. We also offer resources, programs and services to support our employees’ physical, mental, financial and social wellness. Xponential franchises are independently owned and operated businesses. As such, employees of franchisees are not employees of Xponential Fitness.
In addition, we offer competitive salaries, retirement benefits including 401(k), healthcare and insurance benefits, health savings accounts, paid time off, and paid parental leave. We also offer resources, programs and services to support our employees’ physical, mental, financial and social wellness. Xponential franchises are independently owned and operated businesses.
Some states, such as California, New York, Massachusetts and Tennessee, have passed or considered legislation requiring gyms and health clubs to offer a prepaid membership option at all times and/or limit the duration for which such memberships can auto-renew through electronic fund transfers, if at all.
Some states have passed or considered legislation requiring gyms and health clubs to offer a prepaid membership option at all times and/or limit the duration for which such memberships can auto-renew through electronic fund transfers, if at all.
Item 1. Business. Overview Xponential Fitness, Inc. (the “Company” or “XPO Inc.”) through its principal operating subsidiary, Xponential Fitness LLC (“XPO LLC”) is one of the leading global franchisors of boutique health and wellness brands. We operate a diversified platform of eight brands spanning across verticals including Pilates, indoor cycling, barre, stretching, boxing, functional training, metabolic health and yoga.
Item 1. Business. Overview Xponential Fitness, Inc. (the “Company” or “XPO Inc.”) through its principal operating subsidiary, Xponential Fitness LLC (“XPO LLC”), and other subsidiaries, is one of the leading global franchisors of boutique health and wellness brands. We operate a diversified platform of five brands spanning across verticals including Pilates, barre, stretching, functional training, and yoga.
We also had approximately 13 employees at our one company-owned transition studio as of December 31, 2024, of which approximately 12 were part-time employees. None of our employees are represented by labor unions, and we believe we have a good relationship with our employees.
We also had approximately 18 employees at our one company-owned transition studio as of December 31, 2025, of which approximately 16 were part-time employees. None of our employees are represented by labor unions, and we believe we have a good relationship with our employees.
We continually re-evaluate our supplier relationships to ensure we and our franchisees obtain competitive pricing and high-quality equipment, merchandise and other items. 18 Human Capital Resources As of December 31, 2024, we had approximately 432 employees at our corporate headquarters, of which approximately 145 were part-time employees.
We continually re-evaluate our supplier relationships to ensure we and our franchisees obtain competitive pricing and high-quality equipment, merchandise and other items. Human Capital Resources As of December 31, 2025, we had approximately 340 employees at our corporate headquarters, of which approximately 116 were part-time employees.
Our franchised studios provide differentiated and accessible boutique fitness experiences that are fun, energetic and deliver a strong sense of community, engendering loyalty and engagement with consumers. Across our system , we had a total of 60.0 million in-studio and live stream visits in 2024, an increase of 19% over the prior year.
Our franchised studios provide differentiated and accessible boutique fitness experiences that are fun, energetic and deliver a strong sense of community, engendering loyalty and engagement with consumers. Across our system , we had a total of 59.2 million in-studio and live stream visits in 2025, an increase of 12% over the prior year.
Most of StretchLab’s customers purchase one-on-one sessions. StretchLab offers an extensive training program for “Flexologist” instructors. The teacher training program includes both classroom and on-the-job training. Our training provides opportunities for technical advancement and increased earnings potential for instructors, which we believe enables the brand to attract and retain high quality instructors.
StretchLab offers an extensive training program for “Flexologist” instructors. The teacher training program includes both classroom and on-the-job training. Our training provides opportunities for technical advancement and increased earnings potential for instructors, which we believe enables the brand to attract and retain high quality instructors.
The loyalty of our consumer base is evidenced by our franchisees’ ability to grow actively paying members by 15% from December 31, 2023 to December 31, 2024, and membership visits for the quarter ended December 31, 2024 increased 19% compared to the quarter ended December 31, 2023.
The loyalty of our consumer base is evidenced by our franchisees’ ability to grow actively paying members by 5% from December 31, 2024 to December 31, 2025, and membership visits for the quarter ended December 31, 2025 increased 6% compared to the quarter ended December 31, 2024.
We are one of the leading boutique health and wellness franchisor in the United States with 2,693 studios operating across eight brands in the United States. We believe that our Pilates, barre and cycling brands have leading market share positions within their respective verticals.
We are one of the leading boutique health and wellness franchisors in the United States with 2,529 studios operating across five brands in the United States. We believe that our Pilates and barre brands have leading market share positions within their respective verticals.
Following the significant disruption to the global fitness industry caused by the COVID-19 pandemic, however, we took ownership of a greater number of studios than we would expect to hold in the normal course of our business.
Operating company-owned studios is not a component of our business model. Following the significant disruption to the global fitness industry caused by the COVID-19 pandemic, however, we took ownership of a greater number of studios than we would expect to hold in the normal course of our business.
Our studio is designed to be between 1,000 and 1,500 square feet and is equipped with approximately ten stretc h benches. YogaSix We believe YogaSix, founded in 2011 and acquired in 2018, i s the largest fran chised yoga brand by number of studios as of December 31, 2024.
The typical studio is designed to be between 1,100 and 1,500 square feet and is equipped with approximately ten stretch benches. YogaSix We believe YogaSix, founded in 2011 and acquired in 2018, i s the largest fran chised yoga brand by number of studios as of December 31, 2025.
Our member base as of December 31, 2024 is approximately 15% larger than it was as of December 31, 2023. Our Competitive Strengths Diversified portfolio of leading boutique health and wellness brands. Our portfolio of eight diversified brands spans a variety of popular fitness, health, and wellness verticals including Pilates, barre, cycling, stretching, yoga, boxing, metabolic health and functional training.
Our member base as of December 31, 2025 is approximately 5% larger than it was as of December 31, 2024. Our Competitive Strengths Diversified portfolio of leading boutique health and wellness brands. Our portfolio of five diversified brands spans a variety of popular fitness, health, and wellness verticals including Pilates, barre, stretching, yoga, and functional training.
Each brand has a dedicated marketing team that is focused on building brand awareness, generating new customer leads and increasing studio traffic at the national and local level. We leverage our corporate platform and marketing expertise to develop tailored marketing strategies to capitalize on each of our brands’ potential. Marketing Spending National advertising .
Marketing is provided centrally at the corporate level, with a focus on building brand awareness, generating new customer leads and increasing studio traffic at the national and local level. We leverage our corporate platform and marketing expertise to develop tailored marketing strategies to capitalize on each of our brands’ potential. Marketing Spending National advertising .
Key performance metrics in this “Business” section are presented on an adjusted basis to reflect historical information of Lindora prior to the acquisition by the Company in January 2024 and on an adjusted basis to remove historical information for both Stride and Row House prior to their divestitures by the Company in February 2024 and May 2024, respectively.
Key performance metrics in this “Business” section are presented on an adjusted basis to reflect historical information of Lindora prior to the acquisition by the Company in January 2024 and on an adjusted basis to remove historical information of Stride and Row House prior to their divestitures by the Company in February 2024 and May 2024, respectively, CycleBar and Rumble prior to their divestitures by the Company in July 2025, and Lindora prior to its divestiture in September 2025.
As of December 31, 2024, we had 475 studios open internationally across Australia, New Zealand, Japan, Singapore, Spain, United Kingdom, Dominican Republic, Germany, Mexico, Portugal, Kuwait, Saudi Arabia, Malaysia, Indonesia, France and Hong Kong.
As of December 31, 2025, there were 491 studios open internationally across Australia, New Zealand, Japan, Singapore, Spain, United Kingdom, Dominican Republic, Germany, Mexico, Portugal, Kuwait, Saudi Arabia, Malaysia, Indonesia, France and Hong Kong.
Master franchisees were contractually obligated to sell licenses to franchisees to open an additional 1,043 studios, of which master franchisees have sold 237 licenses for studios not yet opened as of December 31, 2024.
Master franchisees were contractually obligated to sell licenses to franchisees to open an additional 767 studios, of which master franchisees have sold 192 licenses for studios not yet opened as of December 31, 2025.
Intellectual Property As of December 31, 2024, we owned approximately 91 registered trademarks and service marks in the United States and approximately 377 registered trademarks and service marks in other countries, including “Xponential,” “Pure Barre,” “StretchLab,” “YogaSix,” “Club Pilates,” “CycleBar,” “Rumble,” “Lindora” and “BFT.” We believe the Xponential name, and the marks associated with our eight brands are of value and are important to our business.
Intellectual Property As of December 31, 2025, we owned approximately 43 registered trademarks and service marks in the United States and approximately 347 registered trademarks and service marks in other countries, including “Xponential,” “Pure Barre,” “StretchLab,” “YogaSix,” “Club Pilates” and “BFT.” We believe the Xponential name, and the marks associated with our five brands are of value and are important to our business.
Franchisees are contractually obligated to open studios in their territories after purchasing a franchise license. In the event that franchisees are unable to meet their contractual obligations, we have the ability to resell or reassign their territory license(s) to another franchisee in the system or our franchisee pipeline.
In the event that franchisees are unable to meet their contractual obligations, we have the ability to resell or reassign their territory license(s) to another franchisee in the system or our franchisee pipeline.
From December 31, 2023 to December 31, 2024, 352 licenses were terminated in North America and 76 were terminated internationally. We expect franchisees to meet and maintain minimum monthly gross revenue quotas by the first and second anniversary of their studio opening.
From December 31, 2024 to December 31, 2025, 284 licenses were terminated in the North America Region and 65 were terminated in other international locations. We expect franchisees to meet and maintain minimum monthly gross revenue quotas by the first and second anniversary of their studio opening.
Approximately 74% of our revenue in 2024 and 75% of our revenue in 2023 was considered recurring, and we believe this percentage will increase as franchise royalty fees are expected to account for a greater percentage of our revenue over time. Highly attractive and predictable studio-level economics.
Approximately 78% of our revenue in 2025 and 74% of our revenue in 2024 was considered recurring, and we believe this percentage will increase as franchise royalty fees are expected to account for a greater percentage of our revenue over time. Reliable studio‑level economics that support sustainable performance.
Accordingly, we have the potential to substantially increase our studio base through our existing licenses sold, providing us with highly visible unit growth and further increasing our already significant scale within the boutique health and wellness industry.
Accordingly, we have the potential to substantially increase our studio base through our existing licenses sold, providing us with highly visible unit growth and further increasing our already significant scale within the boutique health and wellness industry. Proven and experienced management team We are led by an experienced senior leadership team with extensive industry experience.
As of December 31, 2024, 46% of franchisees owned more than one license and about 54% of franchisees owned a single brand of licenses. The largest franchisee in North America owned 191 licenses, representing approximately 4% of our total fran chise licenses sold in North America as of December 31, 2024.
As of December 31, 2025, 52% of franchisees owned more than one license and about 48% of franchisees owned a single brand of licenses. The largest franchisee in the North America Region owned 225 licenses, representing approximately 5% of our total fran chise licenses sold in North America as of December 31, 2025.
As of December 31, 2024, we had 1,648 fra nchisees and licenses for 1,607 studios contractually obligated to be opened under existing franchise agreements in North America. We sold 253 licenses in 2024 compared to 632 licenses in 2023 and 790 licenses in 2022.
As of December 31, 2025, we had 1,269 fra nchisees and licenses for 832 studios contractually obligated to be opened under existing franchise agreements in North America. We sold 67 licenses in 2025 compared to 166 licenses in 2024 and 593 licenses in 2023.
As of December 31, 2024, we had sold a total of 5,359 franchise licenses on a cumulative basis since inception in North America, with approximately 17% of licenses, net, owned by single-unit franchisees and approximately 83% of licenses, net, owned by multi-unit franchisees.
As of December 31, 2025, we had sold a total of 4,443 franchise licenses on a cumulative basis since inception in the North America Region, with approximately 18% of licenses, net, owned by single-unit franchisees and approximately 82% of licenses, net, owned by multi-unit franchisees.
Cybersecurity and operational technology – strengthening our digital and physical infrastructure to enhance security, compliance, and operational resilience. 2. Applications and platforms – laying the groundwork for optimized customer-facing applications, franchisee support platforms, and enterprise solutions. 3.
Cybersecurity and operational technology – strengthening our digital and physical infrastructure to enhance security, compliance, and operational resilience. 2. Applications and platforms – laying the groundwork for optimized customer-facing applications, franchisee support platforms, and enterprise solutions. 3. Data, analytics and artificial intelligence – building the foundational capabilities to harness data and artificial intelligence for future innovation and decision-making.
Under our suggested operating model, consumers may purchase recurring monthly memberships, single classes or private one-on-one training services for each brand. We have created a robust digital platform of recorded workouts that can be easily accessed at-home or on-the-go. Lindora complements our other brands and helps us deliver on our members’ increasing demand for a holistic approach to health.
Under our suggested operating model, consumers may purchase recurring monthly memberships, single classes or private one-on-one training services for each brand. We have created a robust digital platform of recorded workouts that can be easily accessed at-home or on-the-go. Franchisees have the opportunity to purchase merchandise for resale in studios and online.
The Company's portfolio of brands includes Club Pilates, the largest Pilates brand in the United States; CycleBar, the largest indoor cycling brand in the United States; StretchLab, a concept offering one-on-one and group stretching services; YogaSix, the largest franchised yoga brand in the United States; Pure Barre, a total body workout that uses the ballet barre to perform small isometric movements, and the largest barre brand in the United States; Rumble, a boxing-inspired full-body workout; BFT, a functional training and strength-based program; and Lindora, a provider of medically guided wellness and metabolic health solutions, which was acquired on January 2, 2024.
The Company's portfolio of brands includes Club Pilates, the largest Pilates brand in the United States; StretchLab, a concept offering one-on-one and group stretching services; YogaSix, the largest franchised yoga brand in the United States; Pure Barre, a total body workout that uses the ballet barre to perform small isometric movements, and the largest barre brand in the United States; and BFT, a functional training and strength-based program.
We continue to create a more customizable and efficient experience for members through updated digital tools, including enhanced websites and mobile applications. These digital tools enable consumers to search studio locations, browse class schedules and sign up for classes. We continue to enhance the accessibility of our digital tools to increase our online presence and member engagement.
These digital tools enable consumers to search studio locations, browse class schedules and sign up for classes. We continue to enhance the accessibility of our digital tools to increase our online presence and member engagement.
While marketing, wellness and fitness programming are specific to each brand, nearly all other franchisee support functions are integrated across brands at the corporate level, and franchisees are guided through the key pillars of successful studio operations.
Franchisees also benefit from the significant investments we have made in our corporate platform, through which we leverage integrated systems and shared services. While marketing, wellness and fitness programming are specific to each brand, nearly all other franchisee support functions are integrated across brands at the corporate level, and franchisees are guided through the key pillars of successful studio operations.
There is also the option to purchase single walk-in classes. Under our suggested operating model for the boutique format, customers may purchase monthly memberships for four, eight or unlimited classes a month or class packages ranging from 1 to 20 classes. There is also the option to purchase single walk-in classes.
The choreography for each class format is refreshed on a quarterly basis. Under our suggested operating model, customers may purchase recurring monthly memberships for four, eight or unlimited monthly classes. There is also the option to purchase single walk-in classes.
As of December 31, 2024, there were 475 studios open internationally, and the master franchisees were contractually obligated to sell licenses to franchisees to open an additional 1,043 studios, of which master franchisees have sold 237 licenses for studios not yet open as of December 31, 2024.
As of December 31, 2025, there were 491 studios open internationally outside the North America Region, and the master franchisees were contractually obligated to sell licenses to franchisees to open an additional 767 studios, of which master franchisees have sold 192 licenses for studios not yet open as of December 31, 2025.
StretchLab was created to help people improve their health and wellness through customized flexibility services. It appeals to customers across a broad range of ages and fitness levels and is highly complementary to our broader brand portfolio. As of December 31, 2024, there were 529 operational studios and 1,005 licenses sold globally. StretchLab offers one-on-one and group assisted stretching sessions.
It appeals to customers across a broad range of ages and fitness levels and is highly complementary to our broader brand portfolio. As of December 31, 2025, there were 531 operational studios and 1,012 licenses sold globally. StretchLab offers one-on-one and group assisted stretching sessions. Most of StretchLab’s customers purchase one-on-one sessions.
This is followed by a series of contractual payments once a studio is open, many of which are recurring, including royalty fees, technology fees, merchandise sales, marketing fees and instructor and management training revenues.
This is followed by a series of contractual payments once a studio is open (or in the case of the execution of a multi-unit agreement, upon the signing of the second and each subsequent franchise agreement pursuant to such multi-unit agreement), many of which are recurring, including royalty fees, technology fees and merchandise sales, marketing fees and instructor and management training revenues.
Pursuant to a reorganization into a holding company structure, the Company is a holding company with its principal asset being a 69.5% ownership interest in XPO LLC through its ownership interest in Xponential Intermediate Holdings, LLC (“XPO Holdings”).
Pursuant to a reorganization into a holding company structure, the Company is a holding company with its principal asset being a 72.0% ownership interest in XPO LLC through its ownership interest in Xponential Intermediate Holdings, LLC (“XPO Holdings”). The Company’s Class A common stock trades on the New York Stock Exchange under the symbol “XPOF”.
As one of the leading franchisors in the industry, we have significant scale that enables us to negotiate competitive pricing from our suppliers. 16 As a result, we believe that we offer equipment at more attractive pricing than franchisees could otherwise procure on their own, lowering the build-out cost and improving unit economics.
As a result, we believe that we offer equipment at more attractive pricing than franchisees could otherwise procure on their own, lowering the build-out cost and improving unit economics.
Club Pilates We believe that Club Pilates, founded in 2007, is the largest Pilates brand by number of studios as of December 31, 2024. The programming tracks Joseph Pilates’ original Reformer-based Contrology method and is modernized with group practice and sophisticated equipment.
Merchandise is offered from popular athletic retailers, as well as fitness apparel and accessories featuring our brands’ logos and slogans. 9 Club Pilates Club Pilates, founded in 2007, is the largest Pilates brand by number of studios as of December 31, 2025. The programming tracks Joseph Pilates’ original Reformer-based Contrology method and is modernized with group practice and sophisticated equipment.
Fitness Equipment Our franchised studios contain state-of-the-art fitness equipment from an array of suppliers. We believe that the quality of the equipment enriches the customers’ in-studio experience and thereby enhances their brand loyalty. To ensure consistency across the studio base, we require franchisees to order equipment and supplies directly from us or approved vendors.
We believe that the quality of the equipment enriches the customers’ in-studio experience and thereby enhances their brand loyalty. To ensure consistency across the studio base, we require franchisees to order equipment and supplies directly from us or approved vendors. Franchisees are required to order replacement or upgraded equipment within five to ten years depending on the manufacturers’ guidelines.
The Company’s Class A common stock trades on the New York Stock Exchange under the symbol “XPOF”. 22 Available information Our website address is www.xponential.com, and our investor relations website is located at http://investor.xponential.com. Information on our website is not incorporated by reference herein.
Available information Our website address is www.xponential.com, and our investor relations website is located at http://investor.xponential.com. Information on our website is not incorporated by reference herein.
As of December 31, 2024, franchisees were contractually committed to open an additional 1,607 studios in North America under existing franchise agreements. As of December 31, 2024, we estimate approximately 30% of our licenses contractually obligated to open in North America are over 12 months behind the applicable development schedule due to various circumstances and are currently inactive.
As of December 31, 2025, we estimate approximately 30% of our licenses contractually obligated to open in the North America Region are over 12 months behind the applicable development schedule due to various circumstances and are currently inactive. Fitness Equipment 14 Our franchised studios contain state-of-the-art fitness equipment from an array of suppliers.
There is also the option to purchase single walk-in classes. Th e typical studio is approximately 1,500 square feet and is designed to allow up to 26 people to work out together. StretchLab StretchLab, founded in 2015 and acquired in 2017, is a leading assisted stretching brand.
The typical studio is approximately 1,500 to 1,800 square feet and is designed to allow up to 26 people to work out together. StretchLab StretchLab, founded in 2015 and acquired in 2017, is a leading assisted stretching brand. StretchLab was created to help people improve their health and wellness through customized flexibility services.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe principal risk factors are: Risk Factor Summary • Our financial results are affected by the financial results of master franchisees and franchisees. • We may not be able to successfully implement our growth strategy. • Disruptions in the availability of financing for current or prospective franchisees. • The number of new studios that actually open in the future may differ materially from the number of studio licenses sold to potential, existing and new franchisees. • Our success depends substantially on our ability to maintain the value and reputation of our brands. • Our expansion into international markets exposes us to a number of risks. • We have incurred operating losses in the past and may not achieve or maintain profitability in the future. • Franchisees may incur rising costs related to the construction of new studios. • Franchisees may not be able to identify and secure suitable sites for new studios. • New brands or services that we launch in the future may not be as successful as we anticipate. • Franchisees have and could in the future take actions that harm our business. • Franchisees may not successfully execute our suggested best practices, which could harm our business. • Macroeconomic conditions or economic downturn could adversely affect demand for our services. • Our performance may be negatively impacted by our recent Chief Executive Officer transition. • Our future success depends on key employees and our ability to attract and retain highly skilled personnel. • We may not be able to fully realize the cost savings and benefits initially anticipated from the restructuring plan or the charges may be greater than expected, any of which could negatively impact our business. • We operate in a highly competitive market. • Franchisees may be unable to attract and retain customers. • We may not be able to anticipate and satisfy consumer preferences and shifting views of health and fitness. • Our planned growth could place strains on our management, employees, information systems and internal controls, which may adversely impact our business. • Our business is subject to various laws and regulations and changes in such laws and regulations. • Our ability to sell franchise licenses may be impacted due to government investigation regarding compliance with applicable federal and state franchise disclosure laws. • We are subject to government investigations which could have a material adverse impact on our business, financial condition, results of operation, cash flows and reputation. • We, master franchisees and franchisees could be subject to claims related to health and safety risks to customers that arise while at our and franchisees’ studios. • We rely heavily on information systems provided by a single provider. • We, master franchisees, franchisees or our third-party service providers may fail to properly maintain the confidentiality and integrity of our customer personal data. • Failure by us, master franchisees, franchisees or third-party service providers to comply with existing or future data privacy laws and regulations could have a material adverse effect on our business. • Environmental, social and governance issues may have an adverse effect on our business. 24 • Changes in legislation or requirements related to electronic funds transfer may adversely impact our business operations. • We and franchisees are subject to risks related to Automated Clearing House (“ACH”), credit card, debit card and gift card payments we accept. • We depend on a limited number of suppliers for certain equipment, services and products. • Our intellectual property rights, including trademarks and trade names, may be infringed, misappropriated or challenged by others. • Our quarterly results of operations and other operating metrics may fluctuate from quarter to quarter. • Use of social media may adversely impact our reputation or subject us to fines or other penalties. • We may require additional capital to support business growth and objectives. • We may engage in merger and acquisition activities, which could require significant management attention, disrupt our business, dilute stockholder value and adversely affect our results of operations. • If we are unable to accurately forecast demand of our retail products and adequately manage our inventory, our operating results could be adversely affected. • Goodwill and indefinite-lived intangible assets are a material component of our balance sheet and impairments of these assets could have a significant impact on our results. • Our substantial indebtedness could adversely affect our financial condition and limit our ability to pursue our growth strategy. • Our failure to satisfy the covenants in our credit agreement may result in events of default. • Restrictions imposed by our outstanding indebtedness and any future indebtedness may limit our ability to operate our business and to finance our future operations. • We may not be able to maintain required regulatory licenses and permits. • The terms of our convertible preferred stock have provisions that could result in a change of control of our Board in the case of an event of default by us. • Our convertible preferred stock impacts our ability to pay dividends on our Class A common stock and imposes certain negative covenants on us. • Our convertible preferred stock ranks senior to our Class A common stock. • We are a holding company, and depend upon distributions from our subsidiary, XPO Holdings, to pay dividends, if any, and taxes, make payments under the tax receivable agreement (the “TRA”) and pay other expenses. • In certain circumstances, XPO Holdings will be required to make substantial distributions to us and the other holders of limited liability company units (the “LLC Units”). • Continuing Pre-IPO LLC Members hold significant voting power and their interests in our business may be different than yours. • We will be required to pay the TRA parties for certain tax benefits we may receive, and the amounts we may pay could be significant. • Delaware law and our certificate of incorporation and bylaws may deter third parties from acquiring us and diminish the value of our Class A common stock. • Our major stockholders may pursue corporate opportunities that could present conflicts with our and our other stockholders’ interests. • We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Class A common stock less attractive to investors. • The requirements of being a public company may strain our resources and distract our management. • Failure to maintain effective internal control over financial reporting may have an adverse effect on our financial condition and stock price. • The trading price of our Class A common stock has been and may continue to be volatile, and the value of your investment could decline. • We have in the past and may in the future be subject to short selling strategies. • Failure to comply with anti-corruption and anti-money laundering laws or similar laws and regulations could subject us to penalties and other adverse consequences. 25 Risks Related to Our Business and Industry Our financial results are affected by the operating and financial results of, and our relationships with, master franchisees and franchisees.
Biggest changeThe principal risk factors are: The following is a summary of the principal risks that could adversely affect our business, operations and financial results: Risks Related to Our Business and Industry: • Our financial results are affected by the financial results of our franchisees and master franchisees. • We may not be able to successfully implement our growth strategy. • The number of new studios that actually open in the future may differ materially from the number of studio licenses sold to potential, existing and new franchisees. • We may not be able to anticipate and satisfy consumer preferences and shifting views of health and fitness. • Our success depends substantially on our ability to maintain the value and reputation of our brands. • Our performance may be negatively impacted by our recent changes in executive leadership. • Our future success depends on key employees and our ability to attract and retain highly skilled personnel. • Our expansion into international markets exposes us to a number of risks. • We have incurred operating losses in the past and may not achieve or maintain profitability in the future. • Macroeconomic conditions or economic downturn could adversely affect demand for our services. • Disruptions in the availability of financing for current or prospective franchisees. • Franchisees may incur rising costs related to the construction of new studios. • Franchisees may not be able to identify and secure suitable sites for new studios. • We rely heavily on information systems provided by a single provider. • Franchisees have and could in the future take actions that harm our business. • Franchisees may not successfully execute our suggested best practices, which could harm our business. • We may not be able to fully realize the cost savings and benefits initially anticipated from the restructuring plan or the charges may be greater than expected, any of which could negatively impact our business. • We operate in a highly competitive market. • Franchisees may be unable to attract and retain customers. • New brands or services that we launch in the future may not be as successful as we anticipate. • Our growth strategy could place strains on our management, employees, information systems and internal controls, which may adversely impact our business. • Our business is subject to various laws and regulations and changes in such laws and regulations. • Our ability to sell franchise licenses may be impacted due to government investigation regarding compliance with applicable federal and state franchise disclosure laws. • We are subject to government investigations which could have a material adverse impact on our business, financial condition, results of operation, cash flows and reputation. • We, franchisees and master franchisees could be subject to claims related to health and safety risks to customers that arise while at our and franchisees’ studios. 21 • We, franchisees, master franchisees or our third-party service providers may fail to properly maintain the confidentiality and integrity of our customer personal data. • Failure by us, franchisees, master franchisees or third-party service providers to comply with existing or future data privacy laws and regulations could have a material adverse effect on our business. • Changes in legislation or requirements related to electronic funds transfer may adversely impact our business operations. • We and franchisees are subject to risks related to Automated Clearing House (“ACH”), credit card, debit card and gift card payments we accept. • We depend on a limited number of suppliers for certain equipment, services and products. • Changes in trade policies, including tariffs, could adversely affect our business. • Our intellectual property rights, including trademarks and trade names, may be infringed, misappropriated or challenged by others. • We and our franchisees are dependent on certain music licenses to permit franchisees to use music in their studios. • Our quarterly results of operations and other operating metrics may fluctuate from quarter to quarter. • Use of social media may adversely impact our reputation or subject us to fines or other penalties. • We may require additional capital to support business growth and objectives. • We may engage in merger and acquisition activities, which could require significant management attention, disrupt our business, dilute stockholder value and adversely affect our results of operations. • Our reliance on a single third-party supplier for most retail products exposes us to operational and financial risk. • Goodwill and indefinite-lived intangible assets are a material component of our balance sheet and impairments of these assets could have a significant impact on our results. • Our substantial indebtedness could adversely affect our financial condition and limit our ability to pursue our growth strategy. • Our failure to satisfy the covenants in our credit agreement may result in events of default. • Restrictions imposed by our outstanding indebtedness and any future indebtedness may limit our ability to operate our business and to finance our future operations. • We may not be able to maintain required regulatory licenses and permits. • Changes in sustainability issues may have an adverse effect on our business.
In addition, we, master franchisees, and franchisees are subject to various regulatory efforts, such as efforts to enforce employment laws, which include efforts to categorize franchisors as the co-employers of their franchisees’ employees, legislation to categorize independent contractors as employees, legislation to categorize individual franchised businesses as large employers for the purposes of various employment benefits, and other legislation or regulations that may have a disproportionate impact on franchisors and/or franchised businesses.
In addition, we, franchisees, and master franchisees are subject to various regulatory efforts, such as efforts to enforce employment laws, which include efforts to categorize franchisors as the co-employers of their franchisees’ employees, legislation to categorize independent contractors as employees, legislation to categorize individual franchised businesses as large employers for the purposes of various employment benefits, and other legislation or regulations that may have a disproportionate impact on franchisors and/or franchised businesses.
In the ordinary course of business, we, master franchisees, and franchisees collect, use, transmit, store and otherwise process customer and employee data, including credit and debit card numbers, bank account information, driver’s license numbers, dates of birth and other highly sensitive personally identifiable information, in information systems that we, master franchisees, franchisees or our third-party service providers, including ClubReady, maintain.
In the ordinary course of business, we, franchisees, and master franchisees collect, use, transmit, store and otherwise process customer and employee data, including credit and debit card numbers, bank account information, driver’s license numbers, dates of birth and other highly sensitive personally identifiable information, in information systems that we, franchisees, master franchisees or our third-party service providers, including ClubReady, maintain.
Despite the security measures we have in place to comply with applicable laws and rules, our, master franchisees’, franchisees’ and our third-party service providers’ facilities and systems may be vulnerable to both external and internal threats, including security breaches, acts of cyber terrorism or sabotage, vandalism or theft, misuse, unauthorized access, computer viruses, ransomware, denial-of-service attacks, misplaced, corrupted or lost data, programming or human errors or other similar events.
Despite the security measures we have in place to comply with applicable laws and rules, our, franchisees’, master franchisees’ and our third-party service providers’ facilities and systems may be vulnerable to both external and internal threats, including security breaches, acts of cyber terrorism or sabotage, vandalism or theft, misuse, unauthorized access, computer viruses, ransomware, denial-of-service attacks, misplaced, corrupted or lost data, programming or human errors or other similar events.
Furthermore, the size and complexity of our, master franchisees’, franchisees’ and our third-party service providers’ information systems make such systems potentially vulnerable to security breaches from inadvertent or intentional actions by our employees, franchisees or vendors, or from attacks by malicious third parties.
Furthermore, the size and complexity of our, franchisees’, master franchisees’ and our third-party service providers’ information systems make such systems potentially vulnerable to security breaches from inadvertent or intentional actions by our employees, franchisees or vendors, or from attacks by malicious third parties.
The collection, maintenance, use, disclosure and disposal of personally identifiable information by us, master franchisees and franchisees is regulated by federal, state and provincial governments and by certain industry groups, including the Payment Card Industry organization and the National Automated Clearing House Association.
The collection, maintenance, use, disclosure and disposal of personally identifiable information by us, franchisees and master franchisees is regulated by federal, state and provincial governments and by certain industry groups, including the Payment Card Industry organization and the National Automated Clearing House Association.
They also may impose further restrictions on our collection, disclosure and use of personally identifiable information that is stored in one or more of our, master franchisees’, franchisees’ or our third-party service providers’ databases.
They also may impose further restrictions on our collection, disclosure and use of personally identifiable information that is stored in one or more of our, franchisees’, master franchisees’ or our third-party service providers’ databases.
Our amended and restated certificate of incorporation and our amended and restated bylaws provide for, among other things: • a classified board of directors with staggered three-year terms; • the ability of our board of directors to issue one or more series of preferred stock with voting or other rights or preferences that could have the effect of impeding the success of an attempt to acquire us or otherwise effect a change in control; • advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at stockholder meetings; • certain limitations on convening special stockholder meetings; and • certain provisions of our amended and restated certificate of incorporation and our amended and restated bylaws that may be amended only by the affirmative vote of the holders of at least two-thirds in voting power of all outstanding shares of our stock entitled to vote thereon, voting together as a single class. 54 In addition, while we have opted out of Section 203 of the Delaware General Corporation Law (the “DGCL”), our amended and restated certificate of incorporation contains similar provisions providing that we may not engage in certain “business combinations” with any “interested stockholder” for a three-year period following the time that the stockholder became an interested stockholder, unless: • prior to such time, our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; • upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the votes of our voting stock outstanding at the time the transaction commenced, excluding certain shares; or • at or subsequent to that time, the business combination is approved by our board of directors and by the affirmative vote of holders of at least two-thirds of the votes of our outstanding voting stock that is not owned by the interested stockholder.
Our amended and restated certificate of incorporation and our amended and restated bylaws provide for, among other things: • a classified board of directors with staggered three-year terms; • the ability of our board of directors to issue one or more series of preferred stock with voting or other rights or preferences that could have the effect of impeding the success of an attempt to acquire us or otherwise effect a change in control; • advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at stockholder meetings; • certain limitations on convening special stockholder meetings; and • certain provisions of our amended and restated certificate of incorporation and our amended and restated bylaws that may be amended only by the affirmative vote of the holders of at least two-thirds in voting power of all outstanding shares of our stock entitled to vote thereon, voting together as a single class. 51 In addition, while we have opted out of Section 203 of the Delaware General Corporation Law (the “DGCL”), our amended and restated certificate of incorporation contains similar provisions providing that we may not engage in certain “business combinations” with any “interested stockholder” for a three-year period following the time that the stockholder became an interested stockholder, unless: • prior to such time, our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; • upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the votes of our voting stock outstanding at the time the transaction commenced, excluding certain shares; or • at or subsequent to that time, the business combination is approved by our board of directors and by the affirmative vote of holders of at least two-thirds of the votes of our outstanding voting stock that is not owned by the interested stockholder.
Franchisees face many challenges in opening new studios, including: • availability and cost of financing; • selection and availability of suitable studio locations; • competition for studio sites; • negotiation of acceptable lease and financing terms; • impact of and responses to public health considerations; • construction and development cost management; • selection and availability of suitable general contractors; • punctual commencement and progress of construction and development; • equipment delivery or installation delays; • health, fitness and wellness trends in new geographic regions and acceptance of our and franchisees’ services and products; • employment, training and retention of qualified personnel; and • competition for consumers and qualified instructors.
Franchisees face many challenges in opening new studios, including: • availability and cost of financing; • selection and availability of suitable studio locations; • competition for studio sites; • negotiation of acceptable lease and financing terms; • construction and development cost management; • selection and availability of suitable general contractors; • punctual commencement and progress of construction and development; • equipment delivery or installation delays; • health, fitness and wellness trends in new geographic regions and acceptance of our and franchisees’ services and products; • impact of and responses to public health considerations; 23 • employment, training and retention of qualified personnel; and • competition for consumers and qualified instructors.
These laws are not consistent, and compliance in the event of a widespread data breach is difficult and may be costly. Moreover, states have been frequently amending existing laws, requiring attention to changing regulatory requirements. The forgoing could result in adverse publicity, loss of sales and revenue, or an increase in fees payable to third parties.
These laws are not consistent, and compliance in the event of a widespread data breach is difficult and may be costly. Moreover, states have been frequently amending existing laws, requiring attention to changing regulatory requirements. The forgoing has and could result in loss of sales and revenue, an increase in fees payable to third parties or adverse publicity.
Negative economic conditions, including inflation and the effect of decreased consumer confidence or changes in consumer behavior, or any continued disruptions in franchisees’ operations, could materially harm franchisees’ financial condition, which would cause our royalty and other revenues to decline and, as a result, materially and adversely affect our business, results of operations, cash flows and financial condition.
Negative economic conditions, including inflation, tariffs and the effect of decreased consumer confidence or changes in consumer behavior, or any continued disruptions in franchisees’ operations, could materially harm franchisees’ financial condition, which would cause our royalty and other revenues to decline and, as a result, materially and adversely affect our business, results of operations, cash flows and financial condition.
If we fail to maintain or renew our contractual relationships with these significant franchisees on acceptable terms, or if one or more of these significant franchisees were to become unable or otherwise unwilling to pay amounts due to us, our business, results of operations, cash flows and financial condition could be materially adversely affected. 32 Franchisee turnover.
If we fail to maintain or renew our contractual relationships with these significant franchisees on acceptable terms, or if one or more of these significant franchisees were to become unable or otherwise unwilling to pay amounts due to us, our business, results of operations, cash flows and financial condition could be materially adversely affected. Franchisee turnover.
Complying with these reporting and other regulatory requirements is time-consuming and causes us to incur increased costs and could have a negative effect on our results of operations, financial condition or business. As a public company, we are subject to the reporting requirements of the Exchange Act, the requirements of the Sarbanes-Oxley Act and the rules of the NYSE.
Complying with these reporting and other regulatory requirements is time-consuming and causes us to incur increased costs and could have a negative effect on our results of operations, financial condition or business. 53 As a public company, we are subject to the reporting requirements of the Exchange Act, the requirements of the Sarbanes-Oxley Act and the rules of the NYSE.
In particular, any allegations of fraud could temporarily prevent us from offering or selling franchises in certain states for a period of time. The results of litigation, investigations, claims and regulatory proceedings cannot be predicted with certainty, and determining reserves for pending litigation and other legal and regulatory matters requires significant judgment.
In particular, any allegations of fraud could temporarily prevent us from offering or selling franchises in certain states for a period of time. 35 The results of litigation, investigations, claims and regulatory proceedings cannot be predicted with certainty, and determining reserves for pending litigation and other legal and regulatory matters requires significant judgment.
The actual tax basis adjustments that may result from future taxable redemptions or exchanges of LLC Units, as well as the amount and timing of the payments we are required to make under the TRA will depend on a number of factors, including the market value of our Class A common stock at the time of any such future redemptions or exchanges, the prevailing federal tax rates applicable to us over the life of the TRA (plus the assumed combined state and local tax rate) and the amount and timing of the taxable income that we generate in the future. 53 Payments under the TRA will be based on the tax reporting positions we determine, and the IRS or another tax authority may challenge all or a part of the existing tax basis, tax basis increases, NOLs or other tax attributes subject to the TRA, and a court could sustain such challenge.
The actual tax basis adjustments that may result from future taxable redemptions or exchanges of LLC Units, as well as the amount and timing of the payments we are required to make under the TRA will depend on a number of factors, including the market value of our Class A common stock at the time of any such future redemptions or exchanges, the prevailing federal tax rates applicable to us over the life of the TRA (plus the assumed combined state and local tax rate) and the amount and timing of the taxable income that we generate in the future. 50 Payments under the TRA will be based on the tax reporting positions we determine, and the IRS or another tax authority may challenge all or a part of the existing tax basis, tax basis increases, NOLs or other tax attributes subject to the TRA, and a court could sustain such challenge.
Therefore, the increases in historical same store sales growth should not be considered indicative of our future performance. In particular, a number of our brands have a limited number of studios operating, and the limited operating data makes it difficult to forecast results, and as a result, same store sales may differ materially from our projections.
Therefore, the increases in historical same store sales growth should not be considered indicative of our future performance. In particular, certain of our brands have a limited number of studios operating, and the limited operating data makes it difficult to forecast results, and as a result, same store sales may differ materially from our projections.
Moreover, an acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures, including disrupting our ongoing operations, diverting management from their primary responsibilities, subjecting us to additional liabilities, increasing our expenses and adversely impacting our business, results of operations, cash flows and financial condition.
An acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures, including disrupting our ongoing operations, diverting management from their primary responsibilities, subjecting us to additional liabilities, increasing our expenses and adversely impacting our business, results of operations, cash flows and financial condition.
Our dependence on a limited number of suppliers for certain equipment, services and products could result in disruptions to our business and could adversely affect our revenue and results of operation. Certain equipment, services and products used in franchisees’ studios, including exercise equipment and point-of-sale software and hardware, are sourced from third-party suppliers.
Our dependence on a limited number of suppliers for certain equipment, services and products could result in disruptions to our business and could adversely affect our revenue and results of operation. 40 Certain equipment, services and products used in franchisees’ studios, including exercise equipment and point-of-sale software and hardware, are sourced from third-party suppliers.
Instead, the taxable income of XPO Holdings will be allocated to holders of Preferred Units and LLC Units, including us. Accordingly, we will incur income taxes on our allocable share of any net taxable income of XPO Holdings. We will also incur expenses related to our operations and will have obligations to make payments under the TRA.
Instead, the taxable income of XPO Holdings will be allocated to holders of LLC Units, including us. Accordingly, we will incur income taxes on our allocable share of any net taxable income of XPO Holdings. We will also incur expenses related to our operations and will have obligations to make payments under the TRA.
The historic conversion rate of signed studio commitments to new studio locations may not be indicative of the conversion rate we will experience in the future, and the total number of new studios that actually open in the future may differ materially from the number of licenses sold that we have at any point in time.
The historic conversion rate of signed studio commitments to new studio locations may not be indicative of the conversion rate we will experience in the future, and the total number of new studios that actually open in the future may differ materially from the number of licenses sold at any point in time.
If we fail to remediate these and any future material weaknesses in our internal controls over financial reporting, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, if we are unable to conclude that our internal controls over financial reporting are effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting when we are no longer an emerging growth company, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected.
If we fail to remediate this and any future material weaknesses in our internal controls over financial reporting, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, if we are unable to conclude that our internal controls over financial reporting are effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting when we are no longer an emerging growth company, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected.
To the extent that we do not distribute such excess cash as dividends on our Class A common stock and instead, for example, hold such cash balances or lend them to XPO Holdings, holders of LLC Units would benefit from any value attributable to such cash balances as a result of their ownership of Class A common stock following a redemption or exchange of their LLC Units. 52 Continuing Pre-IPO LLC Members hold a significant voting power and their interests in our business may be different than yours.
To the extent that we do not distribute such excess cash as dividends on our Class A common stock and instead, for example, hold such cash balances or lend them to XPO Holdings, holders of LLC Units would benefit from any value attributable to such cash balances as a result of their ownership of Class A common stock following a redemption or exchange of their LLC Units. 49 Continuing Pre-IPO LLC Members hold a significant voting power and their interests in our business may be different than yours.
The foregoing provision will not apply to claims arising under the Securities Act of 1933, as amended, the Exchange Act or other federal securities laws for which there is exclusive federal or concurrent federal and state jurisdiction. 55 These exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and such persons.
The foregoing provision will not apply to claims arising under the Securities Act of 1933, as amended, the Exchange Act or other federal securities laws for which there is exclusive federal or concurrent federal and state jurisdiction. 52 These exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and such persons.
Furthermore, we have and could in the future have disputes with franchisees that have and could in the future damage the image of our brands, our reputation and our relationships with franchisees. Franchisees may not successfully execute our suggested best practices, which could harm our business.
Furthermore, we have and could in the future have disputes with franchisees that have and could in the future damage the image of our brands, our reputation and our relationships with franchisees. 29 Franchisees may not successfully execute our suggested best practices, which could harm our business.
Our and franchisees’ development of properties depends to a significant extent on the selection and acquisition of suitable sites, which are subject to zoning, land use, environmental, traffic and other regulations and requirements.
Franchisees’ development of properties depends to a significant extent on the selection and acquisition of suitable sites, which are subject to zoning, land use, environmental, traffic and other regulations and requirements.
We cannot assure you that any new brands, services or products we launch will be accepted by consumers, that we will be able to recover the costs incurred in developing new brands, services or products, or that new brands, services or products will be successful.
We cannot assure you that any new brands, services or products we launch or acquire will be accepted by consumers, that we will be able to recover the costs incurred in developing new brands, services or products, or that new brands, services or products will be successful.
If we are unable to comply with new laws and regulations or changes to legal or regulatory requirements concerning ESG matters, or fail to meet investor, industry or stakeholder expectations and standards, our reputation may be harmed, franchisees or customers may choose to refrain from using our brands, we may be subject to fines, penalties, regulatory or other enforcement actions, and our business or financial condition may be adversely affected.
If we are unable to comply with new laws and regulations or changes to legal or regulatory requirements concerning sustainability matters, or fail to meet investor, industry or stakeholder expectations and standards, our reputation may be harmed, franchisees or customers may choose to refrain from using our brands, we may be subject to fines, penalties, regulatory or other enforcement actions, and our business or financial condition may be adversely affected.
Any debt financing secured by us in the future could include similar or more restrictive covenants, which may likewise limit our ability to obtain additional capital and pursue business opportunities. 47 We may engage in merger and acquisition activities, which could require significant management attention, disrupt our business, dilute stockholder value and adversely affect our results of operations.
Any debt financing secured by us in the future could include similar or more restrictive covenants, which may likewise limit our ability to obtain additional capital and pursue business opportunities. 44 We may engage in merger and acquisition activities, which could require significant management attention, disrupt our business, dilute stockholder value and adversely affect our results of operations.
We are subject to a variety of additional risks associated with franchisees. Our franchise model subjects us to a number of risks, any one of which may impact our royalty revenues collected from franchisees, harm the goodwill associated with our brands, and materially and adversely impact our business, results of operations, cash flows and financial condition. 30 Franchisee bankruptcies.
We are subject to a variety of additional risks associated with franchisees. Our franchise model subjects us to a number of risks, any one of which may impact our royalty and other revenues collected from franchisees, harm the goodwill associated with our brands, and materially and adversely impact our business, results of operations, cash flows and financial condition. Franchisee bankruptcies.
In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. 58 On February 9, 2024, a federal securities class action lawsuit was filed against the Company and certain of the Company’s officers in the United States District Court for the Central District of California.
In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. 55 On February 9, 2024, a federal securities class action lawsuit was filed against the Company and certain of the Company’s officers in the United States District Court for the Central District of California.
A franchisee bankruptcy could have a substantial negative impact on our ability to collect payments due under our agreements with such franchisee. In the event of a franchisee bankruptcy, the bankruptcy trustee may reject its franchise agreement or agreements, area development agreement or any other agreements pursuant to Section 365 of the U.S.
A franchisee bankruptcy could have a substantial negative impact on our ability to collect payments due under our agreements with such franchisee. In the event of a franchisee bankruptcy, the bankruptcy trustee may reject its franchise agreement or agreements, area development agreement, multi-unit agreements or any other agreements pursuant to Section 365 of the U.S.
Franchise agreements and franchisee relationships. Franchisees develop and operate their studios under terms set forth in our area development and franchise agreements, respectively. These agreements give rise to long-term relationships that involve a complex set of obligations and cooperation. We have a standard set of agreements that we typically use with franchisees.
Franchise agreements and franchisee relationships. Franchisees develop and operate their studios under terms set forth in our area development, multi-unit and franchise agreements, respectively. These agreements give rise to long-term relationships that involve a complex set of obligations and cooperation. We have a standard set of agreements that we typically use with franchisees.
We and franchisees in North America, except for Lindora franchisees, rely heavily on information systems provided by ClubReady, LLC (“ClubReady”), including the point-of-sale processing systems in our franchised studios and other information systems managed by ClubReady, to interact with franchisees and customers and to collect and maintain customer information or other personally identifiable information, including for the operation of studios, collection of cash, management of our equipment supply chain, accounting, staffing, payment of obligations, ACH transactions, credit and debit card transactions and other processes and procedures.
We and franchisees in the North America Region, rely heavily on information systems provided by ClubReady, LLC (“ClubReady”), including the point-of-sale processing systems in our franchised studios and other information systems managed by ClubReady, to interact with franchisees and customers and to collect and maintain customer information or other personally identifiable information, including for the operation of studios, collection of cash, management of our equipment supply chain, accounting, staffing, payment of obligations, ACH transactions, credit and debit card transactions and other processes and procedures.
To pay for any such acquisitions, we would have to use cash, incur debt or issue equity securities, each of which may affect our financial condition or the value of our capital stock, as well as result in dilution to holders of our Class A common stock.
To pay for any such transactions, we would have to use cash, incur debt or issue equity securities, each of which may affect our financial condition or the value of our capital stock, as well as result in dilution to holders of our Class A common stock.
Our or franchisees’ failure to comply fully with these rules or requirements may subject us or franchisees to fines, penalties, damages and civil liability, or result in membership contracts being void or voidable. In addition, states may modify these laws and regulations in the future.
Franchisees’ failure to comply fully with these rules or requirements may subject franchisees to fines, penalties, damages and civil liability, or result in membership contracts being void or voidable. In addition, states may modify these laws and regulations in the future.
Our financial condition and results of operations in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including: • franchisees’ ability to maintain and attract new customers and increase their usage of their studios; • delays in opening new studios; • the continued market acceptance of, and the growth of the boutique fitness market; • our ability to maintain and attract new franchisees; • our development and improvement of the quality of the studio experience, including enhancing existing and creating new services and products; • announcement of major corporate transaction, strategic actions or mergers and acquisitions by us or competitors; • additions or departures of our senior management or other key personnel; • sales, or anticipated sales, of large blocks of our stock; 45 • guidance, if any, that we provide to the public, as well as any changes in this guidance or our failure to meet this guidance; • results of operations that vary from expectations of securities analysis and investors; • issuance of new or changed securities analysts’ reports or recommendations; • system failures or breaches of security or privacy; • seasonality; • constraints on the availability of franchisee financing; • our ability to maintain operating margins; • the diversification and growth of our revenue sources; • our successful expansion into international markets; • increases in marketing, sales and other operating expenses that we may incur to grow and expand our operations and to remain competitive; • pricing pressure as a result of competition or otherwise; • the timing and success of new product, service, feature and content introductions by us or our competitors or any other change in the competitive landscape of our market; • the expansion of our digital platform; • announcement by us, our competitors or vendors of significant contracts or acquisitions; • public response to press releases or other public announcements by us or third parties, including our filings with the SEC; • adverse litigation judgments, settlements or other litigation-related costs, including content costs for past use; • Pause in ability to sell franchise licenses during the pendency of government investigations regarding FDD compliance; • delays by regulators in accepting our annual FDD filing or amendments to our FDD filing; • changes in the legislative or regulatory environment, including with respect to privacy and advertising, or enforcement by government regulators, including fines, orders or consent decrees; • fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies; • changes in our effective tax rate; • changes in accounting standards, policies, guidance, interpretations or principles, including changes in fair value measurements or impairment charges; • global pandemics and natural disasters such as hurricanes, fires and earthquakes; and • changes in business or macroeconomic conditions, including lower consumer confidence, recessionary conditions, increased unemployment rates, or stagnant or declining wages.
Our financial condition and results of operations in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including: • franchisees’ ability to maintain and attract new customers and increase their usage of their studios; • delays in opening new studios; • the continued market acceptance of, and the growth of the boutique fitness market; • our ability to maintain and attract new franchisees; • our development and improvement of the quality of the studio experience, including enhancing existing and creating new services and products; • announcement of major corporate transaction, strategic actions or mergers and acquisitions by us or competitors; • changes in business or macroeconomic conditions, including lower consumer confidence, recessionary conditions, increased unemployment rates, or stagnant or declining wages. • additions or departures of our senior management or other key personnel; • sales, or anticipated sales, of large blocks of our stock; • guidance, if any, that we provide to the public, as well as any changes in this guidance or our failure to meet this guidance; • results of operations that vary from expectations of securities analysis and investors; • issuance of new or changed securities analysts’ reports or recommendations; • system failures or breaches of security or privacy; • seasonality; • constraints on the availability of franchisee financing; • our ability to maintain operating margins; • the diversification and growth of our revenue sources; • our successful expansion into international markets; 42 • increases in marketing, sales and other operating expenses that we may incur to grow and expand our operations and to remain competitive; • pricing pressure as a result of competition or otherwise; • the timing and success of new product, service, feature and content introductions by us or our competitors or any other change in the competitive landscape of our market; • announcement by us, our competitors or vendors of significant contracts or acquisitions; • public response to press releases or other public announcements by us or third parties, including our filings with the SEC; • adverse litigation judgments, settlements or other litigation-related costs; • any future pause in ability to sell franchise licenses during the pendency of government investigations regarding federal or state franchise disclosure compliance; • delays by regulators in accepting our annual FDD filing or amendments to our FDD filing; • changes in the legislative or regulatory environment, including with respect to privacy and advertising, or enforcement by government regulators, including fines, orders or consent decrees; • fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies; • changes in our effective tax rate; • changes in accounting standards, policies, guidance, interpretations or principles, including changes in fair value measurements or impairment charges; • global pandemics and natural disasters such as hurricanes, fires and earthquakes; and • the performance of our digital platform Any one of the factors above or the cumulative effect of some of the factors above may result in significant fluctuations in our results of operations.
Some of this data is sensitive and could be an attractive target of criminal attack by malicious third parties with a wide range of motives and expertise, including organized criminal groups, hackers, “hactivists,” disgruntled current or former employees, and others. The integrity and protection of that customer and employee data is critical to us.
Some of this data is sensitive and could be an attractive target of criminal attack by malicious third parties with a wide range of motives and expertise, including organized criminal groups, hackers, activists, disgruntled current or former employees, and others. The integrity and protection of that customer and employee data is critical to us.
Any violation of the FCPA, other applicable anti-corruption laws, or anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions and, in the case of the FCPA, suspension or debarment from U.S. government contracts, any of which could have a materially adverse effect on our reputation, business, results of operations, cash flows and financial condition.
Any such violation could have an adverse effect on our reputation, business, results of operations and prospects. 56 Any violation of the FCPA, other applicable anti-corruption laws, or anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions and, in the case of the FCPA, suspension or debarment from U.S. government contracts, any of which could have a materially adverse effect on our reputation, business, results of operations, cash flows and financial condition.
To implement, maintain and improve the effectiveness of our disclosure controls and procedures, we have committed significant resources, hired additional staff and provided additional management oversight. Given the material weaknesses identified in this report, additional resources will be needed to address these control issues.
To implement, maintain and improve the effectiveness of our disclosure controls and procedures, we have committed significant resources, hired additional staff and provided additional management oversight. Given the material weakness identified in this report, these additional resources will continue to be needed to address these control issues.
The franchise agreement renewal is contingent on, among other requirements, the franchisee’s execution of the then-current form of franchise agreement (which may include increased royalty rates, advertising fees and other fees and costs), the satisfaction of certain conditions (including studio renovation and modernization and other requirements) and the payment of a renewal fee.
The award of a successor franchise is contingent on, among other requirements, the franchisee’s execution of the then-current form of franchise agreement (which may include increased royalty rates, advertising fees and other fees and costs), the satisfaction of certain conditions (which may include studio renovation and modernization and other requirements) and the payment of a renewal fee.
We currently have franchised studios in Canada, and under master franchise agreements in Australia, New Zealand, Japan, Singapore, South Korea, Spain, United Kingdom, Dominican Republic, Germany, Mexico, Portugal, Kuwait, and Hong Kong and have entered into international expansion agreements in Austria, Saudi Arabia, Switzerland, Ireland, France, Qatar, Malaysia and The Netherlands, and we plan to continue to grow internationally.
We currently have franchised studios in Canada, and under master franchise agreements in Australia, New Zealand, Japan, Singapore, Spain, United Kingdom, Dominican Republic, Germany, Mexico, Portugal, Kuwait, and Hong Kong and have entered into international expansion agreements in Saudi Arabia, Switzerland, Ireland, France, Qatar, Malaysia, Thailand and The Netherlands, and we plan to continue to grow internationally.
We are a holding company and our principal asset is our direct and indirect ownership of 69.5% of the outstanding LLC Units. We have no independent means of generating revenue. XPO Holdings is treated as a partnership for U.S. federal income tax purposes and, as such, generally will not be subject to U.S. federal income tax.
We are a holding company and our principal asset is our direct and indirect ownership of 72.0% of the outstanding LLC Units. We have no independent means of generating revenue. XPO Holdings is treated as a partnership for U.S. federal income tax purposes and, as such, generally will not be subject to U.S. federal income tax.
We have studio locations throughout the U.S. and internationally, with franchise, master franchise and international expansion agreements in 49 U.S. states, Puerto Rico, and 30 additional countries as of December 31, 2024, and we plan to continue to seek franchisees to open new studios in the future, some of which will be in existing markets.
We have studio locations throughout the U.S. and internationally, with franchise, master franchise and international expansion agreements in 49 U.S. states, Puerto Rico, and 28 additional countries as of December 31, 2025, and we plan to continue to seek franchisees to open new studios in the future, some of which will be in existing markets.
We and franchisees are responsible at the studios we operate for compliance with state and provincial laws that regulate the relationship between studios and their customers.
Franchisees are responsible at the studios they operate for compliance with state and provincial laws that regulate the relationship between studios and their customers.
Directors, officers, stockholders and affiliates of the Preferred Investors and Snapdragon Capital Partners may pursue corporate opportunities independent of us that could present conflicts with our and our other stockholders’ interests. Directors, officers, stockholders and affiliates of the Preferred Investors and Snapdragon Capital Partners, an affiliate of Mr.
Directors, officers, stockholders and affiliates of Snapdragon Capital Partners may pursue corporate opportunities independent of us that could present conflicts with our and our other stockholders’ interests. Directors, officers, stockholders and affiliates of Snapdragon Capital Partners, an affiliate of Mr.
Our board of directors will determine the appropriate uses for any excess cash so accumulated, which may include, among other uses, dividends, repurchases of our Class A common stock, the payment of obligations under the TRA and the payment of other expenses.
Our board of directors will determine the appropriate uses for any excess cash so accumulated, which may include, among other uses and subject to our credit agreement, dividends, repurchases of our Class A common stock, the payment of obligations under the TRA and the payment of other expenses.
From time to time, we may be subject to claims, lawsuits, government investigations and other proceedings involving competition and antitrust, intellectual property, privacy, consumer protection, securities, tax, labor and employment, gift cards, commercial disputes and other matters that could adversely affect our business, results of operations, cash flows and financial condition.
From time to time, we may be subject to claims, lawsuits, government investigations and other proceedings involving competition and antitrust, intellectual property, privacy, consumer protection, securities, tax, labor and employment, gift cards, commercial disputes and other matters that could adversely affect our business, results of operations, cash flows and financial condition. See Note 16 of Notes to Consolidated Financial Statements.
A number of factors have historically affected, and will continue to affect, our same store sales, including, among other factors: • competition; • overall economic trends, particularly those related to consumer spending; • franchisees’ ability to operate studios effectively and efficiently to meet consumer expectations; • changes in the prices franchisees charge for memberships or classes; • studio closures due to macro-economic conditions and industry-wide trends; and • marketing and promotional efforts.
A number of factors have historically affected, and will continue to affect, our same store sales, including, among other factors: • competition; • overall economic trends, particularly those related to consumer spending; • franchisees’ ability to operate studios effectively and efficiently to meet consumer expectations; • changes in the prices franchisees charge for memberships or classes; • new studios reaching capacity quickly, limiting their ability to increase sales; 43 • studio closures due to macro-economic conditions and industry-wide trends; and • marketing and promotional efforts.
As the managing member of XPO Holdings, we intend to cause XPO Holdings to make distributions to the holders of LLC Units and us, or, in the case of certain expenses and distributions in respect of the Preferred Units, payments to us, in amounts sufficient to (i) permit us to pay all applicable taxes payable by us and the holders of LLC Units, (ii) allow us to make any payments required under the TRA we entered into as part of a series of transactions to implement an internal reorganization, (the “Reorganization Transactions”) in connection with the IPO, (iii) fund dividends to our stockholders, including in respect of the Convertible Preferred, in accordance with our dividend policy, to the extent that our board of directors declares such dividends and (iv) pay our expenses.
As the managing member of XPO Holdings, we intend to cause XPO Holdings to make distributions to the holders of LLC Units and us, or, in amounts sufficient to (i) permit us to pay all applicable taxes payable by us and the holders of LLC Units, (ii) allow us to make any payments required under the TRA we entered into as part of a series of transactions to implement an internal reorganization, (the “Reorganization Transactions”) in connection with the IPO, (iii) fund dividends to our stockholders, in accordance with any future dividend policy and subject to our credit agreement, to the extent that our board of directors declares such dividends and (iv) pay our expenses.
For example, we had a net loss of $98.7 million for the year ended December 31, 2024 and a net loss of $6.4 million for the year ended December 31, 2023, and we cannot be certain that we will achieve or maintain profitability and may incur operating losses in the future.
For example, we had a net loss of $53.7 million for the year ended December 31, 2025 and a net loss of $98.7 million for the year ended December 31, 2024, and we cannot be certain that we will achieve or maintain profitability and may incur operating losses in the future.
Some states, such as New York and Tennessee, have passed or considered legislation requiring health and fitness clubs to offer a prepaid membership option at all times and/or limit the duration for which memberships can auto-renew through EFTs, if at all.
Some states have passed or considered legislation requiring health and fitness clubs to offer a prepaid membership option at all times and/or limit the duration for which memberships can auto-renew through EFTs, if at all.
The number of new studios that actually open in the future may differ materially from the number of U.S. licenses sold and international licenses to be sold via master franchise agreements.
The number of new studios that actually open in the future may differ materially from the number of studio licenses sold to potential, existing and new franchisees. The number of new studios that actually open in the future may differ materially from the number of U.S. licenses sold and international licenses to be sold via master franchise agreements.
In the third quarter of 2023, we announced a restructuring plan that involves exiting company-owned transition studios and other measures designed to reduce costs to achieve our long-term margin goals and focus on pure franchise operations.
In the third quarter of 2023, we announced a restructuring plan that involves exiting company-owned transition studios and other measures designed to reduce costs to achieve our long-term margin goals and focus on pure franchise operations. As a result, the number of company-owned transition studios has significantly decreased.
We face significant risks if we or any of our directors, officers, employees, franchisees, agents or other partners or representatives fail to comply with these laws and governmental authorities in the United States and elsewhere could seek to impose substantial civil and/or criminal fines and penalties which could have a material adverse effect on our business, reputation, results of operations, cash flows and financial condition. 59 Our employees, contractors, franchisees and agents may take actions in violation of our policies or applicable law.
We face significant risks if we or any of our directors, officers, employees, franchisees, agents or other partners or representatives fail to comply with these laws and governmental authorities in the United States and elsewhere could seek to impose substantial civil and/or criminal fines and penalties which could have a material adverse effect on our business, reputation, results of operations, cash flows and financial condition.
As a public company, we are subject to the rules and regulations established from time to time by the SEC and the NYSE. These rules and regulations require, among other things, that we establish and periodically evaluate procedures with respect to our internal controls over financial reporting.
As a public company, we are subject to the rules and regulations established from time to time by the SEC and the New York Stock Exchange (“NYSE”). These rules and regulations require, among other things, that we establish and periodically evaluate procedures with respect to our internal controls over financial reporting.
Additionally, the loss of any key personnel could make it more difficult to manage our operations, reduce our employee retention and revenue and impair our ability to compete. Although we have entered into employment offer letters with certain of our key personnel, these letters have no specific duration and constitute at-will employment.
Additionally, the loss of any key personnel could make it more difficult to manage our operations, reduce our employee retention, impair our ability to compete or have other negative effects on our business. Although we have entered into employment offer letters with certain of our key personnel, these letters have no specific duration and constitute at-will employment.
In addition, we believe the culture we and franchisees foster at studios is an important contributor to our success. However, as we expand, we may have difficulty maintaining our culture or adapting it sufficiently to meet the needs of our operations. These risks may be heightened as our growth accelerates.
In addition, we believe the culture we and franchisees foster at studios is an important contributor to our success. However, as we expand, we may have difficulty maintaining our culture or adapting it sufficiently to meet the needs of our operations.
The GDPR imposes onerous disclosure and compliance obligations relating to the collection, processing, retention and sharing of personal data, and requirements to demonstrate compliance with such obligations. 42 If our, master franchisees’, franchisees’ or service providers’ privacy or data security measures fail to comply with the GDPR requirements, we may be subject to litigation, regulatory investigations, enforcement notices requiring us to change the way we use personal data and/or fines of up to 20 million Euros/17.5 million Pounds or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, as well as compensation claims by affected individuals, negative publicity, reputational harm and a potential loss of business and goodwill.
If our, franchisees’, master franchisees’ or service providers’ privacy or data security measures fail to comply with the GDPR requirements, we may be subject to litigation, regulatory investigations, enforcement notices requiring us to change the way we use personal data and/or fines of up to 20 million Euros/17.5 million Pounds or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, as well as compensation claims by affected individuals, negative publicity, reputational harm and a potential loss of business and goodwill.
Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, the doctrine of “corporate opportunity” will not apply to directors, officers, stockholders and affiliates of the Preferred Investors and Snapdragon Capital Partners. The reduced disclosure requirements applicable to emerging growth companies may make our Class A common stock less attractive to investors.
Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, the doctrine of “corporate opportunity” will not apply to directors, officers, or stockholders or any of their respective affiliates. The reduced disclosure requirements applicable to emerging growth companies may make our Class A common stock less attractive to investors.
In recent years, the United States and other significant economic markets have experienced cyclical downturns and worldwide economic conditions remain uncertain. As global economic conditions continue to be volatile or economic uncertainty remains, trends in consumer discretionary spending also remain unpredictable and subject to reductions. Unfavorable economic conditions may decrease demand for our franchises.
In recent years, the United States and other significant economic markets have experienced cyclical downturns and worldwide economic conditions remain uncertain. As global economic conditions continue to be volatile or economic uncertainty remains, trends in consumer discretionary spending also remain unpredictable and subject to reductions.
These factors, over which neither we nor franchisees have control, may include: • changes in inflation rates; • recessionary or expansive trends in international markets; • increases in the taxes we or franchisees pay and other changes in applicable tax laws; • legal and regulatory changes, and the burdens and costs of our and franchisees’ compliance with a variety of foreign laws; • changes in exchange rates and the imposition of restrictions on currency conversion or the transfer of funds; • difficulty in protecting our brands, reputation and intellectual property; • difficulty in collecting royalties; • difficulties and interruptions in communications and coordination with international franchisees; • global supply chain disruption and constraints; • political and economic instability; and • other external factors, including actual or perceived threats to public health.
These factors, over which neither we nor franchisees have control, may include: • changes in inflation rates; • recessionary or expansive trends in international markets; • increases in the taxes we or franchisees pay and other changes in applicable tax laws; • legal and regulatory changes, and the burdens and costs of our and franchisees’ compliance with a variety of foreign laws; • changes in exchange rates and the imposition of restrictions on currency conversion or the transfer of funds; • difficulty in protecting our brands, reputation and intellectual property; • difficulty in collecting royalties; • difficulties and interruptions in communications and coordination with international franchisees; • global supply chain disruption and constraints; • political and economic instability; and • other external factors, including actual or perceived threats to public health. 26 Additionally, new markets may have competitive conditions, consumer preferences and discretionary spending patterns that are different from those in our existing markets.
If we do not successfully manage our Chief Executive Officer transition, it could be viewed negatively by our franchisees, employees or investors and could have an adverse impact on our business, financial condition, and operating results.
If we do not successfully manage these transitions, it could be viewed negatively by our franchisees, employees or investors and could have an adverse impact on our business, financial condition, and operating results.
Growing our international presence may also increase our risks related to international operations. Our financial condition and results of operations may also be adversely affected if the global markets in which our franchised studios compete are affected by changes in political, economic or other factors.
Our financial condition and results of operations may also be adversely affected if the global markets in which our franchised studios compete are affected by changes in political, economic or other factors.
As of December 31, 2024, we had 1,607 studios in North America contractually obligated to be opened under existing franchise agreements and 1,043 licenses to be sold internationally via master franchise agreements in respect of studios that had not yet opened. Historically, a portion of our licenses sold have not ultimately resulted in new studios.
As of December 31, 2025, we had 832 studios in the North America Region contractually obligated to be opened under existing franchise agreements and 767 licenses to be sold internationally via master franchise agreements in respect of studios that had not yet opened. Historically, a portion of our licenses sold have not ultimately resulted in new studios.
In addition, we may be subject to audits of our income, sales and other transaction taxes by U.S. federal and state and foreign authorities. Outcomes from these audits could have an adverse effect on our financial condition and results of operations. 60 It em 1B. Unresolved Staff Comments. Not applicable.
In addition, we may be subject to audits of our income, sales and other transaction taxes by U.S. federal and state and foreign authorities. Outcomes from these audits could have an adverse effect on our financial condition and results of operations.
Likewise, we have identified the need to add trained accounting staff to address weaknesses in internal controls over financial reporting identified in this report. During 2024 we experienced significant senior management turnover including a change in chief executive officer and the resignation of both our chief operating officer and our president.
Likewise, we have identified the need to add trained accounting staff to address weaknesses in internal controls over financial reporting identified in this report. During 2025 we experienced significant senior management turnover including a change in our Chief Executive Officer and Chief Legal Counsel.
Such negative publicity also could have an adverse effect on the size, engagement and loyalty of franchisees’ customers and result in decreased revenue, which could have an adverse effect on our business, results of operations, cash flows and financial condition.
Such negative publicity also could have an adverse effect on the size, engagement and loyalty of franchisees’ customers and result in decreased revenue, which could have an adverse effect on our business, results of operations, cash flows and financial condition. Our business and operations could be negatively impacted by the recent changes in executive leadership.
With the change in leadership, there is a risk to retention of other members of senior management, such as the resignations of both our Chief Operating Officer and President during the fourth quarter of 2024, as well as to continuity of business initiatives, plans, and strategies through the transition period and if we are unable to execute an orderly transition, our business may be adversely affected. 33 Our future success depends on the continuing efforts of our key employees and our ability to attract and retain highly skilled personnel.
With the change in leadership, there is also a risk to retention of other members of senior management, as well as to continuity of business initiatives, plans, and strategies through the transition period and if we are unable to execute an orderly transition, our business may be adversely affected. 25 Our future success depends on the continuing efforts of our key employees and our ability to attract and retain highly skilled personnel.
Our substantial level of indebtedness could adversely affect our financial condition and increase the possibility that we may be unable to generate sufficient cash to pay, when due, the principal of, interest on or other amounts due in respect of our indebtedness.
The maturity date for our outstanding debt is December 8, 2030. Our substantial level of indebtedness could adversely affect our financial condition and increase the possibility that we may be unable to generate sufficient cash to pay, when due, the principal of, interest on or other amounts due in respect of our indebtedness.
Our outstanding credit facility includes a number of covenants that limit our and our subsidiaries’ ability to, among other things, incur additional indebtedness or create liens, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.
Our outstanding credit facility includes a number of covenants that limit our and our subsidiaries’ ability to, among other things, incur additional debt, grant liens, make investments, make restricted payments and dispose of assets, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.
In addition, unfavorable economic conditions, such as persistent inflation and rising cost of living, may lead consumers to have lower disposable income and reduce the frequency with which they purchase our and franchisees’ services and products.
Unfavorable economic conditions may decrease demand for our franchises and may also affect our ability to adjust pricing. In addition, unfavorable economic conditions, such as persistent inflation and rising cost of living, may lead consumers to have lower disposable income and reduce the frequency with which they purchase our and franchisees’ services and products.
We cannot predict future business interruptions that may occur, the nature or scope of any such interruptions or the degree to which, or the period over which, franchisees may need to close or re-close studios in the future, and there can be no assurance that in the future we will be able to satisfy the covenants under our credit agreement as a result of a business interruption or otherwise, or obtain any required waiver or amendment. 49 Restrictions imposed by our outstanding indebtedness and any future indebtedness may limit our ability to operate our business and to finance our future operations or capital needs or to engage in other business activities.
We cannot predict future business interruptions that may occur, the nature or scope of any such interruptions or the degree to which, or the period over which, franchisees may need to close or re-close studios in the future, and there can be no assurance that in the future we will be able to satisfy the covenants under our credit agreement as a result of a business interruption or otherwise, or obtain any required waiver or amendment.
This expansion has placed, and our planned future expansion may place significant demands on our administrative, operational, financial and other resources. Any failure to manage growth effectively could seriously harm our business.
Since our founding in 2017, we have experienced significant growth in our business activities and operations. This expansion has placed, and our planned future expansion may place significant demands on our administrative, operational, financial and other resources. Any failure to manage growth effectively could seriously harm our business.
As a result of such failures, we could also become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, and become subject to litigation from investors and stockholders, many of which have occurred already for other reasons, which could harm our reputation and financial condition or divert financial and management resources from our regular business activities. 57 We have in the past and may in the future be subject to short selling strategies that may drive down the market price of our Class A common stock.
As a result of such failures, we could also become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, and become subject to litigation from investors and stockholders, many of which have occurred already for other reasons, which could harm our reputation and financial condition or divert financial and management resources from our regular business activities.
If we incur more debt, it would result in increased fixed obligations and could subject us to covenants or other restrictions that would impede our ability to manage our operations. We may also create future obligations in connection with any such acquisition.
If we incur more debt, it would result in increased fixed obligations and could subject us to covenants or other restrictions that would impede our ability to manage our operations.
Additionally, we may not be able to fully realize the cost savings and benefits initially anticipated from the restructuring plan, the expected charges may be greater than expected, including payments for lease terminations, and we may not be able to reach agreement with contractual counterparties, any of which could negatively impact our business. 34 We operate in a highly competitive market and we may be unable to compete successfully against existing and future competitors.
Additionally, we may not be able to fully realize the cost savings and benefits initially anticipated from the restructuring plan, the expected charges may be greater than expected, including payments for lease terminations, and we may not be able to reach agreement with contractual counterparties, any of which could negatively impact our business.
The convergence of fitness, health, and technology has also given rise to integrated wellness ecosystems that blend AI-powered coaching, biometric tracking, and connected hardware, further redefining industry standards. • Franchisees within our network face direct competition from: • National and regional boutique fitness brands, both franchised and others of which are owned centrally at a corporate level. • Full-service gyms and large-scale fitness centers, including those offering multi-discipline training programs. • Independent boutique studios catering to niche fitness markets. • Digital fitness platforms, including AI-driven, subscription-based, and on-demand services. • At-home fitness ecosystems, integrating connected hardware, smart wearables, and AI-powered coaching. • Metabolic health and weight management providers, leveraging medical and wellness-based interventions. • Other health and wellness ecosystems, including holistic wellness and recovery-focused businesses.
Franchisees within our network face direct competition from: • National and regional boutique fitness brands, both franchised and others of which are owned centrally at a corporate level. • Full-service gyms and large-scale fitness centers, including those offering multi-discipline training programs. • Independent boutique studios catering to niche fitness markets. • Digital fitness platforms, including AI-driven, subscription-based, and on-demand services. 32 • At-home fitness ecosystems, integrating connected hardware, smart wearables, and AI-powered coaching. • Other health and wellness ecosystems, including holistic wellness and recovery-focused businesses.
In addition, any such costs that may arise in the future as a result of changes to such legislation and regulations or in their interpretation, could individually or in the aggregate cause us to change or limit our business practice, which may make our business model less attractive to franchisees and our and their members. 43 We and franchisees are subject to a number of risks related to ACH, credit card, debit card and gift card payments we accept.
In addition, any such costs that may arise in the future as a result of changes to such legislation and regulations or in their interpretation, could individually or in the aggregate cause us to change or limit our business practice, which may make our business model less attractive to franchisees and our and their members.
Further, the new presidential administration in the U.S. could result in policy and regulatory shifts that may affect us in ways we cannot foresee.
Further, changes by the U.S. federal government could result in policy and regulatory shifts that may affect us in ways we cannot foresee.
Any additional costs which may arise in the future as a result of changes to the legislation and regulations or in their interpretation could individually or in the aggregate cause us to change or limit our business practices, which may make our business model less attractive to franchisees or their customers. 37 In January 2024 we acquired a weight loss and wellness brand which is subject to healthcare and related laws.
Any additional costs which may arise in the future as a result of changes to the legislation and regulations or in their interpretation could individually or in the aggregate cause us to change or limit our business practices, which may make our business model less attractive to franchisees or their customers.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe monitor and manage the potential vulnerabilities and security gaps that can arise when working with external vendors, partners, or suppliers who have access to sensitive information or systems. We assess the cybersecurity practices of our third parties by evaluating their compliance with security standards.
Biggest changeThese processes include evaluating the cybersecurity practices of third parties that may have access to our information systems or sensitive data, including through assessments of their alignment with applicable security standards and contractual requirements. We believe these measures help mitigate the risk of cybersecurity incidents originating from third parties.
We believe that our existing facilities are adequate to meet our business requirements for the near-term and that additional space will be available on commercially reasonable terms, if required. We operated one company-owned transition studio in a leased property as of December 31, 2024.
We believe that our existing facilities are adequate to meet our business requirements for the near-term and that additional space will be available on commercially reasonable terms, if required. We operated one company-owned transition studio in a leased property as of December 31, 2025.
We also lease two Club Pilates training locations, one in Atlanta, Georgia and one in Costa Mesa, California. These leases expire in October 2027 and November 2025, r espectively. In addition, we also lease approximately 55,000 square feet of warehouse space in Tustin, CA, which lease expires in 2027.
We also lease two Club Pilates training locations, one in Atlanta, Georgia and one in Costa Mesa, California. These leases expire in October 2027 and November 2028, r espectively. In addition, we also lease approximately 55,000 square feet of warehouse space in Tustin, CA, which lease expires in 2027.
The information set forth in Note 18 “Contingencies and Litigation” in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K is incorporated herein by reference. It em 4. Mine Safety Disclosures. Not applicable. 62 PART II It em 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
The information set forth in Note 16 “Contingencies and Litigation” in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K is incorporated herein by reference. It em 4. Mine Safety Disclosures. Not applicable. 59 PART II It em 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Properties. Our corporate headquarters are located in Irvine, California, where we lease approximately 40,000 square feet of office space pursuant to a lease agreement which expires in 2032. We lease approximately 6,800 square feet for our digital platform production studio pursuant to a lease agreement which expires in 2027.
It em 2. Properties. Our corporate headquarters are located in Irvine, California, where we lease approximately 40,000 square feet of office space pursuant to a lease agreement which expires in 2032. We lease approximately 6,800 square feet for our digital platform production studio pursuant to a lease agreement which expires in 2027.
Additionally, we are negotiating lease terminations for operating leases for certain studios for which we have lease liabilities recorded, including for company-owned transition studios that have ceased operations prior to December 31, 2024. See Note 10 of Notes to Consolidated Financial Statements for additional information related to our existing lease obligations as of December 31, 2024.
Additionally, we are negotiating lease terminations for operating leases for certain studios for which we have lease liabilities recorded, including for company-owned transition studios that have ceased operations prior to December 31, 2025. See Note 8 of Notes to Consolidated Financial Statements for additional information related to our existing lease obligations as of December 31, 2025.
A substantially greater number of holders of our Class A common stock are held in “street name” and held of record by banks, brokers and other financial institutions. As of February 21, 2025, there were 13 holders of record of our Class B common stock.
A substantially greater number of holders of our Class A common stock are held in “street name” and held of record by banks, brokers and other financial institutions. As of February 23, 2026, there were 12 holders of record of our Class B common stock.
Market Information for Class A Common Stock Shares of our Class A common stock trade on the NYSE under the symbol “XPOF.” Holders of Record As of March 6, 2025, there were 31 holders of record of our Class A common stock.
Market Information for Class A Common Stock Shares of our Class A common stock trade on the NYSE under the symbol “XPOF.” Holders of Record As of February 23, 2026, there were 19 holders of record of our Class A common stock.
Evaluating third-party compliance helps us mitigate the risks of data breaches or security incidents originating from external sources, ultimately safeguarding our reputation, legal compliance, and overall cybersecurity posture. We believe that the risks from cybersecurity threats, including as a result of any previous cybersecurity events, have not materially affected our business to date.
To date, we believe that risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected our business, results of operations, cash flows, or financial condition.
To ensure alignment with industry best practices we engage consultants or other third parties in conducting periodic assessments and testing of our policies, standards, processes, and practices. Material risks are those that have the potential to cause substantial harm or financial loss.
To support these processes and to align with industry practices, we engage third-party consultants and other service providers to conduct periodic assessments and testing of our cybersecurity policies, standards, processes, and controls. In evaluating cybersecurity risks, we consider the potential impact of such risks on our business, including operational disruption, financial loss, regulatory or legal exposure, and reputational harm.
Item 1C. Cyber security. Risk Management and Strategy We continue to develop and implement a framework designed to safeguard our organization's digital assets from threats and vulnerabilities as part of our overall risk management system. It involves a systematic approach of identifying, assessing, and mitigating risks associated with our technology systems, data, and operations.
Item 1C. Cyber security. Risk Management and Strategy We maintain and continue to develop processes designed to assess, identify, and manage material risks from cybersecurity threats as part of our overall enterprise risk management framework.
Removed
Key components of this include: • Vulnerability assessments - initiating regular evaluations to identify potential weaknesses in our systems. • Security controls and policies - establishing robust security measures and formal company-wide policies. • Employee training - training programs to ensure all employees are equipped to prevent and respond to cyber threats effectively. • Incident response plan - designing and implementing a well-defined plan for addressing cybersecurity incidents. • Continuous monitoring - establishing mechanisms for proactive monitoring of our environment to detect and respond to anomalies.
Added
These processes are intended to safeguard the confidentiality, integrity, and availability of our information systems and the information residing therein and are integrated into the Company’s broader risk management activities.
Removed
Our approach involves a targeted strategy to protect critical data, systems, and infrastructure against cybersecurity challenges including cyber threats, data breaches, or regulatory compliance issues. Third-party risk mitigation in cybersecurity is a crucial aspect of safeguarding our digital assets and ensuring data integrity and privacy.
Added
Our cybersecurity risk management processes include, among other things: • Risk identification and assessment: Periodic evaluations of our information systems to identify cybersecurity threats and vulnerabilities that could adversely affect our operations. • Security controls and policies: Implementation and maintenance of company-wide cybersecurity policies, standards, and technical controls designed to mitigate identified risks. • Employee awareness and training: Ongoing cybersecurity training programs intended to promote awareness and preparedness across the organization. • Incident response planning: Maintenance of a formal incident response plan that defines processes for responding to, mitigating, and remediating cybersecurity incidents. • Continuous monitoring: Use of monitoring processes designed to detect anomalous activity and potential cybersecurity incidents in a timely manner.
Removed
We can provide no assurance that there will not be incidents in the future or that they will not materially affect us, including our business, results of operations, cash flows and financial condition.
Added
These considerations inform our assessment of whether cybersecurity risks or incidents may be material. We also maintain processes to oversee and manage cybersecurity risks associated with our suppliers and use of third-party service providers.
Removed
Governance The audit committee of our board of directors has primary responsibility for overseeing our risk management process relating to cybersecurity, which includes risks arising from cybersecurity threats. The Chief Technology Officer works together with our board of directors, audit committee, and members of executive management (“Cybersecurity Team”) to set the strategic digital landscape.
Added
However, cybersecurity threats continue to evolve, and we can provide no assurance that future incidents will not occur or that such incidents would not have a material effect on the Company. Governance The audit committee of our board of directors has primary responsibility for overseeing the Company’s risk management processes relating to cybersecurity, including risks arising from cybersecurity threats.
Removed
The Cybersecurity Team provides strategic guidance and oversight to ensure our cybersecurity posture is robust and aligned with our overall objectives. The Cybersecurity Team does this by establishing cybersecurity policies and setting risk tolerance levels, approving budgets for security initiatives, and ensuring compliance with relevant regulations and standards.
Added
The audit committee receives regular updates regarding cybersecurity risks and any significant incident. 58 Our cybersecurity department works with executive management to continually develop our cybersecurity strategy and to manage and assess our risk posture in this area.
Removed
The Cybersecurity Team engages in regular and ad hoc discussions regarding incident response strategies to assess the preparedness for cyber threats and continually evaluates our incident response plans. The Incident Response Team (“IRT”) is led by the Senior Vice President of Information Technology, who is the overall incident response coordinator.
Added
Our cybersecurity department is responsible for establishing and maintaining cybersecurity policies and standards, overseeing key security initiatives, assessing cybersecurity risks, and supporting compliance with applicable laws and regulations. We maintain a documented incident response process led by senior members of the cybersecurity department.
Removed
The IRT, under the guidance of the Chief Technology Officer, assesses risk and materiality of an incident and engages members of Cybersecurity Team as needed. 61 Through ongoing communications with these teams, the Chief Technology Officer and the Cybersecurity Team are informed about and monitor the prevention, detection, mitigation and remediation of cybersecurity threats and incidents in real time and report such threats and incidents to the board of directors and the audit committee when appropriate .
Added
This process is designed to coordinate our response to cybersecurity incidents, including assessing the nature, severity, and potential impact of incidents and determining whether an incident may be material. Matters are escalated to executive management and the audit committee, as appropriate.
Removed
Our Chief Technology Officer’s experience includes various roles in information technology, data analytics, and information security at both public and private companies. Members of the Cybersecurity Team each hold undergraduate and, in some cases, graduate degrees in their respective fields, and each have experience managing risk at the Company or at similar companies, and assessing cybersecurity threats. It em 2.
Added
Through ongoing communications and reporting processes, our cybersecurity department monitors the prevention, detection, mitigation, and remediation of cybersecurity threats and incidents and provides relevant information to executive management, the board of directors, and the audit committee.
Added
Each member of our cybersecurity department has prior work experience in information technology and cybersecurity functions, including experience managing cybersecurity risks, overseeing security operations, and responding to cybersecurity incidents. Such individuals hold undergraduate and graduate degrees in relevant fields, including a master's degree in Computer Science, and also hold industry-recognized certifications and possess relevant knowledge, skills, or background in cybersecurity.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

414 edited+189 added−206 removed226 unchanged
Biggest changeNotes to Consolidated Financial Statements (amounts in thousands, except per share amounts) The following table presents the components of income tax expense (benefit): Years Ended December 31, 2024 2023 2022 Current tax expense (benefit): Federal $ 47 $ 359 $ ( 142 ) State 198 509 450 Foreign 1,075 123 224 Total current tax expense 1,320 991 532 Deferred tax expense (benefit): Federal ( 1,559 ) 30 ( 31 ) State ( 98 ) 8 ( 8 ) Foreign ( 5 ) 5 ( 5 ) Total deferred tax expense (benefit) ( 1,662 ) 43 ( 44 ) Income tax expense $ ( 342 ) $ 1,034 $ 488 The following table presents a reconciliation between the Company's effective tax rate and the applicable U.S. federal statutory income tax rate: Years Ended December 31, 2024 2023 2022 Tax computed at federal statutory rate 21.0 % 21.0 % 21.0 % State tax, net of federal tax benefit 2.8 % 8.8 % 3.8 % Non-controlling interests ( 4.3 )% ( 23.6 )% ( 56.4 )% Permanent items ( 0.3 )% 1.6 % — % TRA liability — % ( 3.3 )% ( 7.6 )% Executive compensation ( 0.1 )% ( 17.6 )% 8.2 % Contingent consideration ( 2.0 )% 76.9 % 97.0 % Foreign withholding tax ( 0.6 )% — % — % State rate differential ( 0.3 )% ( 22.2 )% 48.2 % Other — % 2.5 % 11.3 % Valuation allowance ( 15.9 )% ( 63.2 )% ( 94.8 )% Effective tax rate 0.3 % ( 19.1 )% 30.7 % 132 Xponential Fitness, Inc.
Biggest changeNotes to Consolidated Financial Statements (amounts in thousands, except per share amounts) T he following table presents a reconciliation between the Company's effective tax rate and the applicable U.S. federal statutory income tax rate: Years Ended December 31, 2025 2024 2023 Tax computed at federal statutory rate $ ( 10,993 ) 21.0 % $ ( 20,798 ) 21.0 % $ ( 1,136 ) 21.0 % State tax, net of federal tax benefit (1) 193 ( 0.4 )% 109 ( 0.1 )% 420 ( 7.8 )% Foreign tax effects 767 ( 1.5 )% 1,052 ( 1.1 )% 14 ( 0.3 )% Non-taxable or nondeductible items Contingent consideration ( 1,469 ) 2.8 % 1,979 ( 2.0 )% ( 4,160 ) 76.9 % Executive compensation 80 ( 0.1 )% — — % 952 ( 17.6 )% Penalties 2,587 ( 4.9 )% — — % — — % Other 23 ( 0.1 )% 379 ( 0.4 )% ( 85 ) 1.6 % Changes in valuation allowance 8,484 ( 16.2 )% 13,051 ( 13.2 )% 3,651 ( 67.5 )% Tax credits ( 693 ) 1.3 % ( 595 ) 0.6 % — — % Other adjustments Non-controlling interests 2,051 ( 3.9 )% 4,326 ( 4.3 )% 1,275 ( 23.6 )% TRA liability — — % — — % 177 ( 3.3 )% Other 292 ( 0.5 )% 155 ( 0.2 )% ( 74 ) 1.5 % Effective tax rate 1,322 ( 2.5 )% ( 342 ) 0.3 % 1,034 ( 19.1 )% (1) The states that contribute t o the majority (greater than 50%) of the tax effect in this category include Texas and California for the year ended December 31, 2025, Texas for the year ended December 31, 2024 and Illinois, New Jersey and Texas for the year ended December 31, 20 23.
In particular, AUV (LTM as of period end) and Quarterly AUV (run rate) are calculated as follows: • AUV (LTM as of period end) consists of the average sales for the trailing 12 calendar months for all traditional studio locations in North America that opened at least 13 calendar months ago as of the measurement date and that have generated positive sales for each of the last 13 calendar months as of the measurement date. • Quarterly AUV (run rate) consists of average quarterly sales for all traditional studio locations in North America that had opened at least six calendar months ago as of the beginning of the respective quarter, and that have non-zero sales in the respective quarter (including nominal or negative sales figures; the only figures excluded are exact $0 amounts in the quarter), multiplied by four.
In particular, AUV (LTM as of period end) and Quarterly AUV (run rate) are calculated as follows: • AUV (LTM as of period end) consists of the average sales for the trailing 12 calendar months for all traditional studio locations in the North America Region that opened at least 13 calendar months ago as of the measurement date and that have generated positive sales for each of the last 13 calendar months as of the measurement date. • Quarterly AUV (run rate) consists of average quarterly sales for all traditional studio locations in the North America Region that had opened at least six calendar months ago as of the beginning of the respective quarter, and that have non-zero sales in the respective quarter (including nominal or negative sales figures; the only figures excluded are exact $0 amounts in the quarter), multiplied by four.
(including net operating losses and the Blocker Companies’ allocable share of existing tax basis); (ii) increases in the Company's allocable share of existing tax basis and tax basis adjustments that resulted or may result from (x) the IPO Contribution and the Class A-5 Unit Redemption, (y) future taxable redemptions and exchanges of LLC Units by Continuing Pre-IPO LLC Members and (z) certain payments made under the TRA; and (iii) deductions attributable to imputed interest pursuant to the TRA (the “TRA Payments”).
(including net operating losses and the Blocker Company’s allocable share of existing tax basis); (ii) increases in the Company's allocable share of existing tax basis and tax basis adjustments that resulted or may result from (x) the IPO Contribution and the Class A-5 Unit Redemption, (y) future taxable redemptions and exchanges of LLC Units by Continuing Pre-IPO LLC Members and (z) certain payments made under the TRA; and (iii) deductions attributable to imputed interest pursuant to the TRA (the “TRA Payments”).
The Seventh Amendment provides for, among other things, (i) additional term loans in an aggregate principal amount of $ 25,000 , with an original issue discount of $ 750 , (the “Seventh Amendment Incremental Term Loans”), (ii) an increased amount of the quarterly principal payments of the loans provided pursuant to the Credit Agreement (including the Seventh Amendment Incremental Term Loans) commencing on September 30, 2024 to $ 1,349 and (iii) a prepayment premium on the Seventh Amendment Incremental Term Loans.
The Seventh Amendment provides for, among other things, (i) additional term loans in an aggregate principal amount of $ 25,000 , with an original issue discount of $ 750 , (the “Seventh Amendment Incremental Term Loans”), (ii) an increased amount of the quarterly principal payments of the loans provided pursuant to the Prior Credit Agreement (including the Seventh Amendment Incremental Term Loans) commencing on September 30, 2024 to $ 1,349 and (iii) a prepayment premium on the Seventh Amendment Incremental Term Loans.
The Sixth Amendment, among other things, also (i) increased the amount of the quarterly principal payments of the loans provided pursuant to the Credit Agreement (including the Sixth Amendment Incremental Term Loans) commencing on June 30, 2024 to $ 1,287, (ii) included a prepayment premium on the Sixth Amendment Incremental Term Loans and (iii) extended the maturity date for all outstanding term loans under the Credit Agreement to March 15, 2026.
The Sixth Amendment, among other things, also (i) increased the amount of the quarterly principal payments of the loans provided pursuant to the Prior Credit Agreement (including the Sixth Amendment Incremental Term Loans) commencing on June 30, 2024 to $ 1,287, (ii) included a prepayment premium on the Sixth Amendment Incremental Term Loans and (iii) extended the maturity date for all outstanding term loans under the Prior Credit Agreement to March 15, 2026.
We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. Actual results may differ from those estimates. 85 Our critical accounting policies are those that materially affect our consolidated financial statements, including those that involve difficult, subjective or complex judgments by management.
We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. Actual results may differ from those estimates. Our critical accounting policies are those that materially affect our consolidated financial statements, including those that involve difficult, subjective or complex judgments by management.
The expected future recognition period for deferred franchise development fees related to unopened studios is based on management’s best estimate of the beginning of the franchise license term for those studios. The Company elected to not disclose short term contracts, sales and usage-based royalties, marketing fees and any other variable consideration recognized on an “as invoiced” basis.
The expected future recognition period for deferred franchise and area development fees related to unopened studios is based on management’s best estimate of the beginning of the franchise license term for those studios. The Company elected to not disclose short term contracts, sales and usage-based royalties, marketing fees and any other variable consideration recognized on an “as invoiced” basis.
In connection with the Fifth Amendment, the Company wrote off a pro rata portion of debt issuance costs related to the Term Loans aggregating $ 84 , which was included in interest expense for year ended December 31, 2023. On February 13, 2024, the Company entered into a sixth amendment (the “Sixth Amendment”) to the Credit Agreement.
In connection with the Fifth Amendment, the Company wrote off a pro rata portion of debt issuance costs related to the Term Loans aggregating $ 84 , which was included in interest expense for year ended December 31, 2023. On February 13, 2024, the Company entered into a sixth amendment (the “Sixth Amendment”) to the Prior Credit Agreement.
In connection with the Fourth Amendment, the Company wrote off a pro rata portion of debt issuance costs related to the Term Loans aggregating $ 265 , which was included in interest expense for year ended December 31, 2023. On August 3, 2023, the Company entered into a fifth amendment (the “Fifth Amendment” ) to the Credit Agreement.
In connection with the Fourth Amendment, the Company wrote off a pro rata portion of debt issuance costs related to the Term Loans aggregating $ 265 , which was included in interest expense for year ended December 31, 2023. On August 3, 2023, the Company entered into a fifth amendment (the “Fifth Amendment”) to the Prior Credit Agreement.
Management reviews system-wide sales weekly, which enables us to assess changes in our franchise revenue, overall studio performance, the health of our brands and the strength of our market position relative to competitors. 69 New Studio Openings The number of new studio openings reflects the number of studios opened during a particular reporting period.
Management reviews system-wide sales weekly, which enables us to assess changes in our franchise revenue, overall studio performance, the health of our brands and the strength of our market position relative to competitors. New Studio Openings The number of new studio openings reflects the number of studios opened during a particular reporting period.
The number of shares available for issuance under the 2021 Plan shall not exceed in the aggregate the sum of (i) 5,746 shares of Class A common stock, (ii) the number of shares of Class A common stock issuable pursuant to awards previously granted under the First Amended and Restated Profits Interest Plan of H&W Franchise Holdings LLC ( “ Pre-IPO Plan ”) (taking into account any conversion of such outstanding Awards) and (iii) an additional number of shares of Class A common stock that shall become available on the first day of each fiscal year of the Company in an amount equal to the lesser of a) 511 , b) 2 % of the outstanding shares of Class A common stock on the last day of the immediately prior fiscal year or c) such number of shares of Class A common stock as determined by the board of directors in its discretion.
The number of shares available for issuance under the 2021 Plan shall not exceed in the aggregate the sum of (i) 5,746 shares of Class A common stock, (ii) the number of shares of Class A common stock issuable pursuant to awards previously granted under the First Amended and Restated Profits Interest Plan of H&W Franchise Holdings LLC ( “ Pre-IPO Plan ”) (taking into account any conversion of such outstanding Awards) and (iii) an additional number of shares of Class A common stock that shall become available on the first day of each fiscal year of the Company in an amount equal to the lesser of a) 511 , b) 2 % of the outstanding shares of Class A common stock on the last day of the immediately prior fiscal year or c) such num ber of shares of Class A common stock as determined by the board of directors in its discretion.
The Company’s Chief Executive Officer is the Company’s CODM. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources and evaluating financial performance. As such, the Company has determined that it operates in one reportable and operating segment.
The Company’s Chief Executive Officer is the Company’s CODM. The CODM regularly reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources and evaluating financial performance. As such, the Company has determined that it operates in one reportable and operating segment.
On December 31, 2024 the Company and the Master Franchisee entered into an Amended Master Franchise Agreement (“Amended MFA”) pursuant to which, among other things, the option for the Company to repurchase the master franchise rights has ended and the Company is no longer required to pay a cancellation fee to the Master Franchisee.
On December 31, 2024 the Company and the Master Franchisee entered into an Amended Master Franchise Agreement (“Amended BFT MFA”) pursuant to which, among other things, the option for the Company to repurchase the master franchise rights has ended and the Company is no longer required to pay a cancellation fee to the Master Franchisee.
Licenses Sold The number of licenses sold in North America and globally reflect the cumulative number of licenses sold by us (or, outside of North America, by or to our master franchisees), since inception through the date indicated. The number of licenses sold is not reduced by terminations.
Licenses Sold The number of licenses sold in the North America Region and globally reflect the cumulative number of licenses sold by us (or, outside of the North America Region, by or to our master franchisees), since inception through the date indicated. The number of licenses sold is not reduced by terminations.
The proceeds of the Sixth Amendment were used to repay an aggregate of $ 38,701 in existing term loans under the Credit Agreement and for the payment of fees, costs and expenses related to the making of the Sixth Amendment Incremental Term Loans.
The proceeds of the Sixth Amendment were used to repay an aggregate of $ 38,701 in existing term loans under the Prior Credit Agreement and for the payment of fees, costs and expenses related to the making of the Sixth Amendment Incremental Term Loans.
Note 13 – Stockholder's Equity (Deficit) Common stock – In February 2023, the Company entered into an underwriting agreement with certain existing stockholders, affiliates of H&W Investco and our former Chief Executive Officer (collectively the “Selling Stockholders” ) and certain underwriters named therein, pursuant to which the Selling Stockholders sold an aggregate of 5,000 shares of Class A common stock in a secondary public offering at a public offering price of $ 24.50 per share.
Note 11 – Stockholder's Equity (Deficit) Common stock – In February 2023, the Company entered into an underwriting agreement with certain existing stockholders, affiliates of H&W Investco and our former Chief Executive Officer (collectively the “Selling Stockholders” ) and certain underwriters named therein, pursuant to which the Selling Stockholders sold an aggregate of 5,000 shares of Class A common stock in a secondary public offering at a public offering price of $ 24.50 per share.
As part of the Amended MFA, the Company agreed to pay the Master Franchisee a fee of $ 1,170 , which is included in accrued expenses in the consolidated balance sheet as of December 31, 2024.
As part of the Amended BFT MFA, the Company agreed to pay the Master Franchisee a fee of $ 1,170 , which is included in accrued expenses in the consolidated balance sheet as of December 31, 2024.
All traditional studio locations in North America are included in the AUV calculation, as long as they meet certain time since opening and sales criteria (as defined immediately below).
All traditional studio locations in the North America Region are included in the AUV calculation, as long as they meet certain time since opening and sales criteria (as defined immediately below).
Notes to Consolidated Financial Statements (amounts in thousands, except per share amounts) On January 9, 2023, the Company entered into a fourth amendment (the “Fourth Amendment” ) to the Credit Agreement.
Notes to Consolidated Financial Statements (amounts in thousands, except per share amounts) On January 9, 2023, the Company entered into a fourth amendment (the “Fourth Amendment”) to the Prior Credit Agreement.
If the Company (or a designee of the Company) did not exercise the option pursuant to the terms of the MFA, then the Company might have been required to pay a cancellation fee to the Master Franchisee.
If the Company (or a designee of the Company) did not exercise the option pursuant to the terms of the BFT MFA, then the Company might have been required to pay a cancellation fee to the Master Franchisee.
Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Xponential Fitness, Inc. and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, changes to stockholders’ equity (deficit), and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).
Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Xponential Fitness, Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, changes to stockholders’ equity (deficit), and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”).
For studio assets that are not deemed to be recoverable, the Company recognizes impairment for any excess of carrying value over the fair value of the studios, which is based on the expected net sales proceeds. During the years ended December 31, 2024, 2023 and 2022 , the Company did no t record any impairment charges related to studio assets.
For studio assets that are not deemed to be recoverable, the Company recognizes impairment for any excess of carrying value over the fair value of the studios, which is based on the expected net sales proceeds. During the years ended December 31, 2025, 2024 and 2023 , the Company did no t record any impairment charges related to studio assets.
In the remaining states that require registration of the FDDs, we will continue to pause all sales until registration is obtained from the relevant regulatory agencies, except in cases where an exemption permits sales to persons who met specific criteria. Sales will resume promptly following such approvals, subject to any applicable waiting periods.
In the remaining states that require registration of the FDDs, we will continue to pause all sales until registration is obtained from the relevant regulatory agencies, except in cases where an exemption permits sales to persons who meet specific criteria. Sales will resume promptly following such approvals, subject to any applicable waiting periods.
S-1 333-257443 10.1 06/25/2021 10.5 Financing Agreement dated as of April 19, 2021 by and among Xponential Intermediate Holdings, LLC, as Parent, Xponential Fitness, LLC, each other subsidiary of Parent listed, as Borrowers and each other subsidiary of Parent listed as a Guarantor, as Guarantors, the lenders party thereto, as Lenders, and Wilmington Trust, National Association, as Collateral Agent and Administrative Agent.
S-1 333-257443 10.1 06/25/2021 10.4 Financing Agreement dated as of April 19, 2021 by and among Xponential Intermediate Holdings, LLC, as Parent, Xponential Fitness, LLC, each other subsidiary of Parent listed, as Borrowers and each other subsidiary of Parent listed as a Guarantor, as Guarantors, the lenders party thereto, as Lenders, and Wilmington Trust, National Association, as Collateral Agent and Administrative Agent.
On May 20, 2024, we entered into an agreement with a buyer, pursuant to which we divested the Row House brand, including the intellectual property, franchise rights and franchise agreements for open studios, and retained certain liabilities, including liabilities related to known litigation, pre-litigation, and disputes as of the closing of the divestiture.
Divestiture of Row House brand – On May 20, 2024, the Company entered into an agreement with a buyer, pursuant to which the Company divested the Row House brand, including the intellectual property, franchise rights and franchise agreements for open studios, and retained certain liabilities, including liabilities related to known litigation, pre-litigation, and disputes as of the closing of the divestiture.
The cost and accumulated depreciation of assets sold or retired are removed from the accounts and any gain or loss is included in the results of operations during the period of sale or disposal. Costs for repairs and maintenance are expensed as incurred. Repairs and maintenance costs for the years ended December 31, 2024, 2023 and 2022 were insignificant.
The cost and accumulated depreciation of assets sold or retired are removed from the accounts and any gain or loss is included in the results of operations during the period of sale or disposal. Costs for repairs and maintenance are expensed as incurred. Repairs and maintenance costs for the years ended December 31, 2025, 2024 and 2023 were insignificant.
Shares of Class B common stock are considered potentially dilutive shares of Class A common stock; however, in loss periods related amounts are excluded from the computation of diluted earnings per share of Class A common stock because the effect would be anti-dilutive under the if-converted and two-class methods. For further discussion, see Note 16.
Shares of Class B common stock are considered potentially dilutive shares of Class A common stock; however, in loss periods related amounts are excluded from the computation of diluted earnings per share of Class A common stock because the effect would be anti-dilutive under the if-converted and two-class methods. For further discussion, see Note 14.
Item 6. [Reserved] 63 It em 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes thereto and the other financial information included elsewhere in this Annual Report on Form 10-K.
Item 6. [Reserved] 60 It em 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes thereto and the other financial information included elsewhere in this Annual Report on Form 10-K.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Consolidated Statements of Changes to Stockholders' Equity (Deficit) (amounts in thousands) Class A Common Stock Class B Common Stock Treasury Stock Shares Amount Shares Amount Shares Amount Additional Paid-In Capital Receivable from Shareholder Accumulated Deficit Noncontrolling interests Total Equity (Deficit) Balance at December 31, 2023 (As Corrected) 30,897 $ 3 16,566 $ 2 75 $ ( 1,697 ) $ 521,307 $ ( 15,440 ) $ ( 634,179 ) $ ( 79,528 ) $ ( 209,532 ) Equity-based compensation — — — — — — 15,463 — — 3 15,466 Net loss — — — — — — — — ( 67,658 ) ( 31,038 ) ( 98,696 ) Conversion of Class B shares to Class A shares 1,828 — ( 1,828 ) ( 1 ) — — ( 25,240 ) — — 25,240 ( 1 ) Vesting of Class B shares — — 1 — — — — — — — — Issuance of Class A common stock under stock-based compensation plans, net of shares withheld for taxes 935 — — — — — 129 — — — 129 Loan to shareholder and accumulated interest — — — — — — — ( 1,465 ) — — ( 1,465 ) Distributions paid to Pre-IPO LLC Members — — — — — — — — — ( 8,921 ) ( 8,921 ) Preferred stock dividend — — — — — — ( 7,809 ) — — — ( 7,809 ) Payment received from shareholders — — — — — — — 14 — — 14 Balance at December 31, 2024 33,660 $ 3 14,739 $ 1 75 $ ( 1,697 ) $ 503,850 $ ( 16,891 ) $ ( 701,837 ) $ ( 94,244 ) $ ( 310,815 ) See accompanying notes to consolidated financial statements. 96 Xponential Fitness, Inc.
Consolidated Statement s of Changes to Stockholders' Equity (Deficit) (amounts in thousands) Class A Common Stock Class B Common Stock Treasury Stock Shares Amount Shares Amount Shares Amount Additional Paid-In Capital Receivable from Shareholder Accumulated Deficit Noncontrolling interests Total Equity (Deficit) Balance at December 31, 2023 30,897 $ 3 16,566 $ 2 75 $ ( 1,697 ) $ 521,307 $ ( 15,440 ) $ ( 634,179 ) $ ( 79,528 ) $ ( 209,532 ) Equity-based compensation — — — — — — 15,463 — — 3 15,466 Net loss — — — — — — — — ( 67,658 ) ( 31,038 ) ( 98,696 ) Conversion of Class B shares to Class A shares 1,828 — ( 1,828 ) ( 1 ) — — ( 25,240 ) — — 25,240 ( 1 ) Vesting of Class B shares — — 1 — — — — — — — — Issuance of Class A common stock under stock-based compensation plans, net of shares withheld for taxes 935 — — — — — 129 — — — 129 Loan to shareholder and accumulated interest — — — — — — — ( 1,465 ) — — ( 1,465 ) Distributions paid to Pre-IPO LLC Members — — — — — — — — — ( 8,921 ) ( 8,921 ) Preferred stock dividend — — — — — — ( 7,809 ) — — — ( 7,809 ) Payment received from shareholders — — — — — — — 14 — — 14 Balance at December 31, 2024 33,660 $ 3 14,739 $ 1 75 $ ( 1,697 ) $ 503,850 $ ( 16,891 ) $ ( 701,837 ) $ ( 94,244 ) $ ( 310,815 ) See accompanying notes to consolidated financial statements. 88 Xponential Fitness, Inc.
In addition, the same member of the Company’s board of directors also invested as a limited partner in the Spartan SPV. Spartan Fitness intends to use the investment from Spartan SPV to fund expansion of Club Pilates studios, among other concepts. Spartan Fitness also owns the rights to 79 Club Pilates licenses to open additional new units.
In addition, the same member of the Company’s board of directors also invested as a limited partner in the Spartan SPV. Spartan Fitness intends to use the investment from Spartan SPV to fund the expansion of Club Pilates studios, among other concepts. Spartan Fitness also owns the rights to 73 Club Pilates licenses to open additional new units.
However, to the extent inflation results in rising interest rates and has other adverse effects on the market, it may have an adverse impact on our operating results and financial condition as well as the operating costs of our franchisees. 89 Ite m 8. Financial Statements and Supplementary Data.
However, to the extent inflation results in rising interest rates and has other adverse effects on the market, it may have an adverse impact on our operating results and financial condition as well as the operating costs of our franchisees. 83 Ite m 8. Financial Statements and Supplementary Data.
On May 20, 2024, the Company divested the Row House brand, including the intellectual property, franchise rights and franchise agreements for open studios. Additionally, during the three months ended September 30, 2024, the Company announced the wind down of AKT franchise operations. See Note 4 for additional information.
On May 20, 2024, the Company divested the Row House brand, including the intellectual property, franchise rights and franchise agreements for open studios. Additionally, during the three months ended September 30, 2024, the Company announced the wind down of AKT franchise operations. See Note 3 for additional information.
Note 19 – Restructuring In the third quarter of 2023, the Company began a restructuring plan that involves exiting company-owned transition studios and other measures designed to reduce costs to achieve the Company’s long-term margin goals and focus on pure franchise operations.
Note 17 – Restructuring In the third quarter of 2023, the Company began a restructuring plan that involves exiting company-owned transition studios and other measures designed to reduce costs to achieve the Company’s long-term margin goals and focus on pure franchise operations.
Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of December 31, 2024.
Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of December 31, 2025.
When evaluating goodwill for impairment, the Company may decide to first perform a qualitative assessment, or “step zero” impairment test, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.
When evaluating goodwill for impairment, we may decide to first perform a qualitative assessment, or “step zero” impairment test, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.
Notwithstanding the conclusion by our Chief Executive Officer and Chief Financial Officer that our disclosure controls and procedures as of December 31, 2024 were not effective, and notwithstanding the material weaknesses in our internal control over financial reporting described below, management believes that the consolidated financial statements and related financial information included in this Annual Report on Form 10-K fairly present in all material respects our financial condition, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with accounting principles generally accepted in the United States of America (“U.S.
Notwithstanding the conclusion by our Chief Executive Officer and Chief Financial Officer that our disclosure controls and procedures as of December 31, 2025 were not effective, and notwithstanding the material weakness in our internal control over financial reporting described below, management believes that the consolidated financial statements and related financial information included in this Annual Report on Form 10-K fairly present in all material respects our financial condition, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with accounting principles generally accepted in the United States of America (“U.S.
Note 5 – Contract Liabilities and Costs from Contracts with Customers Contract liabilities – Contract liabilities consist of deferred revenue resulting from franchise development fees (franchise fees, development fees and master franchise fees paid by franchisees), which are recognized over time on a straight-line basis over the franchise agreement term.
Note 4 – Contract Liabilities and Costs from Contracts with Customers Contract liabilities – Contract liabilities consist of deferred revenue resulting from franchise fees (franchise fees, development fees and master franchise fees paid by franchisees), which are recognized over time on a straight-line basis over the franchise agreement term.
Note 14 – Equity Compensation Profit interest units – Under the pre-IPO plan, the Parent granted profit interest units to certain key employees of the Company and its subsidiaries. Subsequent to the IPO, the profit interest units converted to Class B shares. Stock-based compensation related to profit interest units increases noncontrolling interests.
Note 12 – Equity Compensation Profit interest units – Under the pre-IPO plan, the Parent granted profit interest units to certain key employees of the Company and its subsidiaries. Subsequent to the IPO, the profit interest units converted to Class B shares. Stock-based compensation related to profit interest units increases noncontrolling interests.
The federal net operating losses were generated after January 1, 2018, and therefore do not expire. Federal net operating losses generated after January 1, 2018 are subject to a taxable income limitation of 80 % in accordance with the Tax Cuts and Jobs Act of 2017.
The federal net operating losses were generated after January 1, 2018, and therefore do not expire. Feder al net operating losses generated after January 1, 2018 are subject to a taxable income limitation of 80 % in accordance with the Tax Cuts and Jobs Act of 2017.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, the Company's management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-integrated 2013 Framework.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, the Company's management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-integrated 2013 Framework.
On August 23, 2024, the Company entered into a seventh amendment (the “Seventh Amendment”) to the Credit Agreement.
On August 23, 2024, the Company entered into a seventh amendment (the “Seventh Amendment”) to the Prior Credit Agreement.
Acquisition and transaction expenses (income) – Acquisition and transaction expenses (income) include costs directly related to the acquisition of businesses, which include expenditures for advisory, legal, valuation, accounting and similar services, in addition to amounts recorded for changes in contingent consideration (see Note 18).
Acquisition and transaction expenses (income) – Acquisition and transaction expenses (income) include costs directly related to the acquisition of businesses, which include expenditures for advisory, legal, valuation, accounting and similar services, in addition to amounts recorded for changes in contingent consideration (see Note 16).
Other restructuring charges are accounted for under ASC Topic 420, Exit or Disposal Cost Obligations and are either deferred or expensed as incurred based on the nature of the expense. For further discussion of restructuring charges, see Note 19.
Other restructuring charges are accounted for under ASC Topic 420, Exit or Disposal Cost Obligations and are either deferred or expensed as incurred based on the nature of the expense. For further discussion of restructuring charges, see Note 17.
We believe our significant investments in centralized systems and infrastructure help support new and existing franchisees.
We also believe our significant investments in centralized systems and infrastructure help support new and existing franchisees.
Additionally, during the years ended December 31, 2024 and 2023 , pursuant to the Amended Limited Liability Company Agreement of XPO Holdings (“Amended LLC Agreement”), certain Continuing Pre-IPO LLC Members exchanged their LLC units for 1,828 and 1,620 shares of Class A common stock on a one-for-one basis, respectively.
During the years ended December 31, 2025, 2024 and 2023, pursuant to the Amended Limited Liability Company Agreement of XPO Holdings (“Amended LLC Agreement”), certain Continuing Pre-IPO LLC Members exchanged their LLC units for 1,001 , 1,828 , and 1,620 shares of Class A common stock on a one-for-one basis, respectively.
Please see the table in the “Same Store Sales” section, subheader “North America studios contributing to same store sales.” The line “studios without 13 months of consecutive sales as of the last month that had positive sales within the period being measured” is an indicator for the number of North America traditional location studios that are older than 13 months, and that have had a recent or current disruption in sales, but that are still included in the Number of Studios Operating count.
Please see the table in the “Same Store Sales” section, sub header “North America studios contributing to same store sales.” The line “studios without 13 months of consecutive sales as of the last month that had positive sales within the period being measured” is an indicator for the number of the North America Region traditional location studios that are older than 13 months, and that have had a recent or current disruption in sales, but that are still included in the number of studios operating count.
In addition, the Company determined that the franchise agreements intangible assets related to CycleBar were also impaired and recognized an impairment loss of $ 1,178 in the second quarter of 2024.
In addition, the Company determined that the franchise agreements intangible assets related to the CycleBar reporting unit were also impaired and recognized an impairment loss of $ 1,178 in the second quarter of 2024.
Our inability to sell licenses for an extended period has slowed our growth and could result in a reduction in our anticipated royalty or franchise revenue, which in turn may materially and adversely affect our business, results of operations, cash flows and financial condition.
Any inability to sell licenses for an extended period can result in slowed growth and could result in a reduction in anticipated royalty or franchise revenue, which in turn may materially and adversely affect our business, results of operations, cash flows and financial condition.
The Sixth Amendment provides for, among other things, additional term loans in an aggregate principal amount of approximately $ 38,701 , with an original issue discount of $ 4,059 , (the “Sixth Amendment Incremental Term Loans”). The original issue discount was paid-in-kind by increasing the principal amount of the Credit Agreement.
The Sixth Amendment provided for, among other things, additional term loans in an aggregate principal amount of approximately $ 38,701 , with an original issue discount of $ 4,059 , (the “Sixth Amendment Incremental Term Loans”). The original issue discount was paid-in-kind by increasing the principal amount of the Prior Credit Agreement.
During the three months ended June 30, 2024, the Company elected the paid-in-kind option for the Convertible Preferred quarterly preferential coupon resulting in an increase in the fixed liquidation preference of $ 2,150 , which was recorded as a decrease to additional paid-in-capital and was included in the calculation of earnings (loss) per share.
During the three months ended June 30, 2024, the Company elected the paid-in-kind option for the Convertible Preferred quarterly preferential coupon resulting in an increase in the fixed liquidation preference of $ 2,150 , which was recorded as a decrease to additional paid-in-capital and was included in the calculation of earnings (loss) per share. 116 Xponential Fitness, Inc.
The Company also determined that the carrying value of the trademark intangible asset related to the CycleBar reporting unit was in excess of its fair value and recognized an impairment loss of $ 251 during the quarter ended December 31, 2024.
This was a partial impairment. During the quarter ended December 31, 2024, the Company also determined that the carrying value of the trademark intangible asset related to the CycleBar reporting unit was in excess of its fair value and recognized an impairment loss of $ 251 .
Diluted earnings (loss) per share of Class A common stock has been computed by dividing net income (loss) attributable to XPO Inc. by the weighted average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. 134 Xponential Fitness, Inc.
Diluted earnings (loss) per share of Class A common stock has been computed by dividing net income (loss) attributable to XPO Inc. by the weighted average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities.
See Note 19 of Notes to Consolidated Financial Statements for additional information. 66 Factors Affecting Our Results of Operations In addition to the impact of the risks described above under “Risk Factors”, we believe that the most significant factors affecting our results of operations include: • Licensing new qualified franchisees, selling additional licenses to existing franchisees and opening studios.
See Note 17 of Notes to Consolidated Financial Statements for additional information. 63 Factors Affecting Our Results of Operations In addition to the impact of the risks described above under “Risk Factors”, we believe that the most significant factors affecting our results of operations include: • Licensing new qualified franchisees, selling additional licenses to existing franchisees and opening studios.
There are currently 20 non-traditional studio locations globally, which are comprised of studios operated inside of other fitness facilities and on cruise ships.
There are currently 3 non-traditional studio locations globally, which are comprised of studios operated inside of other fitness facilities and on cruise ships.
Recent Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 3 of Notes to Consolidated Financial Statements included in this Annual Report. 88 Ite m 7A. Quantitative and Qualitative Disclosures About Market Risk.
Recent Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 of Notes to Consolidated Financial Statements included in this Annual Report. 82 Ite m 7A. Quantitative and Qualitative Disclosures About Market Risk.
Initial franchise fees are recorded as deferred revenue when received and are recognized on a straight-line basis over the franchise life, which the Company has determined to be ten years , as the Company fulfills its promise to grant the franchisee the rights to access and benefit from the Company’s intellectual property and to support and maintain the intellectual property. 109 Xponential Fitness, Inc.
Initial franchise fees are recorded as deferred revenue when received and are recognized on a straight-line basis over the franchise life, which the Company has determined to be ten years , as the Company fulfills its promise to grant the franchisee the rights to access and benefit from the Company’s intellectual property and to support and maintain the intellectual property.
The annual impairment test is performed as of the first day of our fourth quarter. When evaluating goodwill for impairment, we may decide to first perform a qualitative assessment, or “step zero” impairment test, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.
The annual impairment test is performed as of the first day of the Company’s fourth quarter. When evaluating goodwill for impairment, the Company may decide to first perform a qualitative assessment, or “step zero” impairment test, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.
Note 12 – Redeemable Convertible Preferred Stock On July 23, 2021, the Company issued and sold in a private placement 200 newly issued shares of Series A-1 Convertible Preferred Stock, par value $ 0.0001 per share (the “Convertible Preferred”), for aggregate cash proceeds of $ 200,000 , before deduction for offering costs.
Note 10 – Redeemable Convertible Preferred Stock On July 23, 2021, the Company issued and sold in a private placement 200 newly issued shares of 6.50 % Series A Convertible Preferred Stock and 6.50 % series A-1 Convertible Preferred Stock, par value $ 0.0001 per share (the “Convertible Preferred”), for aggregate cash proceeds of $ 200,000 , before deduction for offering costs.
We define the same store sales base to include monthly sales for any traditional studio location in North America. If the studio has generated at least 13 months of consecutive positive sales and opened at least 13 calendars months ago as of any month within the measurement period, the respective comparable months will be included.
We define the same store sales to include monthly sales for any traditional studio location in the North America Region. If the studio has generated at least 13 months of consecutive positive sales and opened at least 13 calendar months ago as of any month within the measurement period, the respective comparable months will be included.
During the years ended December 31, 2024, 2023 and 2022, the Company also ceased operations at 11 , 22 , and 0 company-owned transition studios, respectively. The Company refranchised or closed company-owned transition studios under its restructuring plan that started in the third quarter of 2023. See Note 19 for further discussion of the Company's restructuring plan.
During the years ended December 31, 2025, 2024 and 2023, the Company also ceased operations at 0 , 11 , and 22 company-owned transition studios, respectively. The Company refranchised or closed company-owned transition studios under its restructuring plan that started in the third quarter of 2023. See Note 17 for further discussion of the Company's restructuring plan.
Any taxable income or loss generated by XPO Holdings is passed through to and included in the taxable income or loss of its members, including the Company. The Company is taxed as a corporation and pays corporate federal, state and local taxes with respect to income allocated from XPO Holdings, based on its 69.5 % economic interest in XPO Holdings.
Any taxable income or loss generated by XPO Holdings is passed through to and included in the taxable income or loss of its members, including the Company. The Company is taxed as a corporation and pays corporate federal, state and local taxes with respect to income allocated from XPO Holdings, based on its 72.0 % economic interest in XPO Holdings.
Upon the issuance of the 2025 FDDs, the franchisors will begin offering and selling franchises in states that do not require registration of the FDDs.
Upon the issuance of the 2026 FDDs, the franchisors will begin offering and selling franchises in states that do not require registration of the FDDs.
In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of outstanding stock of a company by certain stockholders.
In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of outstanding stock of a company by certain stockholders. 122 Xponential Fitness, Inc.
On February 10, 2025, a third derivative lawsuit was filed in the United States District Court for the Central District of California by Stefanie Nelson, purportedly on behalf of Xponential Fitness, Inc., alleging similar claims as the consolidated Akande and Ayers action.
On February 10, 2025, a third derivative lawsuit was filed in the United States District Court for the Central District of California by Stefanie Nelson, purportedly on behalf of Xponential Fitness, Inc., alleging similar claims as the consolidated Akande and Ayers action. On March 31, 2025, the court consolidated the Nelson action with the previously consolidated Akande and Ayers action.
Commissions are earned and recognized at the point in time the vendor ships the product to franchisees. In addition, the Company grants vendors access to franchisees' members to provide certain services to the members for a fee. Revenue is recognized over time on a straight-line basis over the access period.
Commissions are earned and recognized at the point in time the vendor ships the product to franchisees. In addition, the Company grants vendors access to franchisees' members to provide certain services to the members for a fee. Revenue is recognized over time on a straight-line basis over the access period. 98 Xponential Fitness, Inc.
If the Company's ongoing cash flow projections are not met or if market factors utilized in the impairment test deteriorate, including an unfavorable change in the terminal growth rate or the weighted-average cost of capital, the Company may have to record impairment charges in future periods.
If our ongoing cash flow projections are not met or if market factors utilized in the impairment test deteriorate, including an unfavorable change in the terminal growth rate or the weighted-average cost of capital, we may have to record impairment charges in future periods.
The Credit Agreement also contains mandatory prepayments of the Term Loans with: (i) 50 % of XPO Holdings’ and its subsidiaries’ Excess Cash Flow (as defined in the Credit Agreement), subject to certain exceptions; (ii) 100 % of the net proceeds of certain asset sales and insurance/condemnation events, subject to reinvestment rights and certain other exceptions; (iii) 100 % of the net proceeds of certain extraordinary receipts, subject to reinvestment rights and certain other exceptions; (iv) 100 % of the net proceeds of any incurrence of debt, excluding certain permitted debt issuances; and (v) up to $ 60,000 of net proceeds in connection with an initial public offering of at least $ 200,000 , subject to certain exceptions.
The Prior Credit Agreement also contained mandatory prepayments of the Term Loans with: (i) 50 % of XPO Holdings’ and its subsidiaries’ Excess Cash Flow (as defined in the Prior Credit Agreement), subject to certain exceptions; (ii) 100 % of the net proceeds of certain asset sales and insurance/condemnation events, subject to reinvestment rights and certain other exceptions; (iii) 100 % of the net proceeds of certain extraordinary receipts, subject to reinvestment rights and certain other exceptions; (iv) 100 % of the net proceeds of any incurrence of debt, excluding certain permitted debt issuances; and (v) up to $ 60,000 of net proceeds in connection with an initial public offering of at least $ 200,000 , subject to certain exceptions. 111 Xponential Fitness, Inc.
The Company has determined the fair value of these guarantees at inception is not material, and as of December 31, 2024 and 2023, a $ 2,034 and $ 0 accrual has been recorded for the Company’s potential obligation under its guaranty arrangement.
The Company has determined the fair value of these guarantees at inception is not material, and as of December 31, 2025 and 2024 , a $ 0.3 and $ 2,034 accrual has been recorded for the Company’s potential obligation under its guaranty arrangement, respectively.
Under the Credit Agreement, the Company is required to make: (i) monthly payments of interest on the Term Loans and (ii) quarterly principal payments equal to 0.25 % of the original principal amount of the Term Loans.
Under the Prior Credit Agreement, the Company was required to make: (i) monthly payments of interest on the Term Loans and (ii) quarterly principal payments equal to 0.25 % of the original principal amount of the Term Loans.
Based on evaluation under these criteria, management determined, based upon the existence of the material weaknesses described below, that we did not maintain effective internal control over financial reporting as of December 31, 2024.
Based on evaluation under these criteria, management determined, based upon the existence of the material weakness described below, that we did not maintain effective internal control over financial reporting as of December 31, 2025.
In partnership with its franchisees and master franchisees, XPO LLC offers energetic, accessible, and personalized workout experiences led by highly qualified instructors in studio locations throughout North America and internationally, with franchise, master franchise and international expansion agreements in 49 U.S. states, Puerto Rico, and 30 additional countries as of December 31, 2024.
In partnership with its franchisees and master franchisees, XPO LLC offers energetic, accessible, and personalized workout experiences led by highly qualified instructors in studio locations throughout the North America Region and internationally, with franchise, master franchise and international expansion agreements in 49 U.S. states, Puerto Rico, and 28 additional countries as of December 31, 2025.
At December 31, 2024 and 2023 , the Company had total cash, cash equivalents and restricted cash of $ 28,836 and $ 34,359 , respectively, on deposit with high-credit quality financial institutions that exceeded federally insured limits. The Company has not experienced any loss as a result of these or previous similar deposits.
At December 31, 2025 and 2024, the Company had total cash, cash equivalents and restricted cash of $ 42,518 and $ 28,836 , respectively, on deposit with high-credit quality financial institutions that exceeded federally insured limits. The Company has not experienced any loss as a result of these or previous similar deposits.
The wind down of the AKT brand did not represent a strategic shift that has a major effect on the Company's operations and financial results, and, as such, it was not presented as discontinued operations.
The wind down of the AKT brand did not represent a strategic shift that has a major effect on the Company's operations and financial results, and, as such, it was not presented as discontinued operations. 105 Xponential Fitness, Inc.
The Amended MFA grants the Master Franchisee the master franchise rights for the BFT TM brands on a global basis, excluding the United States and Canada, for a ten year period expiring on December 31, 2034. 138 Xponential Fitness, Inc.
The Amended BFT MFA grants the Master Franchisee the master franchise rights for the BFT TM brands on a global basis, excluding the United States and Canada, for a ten year period expiring on December 31, 2034.
In connection with the wind down of the AKT brand, as discussed in Note 4, the Company determined that the deferred video production costs and web design and domain intangible assets related to AKT were impaired and recognized an impairment loss of $ 179 during the quarter ended September 30, 2024.
During the quarter ended September 30, 2024, in connection with the wind down of the AKT brand, as discussed in Note 3, the Company determined that the deferred video production costs and web design and domain intangible assets related to AKT were impaired and recognized an impairment loss of $ 179 . 109 Xponential Fitness, Inc.
During the years ended December 31, 2024 and 2023, we recognized total restructuring charges of $29.6 million, net of gains, and $14.0 million, net of gains, respectively, primarily for contract termination and other associated costs, loss on lease terminations and sale or disposal of assets, impairment of right-of-use assets, and other restructuring charges.
During the years ended December 31, 2025 and 2024, we recognized total restructuring charges of $10.6 million, net of gains, and $29.6 million, net of gains, respectively, primarily for contract termination and other associated costs, loss (gain) on lease terminations and sale or disposal of assets, impairment of right-of-use assets, and other restructuring charges.
The Company’s obligations under the Credit Agreement are guaranteed by XPO Holdings and certain of the Company’s material subsidiaries and are secured by substantially all of the assets of XPO Holdings and certain of the Company’s material subsidiaries.
The Company’s obligations under the Prior Credit Agreement were guaranteed by XPO Holdings and certain of the Company’s material subsidiaries and were secured by substantially all of the assets of XPO Holdings and certain of the Company’s material subsidiaries.
The divested brand did not represent a strategic shift that has a major effect on the Company's operations and financial results, and, as such, it was not presented as discontinued operations. 117 Xponential Fitness, Inc.
The divested brand did not represent a strategic shift that has a major effect on the Company's operations and financial results, and, as such, it was not presented as discontinued operations.
At this stage, the Company is unable to assess whether any material loss or adverse effect is reasonably possible as a result of these investigations or estimate the range of any potential loss.
At this stage, the Company is unable to assess whether any material loss or adverse effect is reasonably possible as a result of this USAO investigation or estimate the range of any potential loss.

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