NY Attorney General Secures Record $3.9M Settlement From Xponential Fitness
Xponential Fitness, Inc. and its subsidiaries will pay $3,971,250 to settle allegations they misled small business owners about studio opening timelines, according to New York Attorney General Letitia James. The settlement, the largest ever for violations of New York’s Franchise Sales Act, provides restitution to franchisees who suffered financial losses due to false promises.
Why did Xponential Fitness pay the settlement?
The Office of the Attorney General (OAG) found that Xponential and its boutique exercise brands misled prospective owners while selling franchise licenses. Between January 1, 2020, and December 31, 2024, Xponential filed approximately 33 Franchise Disclosure Documents (FDDs) with the OAG claiming studios would open in three to six months.
OAG investigators determined the actual average opening time was more than 13 months from the date agreements were executed. This discrepancy caused significant financial losses for some owners, while others never opened their locations at all.
According to the OAG, Xponential was aware these timelines were misleading. The company reported substantially longer periods in annual reports to the U.S. Securities and Exchange Commission (SEC), disclosing opening times of 12.2 months in 2022, 10.5 months in 2023, and 15 months in 2024.
How will the $3.9 million be distributed?
Xponential must pay $3,971,250 into a restitution account for impacted franchisees. The OAG specified that $3,000,000 will go to 70 franchisees harmed by the delayed opening timelines.
An additional $971,250 will be distributed to 25 franchisees who never opened a studio. This amount compensates them for the franchise and transfer fees paid to Xponential. The company will contact eligible franchisees directly.
What does this mean for small business protections in New York?
Attorney General James stated that New Yorkers opening franchises should trust that companies treat them fairly. This settlement follows a pattern of OAG actions targeting small business exploitation, including a $1 billion settlement with Yellowstone Capital in January 2025 and a $4.6 million recovery from Northern Leasing Affiliates in September 2024.
The OAG also shut down two websites in April 2023 that impersonated the New York State Department of State to overcharge aspiring business owners. Additionally, legislation advanced by James to protect consumers and small businesses from fraud was signed into law in December 2025.
What may happen next?
Following this settlement, the OAG may continue to monitor FDD filings to ensure accuracy. Other franchise entities in New York could face similar scrutiny if their disclosed timelines conflict with SEC filings or actual performance.
Impacted franchisees are likely to receive direct communication from Xponential regarding their restitution payments. Future prospective owners may see more conservative opening estimates in FDDs as a result of this enforcement action.
Frequently Asked Questions
Which fitness brands were involved in the investigation?
The investigation included Xponential’s subsidiaries AKT, Body Fit Training, Club Pilates, CycleBar, Pure Barre, Rumble, StretchLab, and YogaSix.
What was the difference between the promised and actual opening times?
Xponential represented estimated opening times of three to six months in FDDs, but the OAG found they took more than 13 months on average.
How will eligible franchisees receive their money?
Xponential will contact eligible franchisees directly to distribute funds from the restitution account.
Do you think stricter enforcement of franchise disclosure documents will encourage more entrepreneurs to take the risk of opening a local business?