FOR IMMEDIATE RELEASE
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BALTIMORE, MD – Attorney General Anthony G. Brown today announced that his Securities Division has reached a settlement with Xponential Fitness, Inc. (Xponential), which sells franchises for fitness studios for brands including Club Pilates, Yoga Six, and Stretch Lab, for allegedly misrepresenting key information in its Franchise Disclosure Documents about the franchises, including the typical time to open an outlet and contact information for former franchisees.
“When Maryland residents invest their hard-earned money to buy a franchise, they deserve the most accurate and complete information before making that investment decision,” said Attorney General Brown. “My Office will continue to hold franchisors accountable for making deceptive or misleading claims.”
The Maryland Securities Division alleged in the Consent Order that Xponential franchisors falsely claimed that the typical time franchisees took to open a fitness studio was six months or less, when the actual time to open those fitness studios was closer to a year or longer. As a result, franchisees incurred substantial costs due to unexpected delays in opening their fitness studios.
In addition, the Securities Division alleged that Xponential franchisors failed to accurately disclose legally mandated contact information of former franchisees, which prevented prospective franchisees from obtaining important information from experienced fitness studio operators, which could have alerted them to the delays that franchisees experienced opening their fitness studio franchises.
Under the Consent Order, Xponential affiliates agreed to offer to terminate franchise agreements and refund fees of certain Maryland franchisees who still had unopened fitness studios. Xponential also agreed to settle with a Maryland franchisee whose outlet Xponential had previously terminated.
Xponential paid a civil monetary penalty of $75,000 to the State of Maryland under the Consent Order and agreed to permanently cease and desist from offering or selling franchises in violation of the Maryland Franchise Law.
For issues or questions regarding the offer and sale of franchises, please contact the Securities Division at [email protected].
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