The FTC Checklist: 7 Things the $17 Million Settlement Tells Every Prospective Club Pilates Buyer to Verify

On March 18, 2026, the FTC announced a consent order against Xponential Fitness, Inc. — the parent company of Club Pilates, Pure Barre, YogaSix, StretchLab, and BFT — requiring $17 million in franchisee redress over twelve months. The U.S. District Court for the Central District of California approved the order on April 2, 2026.

This is not a conviction, and it is not a finding of guilt. Xponential admitted nothing. Under the terms of a stipulated order, the company agreed to the remedial terms without conceding the FTC’s allegations. That distinction matters legally, and this article respects it throughout.

What also matters: the FTC’s allegations are now public and specific. They describe exactly which representations were, in the Commission’s view, wrong. That specificity is unusually useful for a prospective buyer, because each allegation translates directly into something you can verify before signing.

The settlement does not change the data in the 2025 Franchise Disclosure Document. Club Pilates still reported $984,270 in average gross revenue across 849 qualified studios in 2024, with a top-to-bottom quartile spread of just 1.9x — tighter than nearly every franchise system this site covers. That data does not go away because of the settlement. And the settlement does not go away because of the data. A serious buyer holds both in view.

Here are the seven verification steps the order makes clear.

What the FTC alleged: The complaint states that Xponential told prospective franchisees their studios would typically open within six months of signing the franchise agreement. The FTC alleged that studios typically took over a year to open, “if they opened at all.”

Why it matters: Time-to-open is capital burn. Every month between signing and opening, you are paying rent, buildout contractors, insurance, and loan interest on a studio generating zero revenue. At $8,000–$15,000 per month in carrying costs, the difference between six months and fourteen months is $64,000–$120,000 in additional pre-revenue capital — money that does not appear in the Item 7 investment range.

What to verify:

• Ask the franchisor for the median and average time from franchise agreement execution to studio opening for all studios that opened in 2023 and 2024. Not an estimate — the actual distribution.
• Ask for the same data for studios that signed but have not yet opened, and how many signed agreements from 2022 or earlier remain unopened.
• Contact five to ten franchisees from the Item 20 list and ask each one: “How many months passed between the day you signed and the day you opened? What was the biggest delay?”
• Build your financial model with a twelve-month pre-revenue period. If you open faster, you are ahead. If you budget for six months and it takes thirteen, your liquidity cushion may not survive.

What the FTC alleged: The complaint alleged that Xponential failed to disclose prior litigation involving a senior executive — specifically, former CEO Anthony Geisler’s litigation history — in the franchise disclosure document.

Why it matters: Item 3 of the FDD is where the franchisor discloses the litigation history of its officers and directors. The Franchise Rule requires this because a buyer has a right to know whether the people running the system have been involved in prior legal actions that bear on their fitness to manage a franchise network.

What to verify:

• Read Item 3 of the current FDD line by line. Note every name and every litigation entry.
• Run an independent PACER search on every officer, director, and control person named in Item 2. Supplement with state court searches in each executive’s home state.
• If you find litigation not disclosed in Item 3, that is a specific question for your franchise attorney before you proceed.
• Check SEC filings for related-party transactions, consent decrees, or pending regulatory matters. Xponential is publicly traded (NYSE: XPOF), so its 10-K and 10-Q filings contain risk-factor disclosures that the FDD does not.

What the FTC alleged: The complaint alleged that Xponential omitted the names of closed franchisees from the Item 20 list — the section of the FDD that identifies current and former franchisees, including those who left the system.

Why it matters: Item 20 is your contact list — the single most important due-diligence resource in the FDD. Former franchisees, especially those who left involuntarily, are the ones most likely to tell you what went wrong. If they are missing from the list, you cannot call them, and you hear only from survivors.

What to verify:

• Count the franchisees listed in Item 20. Compare the total to the unit counts in the summary table — total outlets at start of year, opened, closed, transferred, total at end of year. If the math does not reconcile, that is a discrepancy worth understanding.
• Ask the franchisor directly: “Is every franchisee who left the system in the past three fiscal years listed in the Item 20 tables, including those whose agreements were terminated, not renewed, or who ceased operations for any reason?” Get the answer in writing.
• Search online for Club Pilates locations that existed in prior years and no longer appear. Google Maps, Yelp, and broker listings often retain entries for closed locations. Cross-reference against Item 20.
• If you find a closed location whose franchisee is not on the list, raise it with a franchise attorney. That omission is a specific Franchise Rule concern.

What the FTC alleged: The complaint alleged that FDDs were not delivered accurately to prospective franchisees at least 14 calendar days before the franchisee signed the franchise agreement or paid any money — as required by the FTC Franchise Rule.

Why it matters: The 14-day period exists so you have time to read the FDD, consult an attorney, and speak with existing franchisees before committing. It is a federal regulatory requirement under 16 CFR 436.2, not a suggestion. If you are pressured to sign before your 14 days have passed, that pressure is itself a red flag.

What to verify:

• Document the date you receive the FDD. Note it in writing — email yourself a timestamped note, or screenshot the delivery confirmation.
• Do not sign anything or pay any fee until at least 14 calendar days have elapsed. If you are told the territory will not be available unless you commit sooner, note that statement and consult your attorney.
• If the FDD is amended after delivery, the 14-day clock may restart. Your franchise attorney can advise.
• Confirm the FDD you received matches the version filed with your state’s franchise registration authority, if your state requires registration (California, Illinois, Maryland, Minnesota, New York, and others).

What happened: Beyond the $17 million FTC consent order, Xponential separately settled a franchisee class-action lawsuit in December 2025 for $22.75 million, covering 509 current and former franchisees. Combined with the FTC redress, the parent company paid more than $43 million in franchise-related settlements during 2025–2026.

Why it matters for you: You are not a party to these settlements and will not receive redress. But 509 franchisees were part of the class, and the combined $43 million in payouts has financial implications for a parent company whose ten-year franchise agreement you are about to sign.

What to verify:

• Read the FTC case page in full. The proposed order, the complaint, and the analysis to aid public comment are all posted. Read the complaint for the specific factual allegations. Read the order for what Xponential is required to do going forward.
• Check Xponential’s most recent 10-K and 10-Q filings for how the settlements are accounted for — the cash impact, any remaining contingent liabilities, and the risk-factor language about ongoing regulatory matters.
• Xponential hired Jefferies in April 2026 to explore strategic alternatives, including a potential sale. If the company changes hands, your franchise agreement transfers to the acquirer. Ask your attorney what protections exist in the agreement for a change-of-control event.
• The consent order imposes ongoing compliance obligations — accurate FDD delivery, complete Item 20 disclosure, truthful earnings representations. Those obligations protect future franchisees. Understand what they require.

Why this step exists now: The FTC’s allegations centered on representations made during the sales process that, in the Commission’s view, did not match the disclosed data. The corrective: build your numbers from the FDD itself, not from anything said in a pitch meeting, a Discovery Day, or a broker call.

The data you have to work with (2024, per the 2025 FDD):

• 849 qualified studios reported average gross revenue of $984,270, with a median of $969,022.
• Top quartile averaged $1,305,116. Bottom quartile averaged $686,457.
• Eleven Expanded Studios (more than 12 reformers) averaged $1,477,615.
• The combined ongoing fee load is approximately 12% of gross sales (8% royalty + 2% brand fund + ~2% local advertising).

What to do with it:

• Start with median revenue ($969,022), not average. The median is less distorted by outliers and is closer to what a “typical” studio produces.
• Subtract the fee load: 12% of $969,022 is approximately $116,000.
• Model your occupancy costs from your specific lease, not from a system average. Studio rents vary enormously by market — a 1,800-square-foot studio in suburban Texas has different economics than one in coastal California.
• Add instructor payroll, insurance, utilities, supplies, and loan debt service if you are financing the buildout.
• What remains is your pre-tax owner cash flow. The FDD does not disclose net income, EBITDA, or owner compensation — those are your numbers to build.
• Test the model at bottom-quartile revenue ($686,457). If the business is not viable at that level, you are betting on outperforming the median, and you should understand why.

Why this matters most: Every item above is a document check. This one is not. The most useful due diligence you will do is talking to people who have already done what you are considering — and the FTC’s allegations about Item 20 completeness make it especially important to cast a wide net.

How to do it:

• Do not limit yourself to franchisees the franchisor introduces you to or contacts suggested during Discovery Day. Those referrals are curated — they may be excellent operators, but they are not a random sample.
• Work from the Item 20 list. Call franchisees in your target market, those who opened recently (last 18 months), those open five or more years, and former franchisees listed as having “ceased operations.”
• Ask specific, falsifiable questions — not “are you happy?” but:
  • “How many months from signing to opening?”
  • “What was your gross revenue in your first full calendar year?”
  • “What is your single largest operating expense after rent?”
  • “If you were signing today, what would you do differently?”
  • “Were you aware of the FTC action before it was announced? Has it changed your experience as a franchisee?”
• If you find that former franchisees you attempt to contact are not on the Item 20 list, that is directly relevant to allegation #3 above. Note it and discuss it with your attorney.
• Visit studios in person. Attend a class as a member, not as a prospective franchisee. Observe class sizes, instructor engagement, and facility condition. The operational reality of running a studio is visible from the reformer.

This article does not tell you whether to buy a Club Pilates franchise. It does not tell you whether Xponential’s conduct was as the FTC described — that is a legal matter, settled by consent without an admission of liability.

What it does is simpler: the FTC identified, in a public filing, exactly which categories of representation it believed were inaccurate. Each maps to something a buyer can independently verify. These are not hypothetical risks — they are specific claims a federal regulator found serious enough to pursue, and that the company found serious enough to settle.

The FDD data is real. Average revenue of $984,270 across 849 studios with a 1.9x quartile spread is a strong performance disclosure — tighter and more transparent than most franchise systems publish. The regulatory history is also real. A careful buyer reads both, verifies both, and decides with both in view.

The checklist above is the minimum. A franchise attorney who has reviewed the consent order can tell you whether additional steps apply in your state and your situation.