The Change-of-Control Question: What Xponential’s Sale Process Means for the Franchise Agreement You’re About to Sign

On April 6, 2026, Xponential Fitness told shareholders its board had begun a review of strategic alternatives — including a potential sale, merger, or other transaction — and had engaged Jefferies LLC as its financial advisor. The announcement followed pressure from Voss Capital, which holds roughly 19% of shares and pushed publicly for a sale in March 2026, and a letter from Kanen Wealth Management (approximately 4%) on April 1 urging the same course.

If you are evaluating a Club Pilates franchise right now, you are evaluating a 10-year agreement with a company that may not own the brand in 12 months.

That is not a reason to walk away. It is a reason to understand exactly what your franchise agreement says about what happens next.

In corporate-finance language, “reviewing strategic alternatives” is a broad phrase. It can mean a full sale of the company, a merger, a sale of individual brands, a recapitalization, or — as Xponential’s own June 2026 10-Q filing states — nothing at all. The filing includes the standard caveat: “there can be no assurance that the process will result in the consummation of any transaction.”

That caveat is not boilerplate for show. Plenty of strategic reviews end with the company staying public and independent. But the engagement of an investment bank — Jefferies, in this case — signals that the board is actively fielding interest, not simply studying the question internally.

For a prospective franchisee, the relevant question is not whether a sale will happen. It is what happens to your franchise agreement if one does.

Franchise agreements are contracts, and like all contracts they contain provisions governing assignment — the transfer of one party’s rights and obligations to a third party. When a franchisor is sold, the new owner steps into the franchisor’s shoes. The question is how much of the shoe fits.

There are two broad paths a sale can take, and they have different implications for franchisees.

Stock sale (or merger)

The acquiring company buys the shares of the parent entity. The franchisor — the legal entity that signed your franchise agreement — continues to exist. It just has a new owner. In most cases, franchise agreements survive a stock sale without triggering the assignment clause at all, because the contract party has not changed. The entity named on page one of your agreement is still the entity operating the system.

This is the more common structure for large franchise acquisitions. It is also the structure that gives franchisees the least leverage, because nothing in the agreement has technically been assigned.

Asset sale

The acquiring company buys the brand, the intellectual property, the franchise agreements themselves, and whatever other assets it wants — but not the corporate entity. This is a true assignment: your contract moves from one legal party to another. Most franchise agreements permit the franchisor to assign without franchisee consent, but the language varies. Some require the assignee to assume all obligations. Some do not.

The critical clause is in Item 17 of the Franchise Disclosure Document. Item 17 is where the FDD discloses the terms of the franchise agreement relating to renewal, termination, transfer, and — crucially — the franchisor’s right to assign. Before you sign anything, read the actual franchise agreement language on assignment, not just the Item 17 summary. Item 17 is a summary table required by the FTC Franchise Rule (16 CFR 436); the agreement itself is the binding document.

If you are reviewing Club Pilates’ financial disclosures as part of your due diligence, the Club Pilates FDD analysis covers the economic picture. The assignment question is the legal picture, and they are separate analyses.

A franchise attorney is not optional in normal circumstances. During an active strategic review, the attorney’s role shifts from “review the agreement” to “stress-test the agreement against a change of ownership.” These are the questions that matter:

1. Does the franchise agreement permit the franchisor to assign without my consent? Most do. But “without consent” is not the same as “without obligation.” Ask whether the assignee must assume all of the franchisor’s existing obligations under the agreement, or only some of them.
2. What happens to my territory protections if the brand is sold to a company that already operates a competing concept? A buyer that owns another fitness brand may have existing units or development agreements in your territory. Your agreement’s non-compete and territory provisions were written for the current franchisor. Ask whether they bind a successor.
3. Does a change of control trigger any modification rights — for either party? Some agreements give the new franchisor the right to modify the operations manual, supplier requirements, or technology platforms after an acquisition. Others are silent, which is not the same as prohibiting it.
4. What is the termination-on-assignment language? In some agreements, a franchisee has the right to terminate without penalty if the franchisor assigns to a party that does not assume all obligations. This is rare but worth checking.
5. If I sign today and the sale closes in six months, what is the worst-case contractual outcome for me? Ask the attorney to walk through a scenario where the acquirer is a private equity firm that wants to restructure the system — raise royalties on renewals, change approved suppliers, consolidate territories. What in the agreement prevents that, and what does not?

These are questions about the contract, not predictions about the sale. They cost a few hundred dollars of attorney time and they are worth asking whether or not the sale goes through, because the assignment clause matters every time a franchisor changes hands — and over a 10-year agreement, most do at least once.

Franchise systems change ownership regularly. What varies is how disruptive the transition is for franchisees.

Massage Envy was acquired by Roark Capital in 2017. The franchise system continued to operate under substantially the same terms. Franchisees reported operational continuity, though strategic priorities shifted over time as they do under any new management.

F45 Training was acquired by Kennedy Lewis Investment Management out of bankruptcy in 2023 after a period of severe financial distress. Franchisees in that system faced a more turbulent transition — the brand’s financial instability had already affected unit economics before the sale closed.

Within Xponential’s own portfolio, CycleBar was one of several brands Xponential itself acquired as it built its multi-brand platform. Those acquisitions give Xponential direct experience on the buyer side of franchise system transfers — and prospective franchisees can ask what happened to existing CycleBar, Pure Barre, or StretchLab agreements when Xponential bought them.

The pattern across these examples is not that sales are inherently harmful to franchisees. It is that the outcome depends on the buyer’s intentions and the contract’s protections — and the contract is the only part you control before closing.

If you are financing a Club Pilates studio through an SBA-backed loan, your lender is underwriting two things: the borrower and the brand. SBA lenders use the franchise directory to confirm that a brand’s agreement meets SBA requirements, and they evaluate the franchisor’s financial stability as part of the credit decision.

An active strategic review does not remove a brand from SBA eligibility. But lenders notice. A franchisor whose parent company reported Q2 2026 revenue of $66 million (down 13% year over year), adjusted EBITDA of $21.9 million (down 22%), and a net loss of $4.8 million — per Xponential’s public filings for the quarter ended June 2026 — is a franchisor whose financial trajectory a lender will want to understand. Those figures cover the entire multi-brand portfolio, not Club Pilates alone.

Ask your lender directly: does the strategic review affect their underwriting timeline or terms? Some lenders will want to see the review resolved before closing. Others will proceed on the strength of the unit-level economics, which is where the Club Pilates FDD data matters most.

Two other pieces of context belong in the due diligence file, separate from the sale process.

First, five Xponential brands — Club Pilates, Pure Barre, YogaSix, StretchLab, and BFT — were named in an FTC proposed stipulated order addressing earnings claims and disclosure practices. The FTC alleged violations; Xponential admitted nothing. The order was approved by the FTC Commissioners on March 18, 2026 and by the U.S. District Court for the Central District of California on April 2, 2026. It imposes specific requirements on how the company presents financial performance data to prospective franchisees.

Second, Xponential reached a $22.75 million class settlement on December 29, 2025, covering 509 current and former franchisees. That settlement is a matter of public record.

Neither of these is predictive. Both are inputs to a due diligence process, and your franchise attorney should be aware of them.

There are two honest ways to read the Club Pilates opportunity right now, and neither cancels the other.

Picture A: Club Pilates has strong unit-level economics in its FDD data — $984,270 average revenue across 849 qualified studios in 2024, per the 2025 FDD, with a 1.9x quartile spread. The FDD analysis covers that data in detail. The brand is recognizable, the operational model is established, and franchisees can evaluate the business against real performance benchmarks.

Picture B: The parent company is in an active sale process, has declining revenue and EBITDA, faces an FTC proposed order, and recently settled a class action with 509 franchisees. A 10-year agreement signed today may be managed by a different company before the first lease renewal.

Both pictures are drawn from public sources. A prospective franchisee who looks at only one of them is doing incomplete work.

The franchise agreement is where these two pictures meet. It is the document that determines what survives a change of control and what does not. Read it with an attorney who understands franchise transfers. Ask the five questions above. Get the answers in writing before you sign.

The sale process will resolve itself one way or another. The agreement you sign is permanent.