What is the current status of the AKT Lawsuit, as described in the Beem Light Sauna FDD?
Beem_Light_Sauna Franchise · 2025 FDDAnswer from 2025 FDD Document
Ryan Junk, our Chief Executive Officer, previously served as Chief Operating Officer of Xponential and various subsidiaries of Xponential, and Anthony Geisler, the Chief Executive Officer of Sequel Brands, previously served in the same role for Xponential and various subsidiaries of Xponential. They have been named as defendants, along with other officers and employees of Xponential, in the following lawsuits involving Xponential and its affiliates, which involve similar claims and allegations. We are not affiliated with Xponential and these lawsuits do not involve us or our affiliates.
- Dance Fitness Michigan LLC, et al. v.
AKT Franchise, LLC, et al., filed August 30, 2023, Superior Court of the State of California, County of Orange, Case No. 30-2023-01345433- CU-AT-CXC (the "AKT Lawsuit").
This action was filed by certain former AKT® franchisees and their owners, including Dance Fitness Michigan LLC, Property Maintenance, Inc., 6pk Mason LLC, 6pk Liberty LLC, Teeny Turner LLC, S2 Fitness Enterprises, LLC, Soros & Associates, LLC, AdEdge Services Inc., Deanna Alfredo, Amanda Davis, Nisha Moeller, Samantha Cox, Suzanne Fischer, Nichole Soros, Michael Soros, Paul Dumas, Jodi Dumas and Laura Hannan (collectively, the "AKT Plaintiffs") against (i) AKT Franchise, LLC and AKT Franchise SPV, LLC; (ii) Xponential, Xponential Fitness, Inc., XPOF Assetco, LLC, and Xponential Intermediate Holdings, LLC (collectively, the "Xponential Entities"); (iii) H&W Franchise Intermediate Holdings LLC, H&W Investco LP, and H&W Investco II LP (collectively, the "H&W Entities"); (iv) LAG Fit, Inc.; (v) MGAG LLC; and (vi) Anthony Geisler, Mark Grabowski, Melissa Chordock, Elizabeth "Liz" Batterton Cooper, Alexander Cordova, Lance Freeman, Ryan Junk, Megan Moen, John Meloun, Sarah Luna, Tori Johnston, Justin LaCava, Bobby Tetsch, Brandon Wiles, Jason Losco, Brittney Holobinko, Amy Wehrkamp, Scott Svilich, Sarah Nolan, Emily Brown, Rachel Markovic, and Brenda Morris (collectively, (i) through (vi), the "AKT Defendants") after AKT Franchise, LLC initiated an arbitration against and sought damages from certain of them for breaches of their franchise agreements.
The AKT Plaintiffs alleged that one or more of the AKT Defendants (a) violated pre-sale disclosure obligations under the California Franchise Investment Law, the Florida Franchise Act, and the Michigan Franchise Investment Law by failing to provide a compliant Franchise Disclosure Document, making statements that they contend were erroneous or prohibited, and failing to disclose information that they contend necessitated disclosure; (b) fraudulently induced them to invest in franchises; (c) breached the implied covenant of good faith and fair dealing; (d) breached a purported agreement to provide certain financing; and (e) engaged in unfair and deceptive trade practices.
The AKT Plaintiffs seek (1) declaratory and injunctive relief regarding the enforcement of the mandatory arbitration provisions in their franchise agreements; (2) rescission of their franchise agreements; (3) actual and special damages; and (4) attorneys' fees, costs, and interest.
The AKT Defendants have all filed a demurrer to the complaint.
Source: Item 3 — LITIGATION (FDD pages 13–18)
What This Means (2025 FDD)
According to Beem Light Sauna's 2025 Franchise Disclosure Document, the AKT Lawsuit was filed on August 30, 2023, in the Superior Court of the State of California, County of Orange, Case No. 30-2023-01345433- CU-AT-CXC. The lawsuit involves allegations that the AKT Defendants violated pre-sale disclosure obligations under various franchise laws, including those of California, Florida, and Michigan. These violations purportedly include failing to provide a compliant Franchise Disclosure Document, making erroneous or prohibited statements, and not disclosing necessary information. The lawsuit also alleges fraudulent inducement to invest in franchises, breach of the implied covenant of good faith and fair dealing, breach of a purported agreement to provide financing, and unfair and deceptive trade practices.
The AKT Plaintiffs are seeking several remedies, including declaratory and injunctive relief regarding the enforcement of mandatory arbitration provisions in their franchise agreements, rescission of their franchise agreements, actual and special damages, and attorneys' fees, costs, and interest. As of the date of the FDD, the AKT Defendants have filed a demurrer to the complaint.
It is important to note that Ryan Junk, the Chief Executive Officer of Beem Light Sauna, and Anthony Geisler, the Chief Executive Officer of Sequel Brands, are named as defendants in the AKT Lawsuit due to their previous roles at Xponential. However, the FDD explicitly states that Beem Light Sauna is not affiliated with Xponential and that these lawsuits do not involve Beem Light Sauna or its affiliates directly. A demurrer is a legal pleading that argues that even if the facts alleged in a complaint are true, they are insufficient to state a cause of action upon which relief can be granted. The fact that a demurrer has been filed suggests that the defendants are contesting the legal sufficiency of the plaintiffs' claims.