What does 'Adjusted EBITDA' mean in the context of the Bft franchise and Xponential Fitness?

According to Bft's 2025 Franchise Disclosure Document, Adjusted EBITDA is a financial metric used by Xponential Fitness and its subsidiaries, including Bft, to evaluate ongoing operating performance. It starts with EBITDA, which is the net income or loss before interest, taxes, depreciation, and amortization. Then, it's adjusted to account for the impact of certain non-cash and other items that Xponential doesn't consider when evaluating how well the business is running.

In simpler terms, Adjusted EBITDA aims to provide a clearer picture of the company's core profitability by removing the effects of financing, accounting decisions (like depreciation), and one-time or unusual items. This metric is important because Xponential Fitness anticipates that if a future financing opportunity occurs, the leverage ratio of debt to Adjusted EBITDA of Xponential and its subsidiaries (including Bft) would increase. The exact amount of this increase is not determinable until the details of the financing opportunity are finalized.

For a prospective Bft franchisee, understanding Adjusted EBITDA is crucial because it reflects the financial health and performance of the overall Xponential Fitness organization, which can indirectly impact the Bft franchise system. While the franchisee's individual studio performance is important, the financial stability of the parent company can affect the resources available for marketing, training, and support. Franchisees should monitor Xponential Fitness' financial reports and ask the franchisor for clarification on how Adjusted EBITDA is used in decision-making processes that could affect their franchise.