Did Bft admit or deny any of the Commissioner's findings in the Consent Order?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
tive Action.
California Regulatory Matter
In the Matter of: The Commissioner of Financial Protection and Innovation v. Xponential Fitness, Inc., et al. On November 4, 2024, in order to avoid the expense of a hearing and other possible court proceedings, the Commissioner of California's Department of Financial Protection and Innovation ("DFPI") and us, our Predecessor, Affiliate SPV Franchisors, Affiliate Prior Franchisors, Former Portfolio Brand SPV Franchisors, and Former Portfolio Brand Franchisors (collectively, the "Brand Franchisors"), and XFI, Xponential, Assetco, and Xponential Intermediate Holdings LLC (together with the Brand Franchisors, the "DFPI Parties") entered into a negotiated Consent Order to resolve as to all of the DFPI Parties, DFPI's investigation as to the DFPI Parties' compliance with the California Franchise Investment Law ("CFIL"). The Consent Order acknowledges that, in its investigation, the Commissioner found, without adjudication, that certain registration applications filed by the Brand Franchisors with the DFPI contained material misrepresentations and omissions and sets forth the agreement of the DFPI Parties, without admitting nor denying any of the Commissioner's findings, to desist and refrain from violating Sections 31110, 31200 and 31201 of the California Corporations Code and to pay an administrative penalty of $450,000. The Consent Order also acknowledges that CP SPV failed to timely file certain exemption notices. Finally, the Consent Order also requires that persons (a) with management responsibility relating to the sale or operation of the Brand Franchisors, (b) assisting the Brand Franchisors in preparing franchise materials or selling franchises and (c) certifying the accuracy of Franchise Disclosure Documents filed with the Commissioner by the Brand Fran
Source: Item 3 — LITIGATION (FDD pages 14–18)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, Bft and other related entities entered into a Consent Order with the Commissioner of California's Department of Financial Protection and Innovation (DFPI) to resolve an investigation into compliance with the California Franchise Investment Law. The Consent Order states that the DFPI found material misrepresentations and omissions in registration applications filed by the Brand Franchisors.
However, the agreement specifically states that Bft and the other parties neither admitted nor denied any of the Commissioner's findings. Instead, they agreed to cease violations of specified sections of the California Corporations Code and to pay an administrative penalty of $450,000. The Consent Order also acknowledges that CP SPV failed to timely file certain exemption notices.
This type of settlement is common in franchise regulation, as it allows Bft to resolve the matter without a formal admission of wrongdoing, which could have broader legal and financial repercussions. For a prospective franchisee, this indicates that Bft has faced regulatory scrutiny and has taken steps to address the concerns raised. It also highlights the importance of compliance training for those involved in the sale and operation of Bft franchises, as mandated by the Consent Order.