What was the outcome of the Commissioner of Financial Protection and Innovation's investigation into Bft and related entities?
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, the California Department of Financial Protection and Innovation (DFPI) investigated Bft, its predecessors, affiliated SPV franchisors, affiliated prior franchisors, former portfolio brand SPV franchisors, former portfolio brand franchisors, XFI, Xponential, Assetco, and Xponential Intermediate Holdings LLC (collectively, the "DFPI Parties") for compliance with the California Franchise Investment Law. To avoid a hearing and potential court proceedings, the DFPI Parties entered into a negotiated Consent Order with the Commissioner of Financial Protection and Innovation on November 4, 2024.
According to the Consent Order, the Commissioner found that certain registration applications filed by the Brand Franchisors contained material misrepresentations and omissions. While the DFPI Parties did not admit or deny these findings, they agreed to stop violating Sections 31110, 31200, and 31201 of the California Corporations Code. CP SPV also acknowledged failing to file certain exemption notices on time. As part of the resolution, the DFPI Parties agreed to pay an administrative penalty of $450,000.
The Consent Order also mandates compliance training for individuals with management responsibilities related to the sale or operation of the Brand Franchisors, those assisting in preparing franchise materials or selling franchises, and those certifying the accuracy of Franchise Disclosure Documents filed with the Commissioner. This suggests that Bft is taking steps to ensure future compliance with franchise laws and regulations.