What are the specific allegations against Bft and related entities regarding Franchise Disclosure Documents in the Nickle Acquisition Lawsuit?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
Nickle Acquisition LLC v. Xponential Fitness, Inc. et al., filed February 3, 2025, Superior Court of the State of California, County of Orange, Case No. 30-2025-01459041-CU-AT-CXC (the "Nickle Acquisition Lawsuit"). This action was filed by Nickle Acquisition LLC ("Nickle Acquisition"), a former franchisee of the BFT and CycleBar franchise brands, and its purported owners, Michael D. Nickle and Jana Nickle ("Nickles" together with Nickle Acquisition, "Nickle Plaintiffs"), asserting that one or more of XFI, CB, CB SPV, BFT, BFT SPV, Xponential, Xponential Intermediate Holdings LLC, Assetco, H&W Franchise Intermediate Holdings LLC, LAG FIT, Inc., H&W Investco LP, H&W Investco II LP, MGAG LLC, Anthony Geisler, Mark Grabowski, Trevor Lucas, Lou DeFrancisco, Ryan Junk, Sarah Luna, Lance Freeman, Kristie Lavasile, and Navitas Credit Corp. (collectively, the "Nickle Defendants"): (a) violated the California Franchise Investment Law for allegedly (i) failing to disclose directors, principal officers, and individuals with management responsibility and litigation and material terms of settlements in Franchise Disclosure Documents; (ii) willfully making untrue statements regarding franchisee's estimated initial investment and time to open studios in the in Franchise Disclosure Documents; and (iii) failing to timely disclose the Franchise Disclosure Documents; (b) willfully made untrue financial performance representations and other representations and failing to disclose financial performance representations in Franchise Disclosure Documents; (c) breached the franchise agreements and covenant of good faith and fair dealing by allegedly undercutting membership sales; (d) made fraudulent omissions by allegedly failing to disclose kickbacks, financial relationships, lack of standard due diligence, and material facts regarding the Xponential franchise system; and (e) committed fraudulent inducement by allegedly making misrepresentations regarding the Castle Pines CycleBar studio performance. Nickle Plaintiffs seek declaratory judgment that the franchise agreements, including the arbitration provisions, are void and unenforceable, and rescission of the franchise agreements, actual and special damages, attorneys' fees, costs, and interest.
Source: Item 3 — LITIGATION (FDD pages 14–18)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the Nickle Acquisition Lawsuit includes allegations regarding Franchise Disclosure Documents (FDDs). Filed on February 3, 2025, the lawsuit, Nickle Acquisition LLC v. Xponential Fitness, Inc. et al., alleges violations of the California Franchise Investment Law.
Specifically, the plaintiffs, Nickle Acquisition LLC, Michael D. Nickle, and Jana Nickle, claim that the Nickle Defendants, which include Bft and related entities, failed to disclose directors, principal officers, individuals with management responsibility, litigation, and material terms of settlements in the FDDs. They also allege that the defendants made untrue statements regarding a franchisee's estimated initial investment and the time required to open studios in the FDDs, and failed to disclose the FDDs in a timely manner.
Additionally, the Nickle Plaintiffs assert that the defendants willfully made untrue financial performance representations and other representations, and failed to disclose financial performance representations in the FDDs. These allegations form part of a broader set of claims that include breach of contract, fraudulent omissions, and fraudulent inducement, with the plaintiffs seeking declaratory judgment, rescission of the franchise agreements, damages, attorneys' fees, costs, and interest.