F45 Reveals $372M Loss as CEO Plots Plan Forward

Functional fitness franchise F45 Training has released its restated financial reports, showing a $372.3 million loss for the last two years — $178.8 million for the year ended Dec. 31, 2022, and $193.5 million for the year ended Dec. 31, 2021, as restated.

Previously, the Mark Wahlberg-backed fitness franchise warned that it had made “material errors” in its financial statements for 2022 and 2021, warning that net losses were likely higher than initially reported.

In late August, F45’s stock officially went dark on Wall Street after the functional fitness franchise delisted and deregistered its stock from the New York Stock Exchange. Earlier this year, the company was hit with a notice for failing to comply with the NYSE listing standards and falling behind on public filings.

In addition to painting a grim financial picture, F45’s newly released 10-K references its legal entanglement with David Beckham and pro golfer Greg Norman, who allege F45 breached promotional agreement contracts. The two are seeking damages of “no less than $20 million,” but F45 stated in the filing that it opposes the claims and “intends to vigorously defend itself.”

F45’s filing also revealed a class action complaint against the franchise, Wahlberg, former CEO and co-founder Adam Gilchrist and others. The complaint, filed in December 2022, targets “misleading statements” regarding F45’s business model in its registration statement issued in connection with its July 2021 IPO. F45 filed a motion to dismiss the complaints in August. The franchisor noted that it intends to “zealously defend” against the allegations.

New Leadership Plans

New F45 CEO Tom Dowd has said that while COVID led to a “bumpy road” for F45, the company is ready to move forward from its past errors and is experiencing positive traction each day.

Overall, Dowd appears confident he can right F45’s ship, telling Eric Malzone on The Future of Fitness podcast, “It’s not that complicated, it’s not a hard business, quite frankly —it’s a franchise model. It’s not a lot of layers, it’s all selling and marketing.”

However, he says that in the past, F45 was only focused on “selling and not supporting,” and wasn’t focused on the standard operating procedures of running a good business.

“I’ve never seen a company that just really didn’t even review P&L,” Dowd said of F45’s past. “Everything was just kind of cowboys out there running around, trying to sell franchises.”

Franchisee Support Focus

Instead, Dowd’s approach is simple: “I work for the franchisees and I work for the employees. My job for the franchisees is to make them more profitable and get them to grow more because they’re making money and doing well, because that means that we do well, in that logic alone. As simple as it sounds, it just wasn’t resonating here. It was not a part of the culture.”

Among F45’s plans to right the ship, the company recently partnered with human performance company Whoop, and Dowd indicated other upcoming concepts.

“It’s just been really a mess in many regards, but it’s been a mess that’s easy to clean up and get back on track, because, again, this has been a slow-motion train wreck,” Dowd said. “So getting everything back on track as intended isn’t that hard when you know how to do it.”