Fitness franchise company F45 Training, which is based in Austin and has attracted high-profile investors and partners, is preparing to lay off about 80 workers nationwide, according to documents filed with the state.
The job cuts, which will affect about 30 employees in Austin, were reported by the company in a WARN letter sent to the Texas Workforce Commission. A WARN letter, which stands for Worker Adjustment and Retraining Notification Act, is a federally mandated notice employers must provide to state governments in the event of major layoffs.
The job reductions come as the Australian-founded company is facing fall outs on various fronts. After founding F45 Training in 2013, CEO and chairman Adam Gilchrist has stepped down. Ben Coates will serve as interim CEO until a permanent CEO is appointed. Gilchrist will remain on the board as a director and the board of directors will appoint a new chairman, according to the company.
F45 Training’s 45-minute workouts offer a mix of high-intensity interval, circuit and functional training. The exercises are designed for customers seeking a less-expensive option that one-on-one personal training. The company is now based in Austin and uses a franchise model.
The company had about 1,900 studios across 69 countries as of March 2022. F45 Training said in a written statement that it expects to open 350 to 450 studios this year, down from an estimated 1,000. Its investors, brand ambassadors and partners have included Mark Wahlberg, Cindy Crawford, Magic Johnson and David Beckham.
The company raised $325 million in an initial public offering in July 2021 which saw F45 Training sell more than 20 million shares for a market value of $1.46 billion. Today, its shares have fallen from $16 at its IPO to $1.75.
“When we founded F45, we made it our principal goal to change people’s lives by creating the world’s best workout,” Gilchrist said in a written statement. “To the staff that have worked tirelessly since our inception, you have been incredible in your efforts, and I thank you for all of your support. To the investors that have joined us along our journey, I thank you for your commitment to F45. Lastly, I am forever grateful to our franchisees who deliver the world’s best workout each day to F45 members around the world.”
F45 Training referred to “ongoing macroeconomic uncertainty” as a reason for its pullback.
“The company is realigning its corporate operations around an updated growth outlook that prioritizes profitability and cash flow generation,” the company said. “This includes reducing operational expenses and strategically streamlining corporate functions, including reducing global workforce by approximately 110 employees.”
“We are taking the necessary steps to right-size our business in light of shifting macroeconomic and business conditions,” said Chris Payne, F45 Training’s chief financial officer. “While we expect growth to continue, market dynamics are having a greater than expected impact on the ability of franchisees to obtain capital to develop new F45 locations.”
In addition, Payne said, recent stock price performance has made it challenging for franchisees to use financing facilities announced earlier this year.
“While reducing corporate headcount was an incredibly difficult decision, acting proactively to realign our resources is an important step to enable the company to remain on track for long-term, sustainable success,” Payne said. “We believe that once these cost reductions are fully realized, the company will be able to generate positive free cash flow on a normalized basis. Despite the headwinds, F45’s business fundamentals remain strong.”