An Austin-based fitness franchiser with Hollywood star power in its boardroom has moved to resolve investor claims that shadowed its public debut. The F45 Training shareholder lawsuit settlement comes after allegations the company misled investors ahead of its initial public offering.

F45 Training Holdings Inc., known for its 45-minute high-intensity workout studios, agreed to settle a proposed class-action suit filed in December 2022 — roughly 18 months after its IPO. The lawsuit named actor Mark Wahlberg, a board member, along with other directors.

Founded in 2013 in Sydney, Australia, F45 expanded rapidly in the United States, where it now operates nearly 900 locations. Ten studios are in Austin, seven in San Antonio and 20 in and around Houston.

Claims of Inflated Growth Projections

The suit, brought by shareholder Kenzie Goer, alleged the company painted an overly rosy picture of its expansion strategy in filings with the U.S. Securities and Exchange Commission. According to the complaint, F45 told prospective investors it would boost capital with each franchise sale.

Instead, the lawsuit claims, the company offered special incentives to multi-franchise operators and financed certain franchisees. That approach, Goer alleged, generated less revenue than investors were led to expect.

“These practices were not sustainable at the time of the IPO. When the Company could no longer sustain this defective business model, its growth rate and revenue plummeted,” the complaint states.

Forecasts Collapse, Leadership Shifts

Studio Openings Drop, Stock Sinks

According to the lawsuit, the fallout was swift. Studio openings reportedly fell by as much as 60% compared with company forecasts. Layoffs followed. The chief executive officer stepped down in July 2022. The company’s stock price tumbled.

Within two years of going public, F45 was delisted from the New York Stock Exchange and shifted to over-the-counter trading — a dramatic reversal for a brand once marketed as a global fitness phenomenon.

Kennedy Lewis Investment Management LP, a major investor in the company, later took F45 private in a $385 million deal. The transaction represented a steep decline in valuation from its public-market debut.

Settlement Terms Pending

In a letter filed in U.S. District Court in Austin, the parties told Judge David Ezra they plan to seek preliminary approval of the settlement by Feb. 13. The specific terms of the agreement were not disclosed.

The filing indicated the parties are still finalizing documentation of the formal settlement, which will be distributed to class members once completed.

The agreement marks a potential closing chapter in a case that followed F45 from Wall Street optimism to market retrenchment — a cycle as intense as the workouts the company built its brand upon.