Austin-based fitness franchise company F45 Training, which has attracted high-profile investors and partners, is preparing to lay off about 80 workers across the country, 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 WARNING letter, which stands for Worker Adjustment and Retraining Notification Act, is a federally mandated notice that employers must provide to state governments in the event of major layoffs.
The job cuts come as the Australian-founded company faces downturns on several fronts. After founding F45 Training in 2013, CEO and President Adam Gilchrist stepped down. Ben Coates will serve as interim CEO until he appoints a permanent CEO. 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 intervals, circuits, and functional training. The exercises are designed for clients looking for a less expensive option than one-on-one personal training. The company is now based in Austin and uses a franchise model.
The company had about 1,900 studios in 69 countries as of March 2022. F45 Training said in a written statement that it expects to open between 350 and 450 studios this year, down from an estimated 1,000. His investors, brand ambassadors, and partners have included Mark Wahlberg, Cindy Crawford, Magic Johnson, and David Beckham.
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The company raised $325 million in an initial public offering in July 2021 in which F45 Training sold over 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, our main goal was to change people’s lives by creating the best training in the world,” Gilchrist said in a written statement. “To the staff who have worked tirelessly since our inception, you have been incredible in your efforts and I thank you for all your support. To the investors who have been with us throughout our journey, I thank you for your commitment to F45. Lastly, I will be eternally grateful to our franchisees who provide the best training in the world every day to F45 members around the world.”
F45 Training cited “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 operating expenses and strategically streamlining corporate functions, including reducing the global workforce by approximately 110 employees.”
“We are taking the necessary steps to adjust the size of our business in light of changing business and macroeconomic conditions,” said Chris Payne, chief financial officer of F45 Training. “While we expect growth to continue, market dynamics are having a greater than expected impact on franchisees’ ability to raise capital to develop new F45 locations.”
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In addition, Payne said, recent stock price performance has made it difficult for franchisees to use financing facilities announced earlier this year.
“While reducing corporate staff was an incredibly difficult decision, taking proactive action to realign our resources is an important step in enabling the company to stay on track for long-term, sustainable success,” said Payne. “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 hurdles, F45’s business fundamentals remain strong.”
