So You Think You Can Run a Dance Cardio Business

The luxury studios featured her signature AKT classes, services such as nutritional advisers and cryotherapy (a treatment using freezing or near-freezing temperatures), and a long line of well-heeled devotees, including TriBeCa moms and stars like Alicia Keys. Ms. Kaiser made regular appearances in women’s magazines and on television shows like “Live With Kelly and Ryan.” She even had her own clothing line in Target.

Ms. Kaiser wanted to continue growing her brand, so she began meeting with potential investors. In the fall of 2017, she flew to Los Angeles for a meeting with Mr. Geisler of Xponential.

“Initially I was not too interested because the word ‘franchise’ has such a mass-market connotation,” Ms. Kaiser said. “But after months of talking, or dating, really, I envisioned how we could make this the very first dance concept to be scaled nationally, and I was convinced it was going to be incredible.”

The following March, the sides had closed a deal that would give Xponential the rights to AKT’s intellectual property, as well as a license to use Ms. Kaiser’s image and persona. In return, she was to receive $2.15 million in cash, plus $850,000 over three equal installments, in addition to a consulting deal, an equity stake in Xponential’s parent company, and other payments.

When the deal closed, Mr. Geisler was bullish on the company’s swift expansion, boasting of plans to open as many as 20 new AKT studios within 12 months and up to 150 more in 2019. But the first AKT franchise studio didn’t open until June 2019, more than a year later and only eight are now open. While Xponential has spent more than $8 million on the AKT business, it has yet to generate a net profit, according to court filings.

The pandemic, of course, has been particularly hard on the fitness industry. Companies including Gold’s Gym, 24-Hour Fitness and Flywheel Sports are just some of those that have filed for bankruptcy.As for Xponential, sales “have been hit hard, wiping out strong gains observed over recent years and pulling sales back to the levels not seen since the third quarter of 2018,” said Liyin Yeo, an applied data analyst at Second Measure, a technology company that analyzes transaction data from a panel of 4.5 million consumers.