Gone forever are the days when only residents of major cities could get their fitness fix by tapping it back or lifting, toning, and burning at the barre. (How far is the nearest Orangetheory to you?) But while studios are becoming ever more ubiquitous, few are big business, unicorn-status brands (hello, SoulCycle!). Instead, many remain boutique, run on the sweat of passionate owners who do it for love more so than, say, money.
Private equity firm TPG, which has approximately $73 billion in assets, sees this wide-open market as a major business opportunity. The company's growth-investment arm has added recovery-based studio StretchLab to its fitness portfolio, which also includes Club Pilates and CycleBar. What's more, TPG has created an entirely new company, Xponential Fitness, to serve as the umbrella to these sweat boxes—and any others acquired in the future.
TPG Partner Mark Grabowski is no stranger to fitness investments. He joined the company last year from private equity firm L Catterton, where he worked on deals with boutique fitness brands such as CorePower Yoga and Pure Barre. To run Xponential, he's tapped someone else with experience in the sector: Club Pilates CEO Anthony Geisler.
Geisler cites his work with Club Pilates as the blueprint for all Xponential business moving forward. "If you look at what I did with Club Pilates... Pilates was around, but there was no national chain," he told Well+Good. "It was a very fragmented market, and then we came in and developed the first national Pilates franchise." At the time it was acquired, Club Pilates had sold 100 franchises in total. Now, with Geisler's guidance, 35-40 Club Pilates franchises are sold per month.
He explains that with each new vertical Xponential takes on (think: yoga, boxing), the goal is to hit 1,000+ studios. For now, the company plans to stick to investing in boutique fitness genres which have been tested over time and require some barrier of entry in terms of instructor training (e.g. Pilates, which requires months of training for its teachers). "We’re looking for things that are non-faddish, that will be around for a long time," Geisler told Well+Good.
The company plans to acquire just one brand per vertical, which means being incredibly selective about their purchases. "We want to see multiple units open and doing well," Geisler explains. "We’re also looking for founders who have a compelling story, and for companies that fit in with our other brands." Once a new studio has been brought into the Xponential fold, branding work (e.g. ethos, imagery, website, etc.) will commence while a dedicated team is built to run the franchise business out of Orange County, California.
For now, Geisler's staying mum as to which studios the firm be courting to add to the portfolio in 2018, but notes that the focus will be on major categories which still lack a national franchise brand. So, if you are one of those passionate business owners who's built a modest but successful yoga or boxing business, for example, you may want to email Xponential ASAP. Geisler and his team can take your small business to Starbucks status, stat.
Since you, personally, may not be getting an influx of cash anytime soon, you may want to check out this guide to discounting your boutique fitness obsession. Plus, find out how your favorite studios are working to save you a commute to the studio.
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