ABSTRACT

This article examines the United States District Court for the Western District of Texas’s April 16, 2026 preliminary approval of a $10.5 million class action settlement in In re F45 Training Holdings, Inc. Securities Litigation. The case involved allegations that F45 Training Holdings, Inc., a fitness franchisor, made materially false and misleading statements in its initial public offering materials and subsequent disclosures regarding franchise growth metrics, revenue recognition practices, and the sustainability of its business model. The court granted preliminary certification of the settlement class, approved the settlement as fair, reasonable, and adequate, established a notice program, and set a schedule for final approval proceedings. This decision has significant implications for securities litigation involving franchisors and demonstrates judicial willingness to approve settlements that provide meaningful recovery while avoiding the risks and costs of continued litigation.

CASE CAPTION AND COURT

In re F45 Training Holdings, Inc. Securities Litigation, No. 1:22-CV-1291-DAE, was decided by Senior United States District Judge David A. Ezra in the United States District Court for the Western District of Texas, Austin Division, on April 16, 2026. Lead Plaintiff Pledge Capital LLC and named Plaintiff Police and Fire Retirement System of the City of Detroit (collectively, Plaintiffs) brought claims against F45 Training Holdings, Inc. (Defendant and franchisor), along with individual defendants Adam Gilchrist, Michael Raymond, Darren Richman, Mark Wahlberg, Christopher E. Payne, controlling entity defendants MWIG LLC and Kennedy Lewis Management LLC, and underwriter defendants Goldman Sachs & Co. LLC, J.P.

Morgan Securities LLC, Robert W. Baird & Co. Incorporated, Cowen and Company, LLC, Guggenheim Securities, LLC, Macquarie Capital (USA) Inc., MUFG Securities Americas Inc., and Roth Capital Partners, LLC. The plaintiffs were investors who purchased F45 common stock during the class period from July 15, 2021 through August 14, 2023.

FACTUAL BACKGROUND

F45 operated as a fitness franchisor that licensed the F45 Training brand in over 70 countries, offering a 45-minute high-intensity workout distributed primarily through its technology-enabled platform. The company initially sought to go public in 2020, but the COVID-19 pandemic delayed F45’s initial public offering until July 2021. F45’s revenue and profits were allegedly primarily derived from fees charged to its franchisees, including upfront establishment fees and monthly recurring franchise fees. Prior to the IPO and throughout the class period, F45’s business model was allegedly centered around rapid growth through the franchising of single and multi-unit fitness studios with low overhead.

F45 sold two types of franchises: traditional franchise agreements where the franchisee paid an initial establishment fee and agreed to standard terms including purchasing equipment packs from F45 in exchange for exclusive rights to operate within a specified territory, and multi-unit development agreements under which the franchisee purchased the right to develop multiple franchises in a specified area, usually for a period of three to five years, requiring upfront payments to F45. When the IPO occurred, F45 had sold more than 2,800 franchises worldwide. F45 reported its growth through various metrics including Total Franchises Sold and New Franchises Sold, which respectively measured the total and new franchise agreements and studios committed under multi-unit agreements, as well as Initial Studio Openings, Total Studios, and Open Studios, which measured the new and total studios opened during a specified period. F45 filed a registration statement on Form S-1 for its IPO which, after two amendments, was declared effective on July 14, 2021.

Plaintiffs alleged they were misled by the Registration Statement because while they were told F45 could maintain a substantial rate of growth and scale of operations, in reality F45’s business model was reliant on undisclosed and unsustainable practices. Plaintiffs claimed that a key growth metric, New Franchises Sold, was defined to allow F45 to misleadingly overreport the number of multi-unit franchise agreements regardless of whether these multi-unit franchisees ever opened.

On October 1, 2021, F45 allegedly changed the definition of Initial Studio Openings from the first month in which the studio first generates monthly revenue of at least $4,500 to the month in which the company records the initial studio opening in its internal systems, regardless of whether the studio is generating any revenue, which Plaintiffs claimed was an attempt to artificially inflate a key growth metric used by analysts to value the company. Plaintiffs also claimed that F45 began waiving certain fees and issued undisclosed modified payment terms to potential franchisees, and that defendants failed to disclose that F45’s largest franchisees already had been granted exclusive rights to most of the key territories in the U.S., leaving little room for additional growth.

Plaintiffs claimed F45 was selling exclusive franchise rights to multi-unit franchisees without regard to whether those franchisees could financially open those franchises. F45 created new loan financing options in collaboration with Fortress Credit, and at an event in Las Vegas, Nevada, F45 allegedly told potential franchisees that any franchise operator who agreed to open 20 studios only had to put down $10,000, leading to commitments for approximately 600 additional studios with minimal due diligence for the potential franchisee’s creditworthiness or ability to purchase, open, and successfully manage F45 studios.

On July 26, 2022, F45 issued a Strategic Update disclosing that the $250 million financing facility with Fortress was no longer available and announced a cut in the number of new studios the company would open in 2022 down approximately 60% from 1,000 studios to a range of 350 to 450 new studios, a cut in the number of new franchises that the company would sell in 2022 down approximately 70% from 1,500 to 350 to 450 new franchises, a reduction in the company’s financial guidance for full-year revenue from a range of $255 to $275 million to a range of $120 to $130 million, the reduction of approximately 45% of F45’s workforce, the departure of CEO Adam Gilchrist, the appointment of an Interim CEO, and the payment of a $2.4 million retention bonus to CFO Payne. On this news, F45’s common stock fell more than 60% to close at $1.35 per share on July 27, 2022.

On August 15, 2022, F45 released its 2Q22 financial results and disclosed that total franchises sold declined by 175 in the region, gross profit decreased 9.1% from the prior period, gross profit margin fell to 65.5% from 80.6% for the prior year period, and franchise gross profit declined 8.9% to $17.4 million compared to $19.1 million in 2Q21. F45 also confirmed that 307 franchises were terminated, and another 300 franchises were still in question as F45 was unable to provide financing after the termination of the Fortress financial deal, meaning almost all the 706 franchises purportedly sold in 1Q22 were, in fact, conditional agreements that contained significant financing contingencies.

By May 18, 2023, F45’s stock was trading at less than $1.00 per share, down from its IPO price of $16.00 per share. On August 14, 2023, F45 delisted from the NYSE. On October 23, 2023, F45 issued its Form 10-K for fiscal 2022, which included a restatement of F45’s financial statements for the year ending on December 31, 2021, and the first three quarters of 2022, revealing errors related to, among other things, premature revenue recognition on equipment and merchandise revenue, improperly recognized rebates, and other errors.

PRIOR RULINGS AND PROCEDURAL POSTURE

Plaintiffs’ Second Amended Complaint alleged violations of Section 11, 12(a)(2), and 15 of the Securities Act, and Section 10(b) and 20(a) of the Exchange Act. Defendants filed a Motion to Dismiss the Second Amended Complaint. On February 21, 2025, the court granted in part and denied in part Defendants’ motion to dismiss Plaintiffs’ amended complaint. Specifically, the court dismissed claims under the Exchange Act, claims for the violation of Item 303 and Item 105, and control person claims under Section 20(a) of the Exchange Act and Section 15 and Section 20 of the Securities Act without prejudice.

The court denied Defendants’ Motion to Dismiss claims under the Securities Act, except as to the Section 12 claim asserted by Lead Plaintiff Pledge Capital for lack of standing. Thereafter, Defendants answered the Second Amended Complaint. On October 3, 2025, the parties filed an Agreed Motion to Stay Proceedings Pending Mediation, and the case remained stayed since.

On February 17, 2026, Plaintiffs filed the Unopposed Motion for Preliminary Approval of Class Action Settlement, seeking preliminary certification of the settlement class, approval of their class notice program, and entry of a schedule for settlement-related events, including a date and time for a final settlement hearing. The court held a hearing on this matter on April 16, 2026, and granted Plaintiffs’ Motion, preliminarily approving the settlement as fair, reasonable, and adequate, preliminarily certifying the settlement class, approving the notice program, and establishing a schedule for final approval proceedings.

ALLEGED MISSTATEMENTS IN IPO MATERIALS AND CLASS PERIOD

Plaintiffs alleged that statements in the IPO Materials and throughout the alleged Class

Period were materially false and misleading when made. These included statements about:

• F45’s growth.
• F45’s unit economic model.
• Increasing percentage of multi-unit franchisee systems being sold.
• F45’s internal controls and remediation of material weakness in internal controls and risk warnings.
• Quality and credit-worthiness of F45 franchisees.
• F45’s franchise equipment fee.
• The franchise effect.
• Guidance and franchisee pipeline.
• 700 net new franchise sales.
• F45’s Fortress financing facility.

PARTIES’ POSITIONS ON SETTLEMENT APPROVAL

Plaintiffs filed an unopposed motion for preliminary approval of the class action settlement, seeking preliminary certification of the proposed settlement class, approval of their class notice program, and entry of a schedule for settlement-related events. Plaintiffs contended they had been active and informed participants in this litigation and that their interests aligned with those of the rest of the class. Plaintiffs represented that the parties attended multiple mediation sessions to continue negotiation sessions despite significantly differing views on the merits of Plaintiffs’ claims, and that this settlement was the product of multiple discussions facilitated by a mediator. Plaintiffs consulted with an expert in class action damages who estimated maximum statutory damages at $234 million, but acknowledged that Defendants likely had strong negative causation arguments, and if those defenses were successful, damages would be decreased to approximately $24.5 million.

The total amount of the settlement, $10.5 million, represented approximately 4.5% of the estimated maximum damages, or 42.8% of likely recoverable estimated damages. Plaintiffs cited risks involved in continuing the litigation, including uncertainty in jury outcomes and the financial health of F45. Defendants did not oppose the motion, and the settlement was presented as an unopposed proposal to the court.

FRANCHISE AGREEMENT DOCUMENTS AND SECTIONS IN DISPUTE

The case did not involve a dispute over specific franchise agreement documents or particular contractual provisions between F45 and its franchisees. Rather, the dispute centered on alleged misrepresentations and omissions in F45’s public offering materials and subsequent disclosures to investors regarding the nature and sustainability of F45’s franchise business model. The alleged misstatements concerned how F45 defined and reported key franchise growth metrics such as New Franchises Sold and Initial Studio Openings, the company’s practices regarding waiving fees and offering modified payment terms to franchisees, the availability of exclusive territories for new franchisees, the creditworthiness and financial capacity of multi-unit franchisees to actually open the studios they committed to develop, and the terms and availability of the Fortress Credit financing facility that F45 promoted to potential franchisees.

The plaintiffs alleged that F45’s registration statement and subsequent disclosures painted an overly optimistic picture of franchise growth and sustainability while concealing practices such as counting multi-unit development commitments as franchise sales regardless of whether studios would actually open, changing the definition of studio openings to inflate metrics, offering financing with minimal due diligence on franchisee creditworthiness, and failing to disclose that key territories were already committed to existing franchisees.

COURT’S ANALYSIS OF PRELIMINARY CLASS CERTIFICATION

The court applied the requirements of Federal Rule of Civil Procedure 23(a) and 23(b)(3) to determine whether preliminary certification of the settlement class was appropriate. The court recognized that Federal Circuits acknowledge the utility of Federal Rule of Civil Procedure 23(b)(3) settlement classes and that among current applications of Rule 23(b)(3), the settlement only class has become a stock device. A court may certify a class if the proposed class meets the four requirements in Rule 23(a) and one of the three additional requirements in Rule 23(b). Rule 23(a) has four prerequisites to certify a class: numerosity, commonality, typicality, and adequacy of representation.

The court found the numerosity requirement was satisfied, as Plaintiffs alleged there were thousands of potential Settlement Class Members because the at-issue stock was a nationally traded security. The proposed class also met the commonality requirement, sharing common questions of law or fact, because the class was made up of shareholders from the same relevant time-period and questions of law and fact concerning whether Defendants’ actions constituted violations of federal securities laws and whether class members sustained damages would be common to most, if not all, class members.

The Lead Plaintiffs’ claims were also typical of those of the proposed class because Lead Plaintiffs were shareholders of F45 common stock who alleged the same injuries as the other members of the proposed class. Finally, Lead Plaintiffs and class counsel had adequately represented the class because Plaintiffs’ interests aligned with the interests of the rest of the settlement class, and Lead Counsel were experienced in shareholder class action litigation and securities fraud cases.

The requirements of Rule 23(b)(3) were also satisfied, which authorizes class certification so long as the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. As alleged in their Second Amended Complaint and in the instant motion, the predominant question was whether Defendants made misstatements or omissions of material fact, an inquiry which affected class members at large, so class issues predominated over individual issues. In considering whether a class action was the superior method of adjudication, the court considered the class members’ interests in controlling the prosecution or defense of separate actions, the extent and nature of any litigation concerning the controversy already begun by or against class members, the desirability of concentrating the litigation of the claims in the particular forum, and the likely difficulties in managing a class action.

However, in the context of certifying a class for settlement-only purposes, the fourth factor may be disregarded. The court agreed with Plaintiffs that at this preliminary settlement stage, the requirements of Rule 23(b)(3) were met where Counsel was not aware of any individual Settlement Class member interested in bringing his or her own action against

Defendants for the same alleged conduct and the class members were geographically dispersed.

Where for many Plaintiffs, the cost of bringing individual suits to seek recovery would outweigh the recovery obtained, class certification for the purposes of settlement was appropriate. Accordingly, because the proposed Settlement Class met the requirements for class certification under Rule 23(a) and Rule 23(b)(3), the court found the proposed Settlement Class should be preliminarily certified for the purposes of settlement only.

COURT’S ANALYSIS OF SETTLEMENT FAIRNESS, REASONABLENESS, AND ADEQUACY

Under Federal Rule of Civil Procedure 23(e)(2), the court was required to consider whether:

• The class representatives and class counsel have adequately represented the class.
• The proposal was negotiated at arm’s length.
• The relief provided for the class is adequate.
• The proposal treats class members equitably relative to each other.

The court found it appeared that Plaintiffs had adequately represented the class as investors who owned common stock in F45. Plaintiffs contended they had been active and informed participants in this litigation, and that their interests aligned with those of the rest of the class, and the court agreed. Lead Counsel had also adequately represented the class throughout this litigation over the course of several years, engaging in discovery, motion practice, and settlement negotiations with defense counsel. Lead Counsel was also wellqualified, citing several high-profile securities litigation matters in which the firm had served as lead counsel. Both Plaintiffs and their counsel had diligently pursued their claims since the inception of this suit. It also appeared to the court that the parties had negotiated the settlement proposal at arm’s length.

Plaintiffs represented that the Parties attended multiple mediation sessions to continue negotiation sessions despite significantly differing views on the merits of Plaintiffs’ claims, and this settlement was the product of multiple discussions facilitated by a mediator, so this factor weighed in favor of granting the requested relief. At this stage of the settlement approval process, the third factor also weighed in favor of approval. Plaintiffs alleged they had consulted with an expert in class action damages who estimated maximum statutory damages at $234 million, but Plaintiffs acknowledged that Defendants likely had strong negative causation arguments, and if those defenses were successful, damages would be decreased to approximately $24.5 million.

The total amount of the settlement, $10.5 million, represented approximately 4.5% of the estimated maximum damages, or 42.8% of likely recoverable estimated damages. Plaintiffs also cited risks involved in continuing the litigation, including uncertainty in jury outcomes and the financial health of F45. Thus, the court agreed that at the preliminary approval stage, the settlement amount was sufficient to provide adequate relief for the class.

Finally, the proposal treated class members equitably relative to one another because in accordance with the Plan of Allocation, all members of the Settlement Class and Plaintiffs would receive a distribution from the Net Settlement Fund, which would differ based on their

Recognized Claim. Thus, this fourth factor also weighed in favor of preliminary approval. Based on these reasons and the parties’ representations at the hearing, the court found that Plaintiffs’ Settlement Proposal was fair, reasonable and adequate, and the court would likely be able to approve the settlement pursuant to Rule 23(e)(2).

COURT’S REASONING FOR ACCEPTING PLAINTIFFS’ PROPOSED SETTLEMENT

The court accepted Plaintiffs’ proposed settlement over continuing with litigation for several interconnected reasons grounded in the Rule 23(e)(2) factors.

First, the court was persuaded that the settlement was the product of arm’s-length negotiations conducted through multiple mediation sessions with a neutral mediator, despite the parties having significantly differing views on the merits, which indicated the settlement amount reflected genuine compromise rather than collusion.

Second, the court credited Plaintiffs’ expert analysis showing that while maximum statutory damages could theoretically reach $234 million, Defendants had strong negative causation defenses that could reduce recoverable damages to approximately $24.5 million, making the $10.5 million settlement amount a reasonable 42.8% recovery of likely damages rather than merely 4.5% of theoretical maximum damages.

Third, the court recognized the substantial risks of continued litigation, including uncertainty in jury outcomes and concerns about F45’s financial health and ability to satisfy a larger judgment, which made a certain recovery now more valuable than a potentially larger but uncertain recovery later.

Fourth, the court found that Plaintiffs and Lead Counsel had adequately represented the class through several years of active litigation including discovery, motion practice, and settlement negotiations, demonstrating they had sufficient information to evaluate the settlement’s fairness.

Fifth, the court determined the settlement treated all class members equitably through a

Plan of Allocation that distributed funds based on each member’s Recognized Claim. The court implicitly rejected any argument for continuing litigation by finding these factors collectively demonstrated the settlement provided adequate relief given the circumstances and risks.

COURT’S APPROVAL OF NOTICE PROGRAM

The court applied Federal Rule of Civil Procedure 23(c)(2)(B), which provides that the court must direct to class members the best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort. Lead Counsel proposed providing notice by:

• Individual mailing of the Postcard Notice to all Settlement Class Members who can reasonably be identified, using mailing records obtained from F45’s transfer agent, as well as information provided by third party banks, brokers, and other nominees about their customers.
• Emailing of the Postcard Notice to the extent emails are provided.
• Publication of the Summary Notice in The Wall Street Journal, as well as dissemination on the internet using PR Newswire.
• Posting documents on a website from which copies can be downloaded, with Strategic

Claims Services also mailing the Notice and Claim Form upon request.

The Postcard Notice would provide key information regarding the Settlement and the rights of Settlement Class Members in connection therewith, and would direct recipients to the website for more detailed information. The Motion further requested that Strategic Claims Services, a notice and claims administration firm, be appointed the Claims Administrator. Upon reviewing the attached notices, the court found that the proposed class notice should be approved as to form and content, and Strategic Claims Services was appointed as the Claims Administrator. The methods of distribution of notice satisfied due process and the requirements set forth in Federal Rule of Civil Procedure 23(c)(2)(B).

The court approved the form and content of the notice program and found the methods of notifying the Settlement Class of the Settlement and its terms and conditions met the requirements of Rule 23 of the Federal Rules of Civil Procedure, Section 27 of the Securities Act of 1933, and due process, constituted the best notice practicable under the circumstances, and constituted due and sufficient notice to all Persons and entities entitled thereto.

SETTLEMENT CLASS DEFINITION AND EXCLUSIONS

The court preliminarily certified for purposes of the Settlement only the Settlement Class of all Persons and entities who or which purchased or otherwise acquired F45 publicly traded common stock during the period from July 15, 2021 through August 14, 2023, inclusive, including purchases or acquisitions pursuant and/or traceable to the Offering Documents for F45’s IPO, and were allegedly damaged thereby. Excluded from the Settlement Class were:

• Immediate Families of the Individual Defendants.
• Any Person who was an officer, director, or control person of F45, the Underwriter Defendants, or the Controlling Entity Defendants at all relevant times, and members of their Immediate Families.
• Any entity in which any Defendant has or had a controlling or beneficial interest.
• The legal representatives, heirs, affiliates, successors, or assigns of any such excluded Person or entity.

However, any Investment Vehicle, except for the Controlling Entity Defendants, would not be excluded from the Settlement Class. The Stipulation defined Investment Vehicle to mean any investment company or pooled investment fund, including but not limited to, mutual fund families, exchange traded funds, fund of funds and hedge funds, in which Defendants, or any of them, have, has or may have a direct or indirect interest, or as to which any of their affiliates may act as an investment advisor, but in which any Defendant alone or together with its, his or her respective affiliates is not a majority owner or does not hold a majority beneficial interest. Also excluded from the Settlement Class would be any Persons and entities who or which exclude themselves from the Settlement Class by submitting a timely and valid request for exclusion that is accepted by the Court.

SCHEDULE OF SETTLEMENT-RELATED EVENTS

The court established the following settlement-related deadlines:

• Deadline for commencement of mailing of the Postcard Notice: May 1, 2026.
• Deadline for publishing the Summary Notice: May 10, 2026.
• Deadline for filing motions in support of final approval of the Settlement, Plan of Allocation, and Lead Counsel’s application for attorneys’ fees and expenses: July 10, 2026.
• Deadline for receipt of requests for exclusion or objections: July 24, 2026.
• Deadline for submitting Claim Forms: August 1, 2026.
• Deadline for filing reply papers: August 13, 2026.
• Settlement Hearing: August 27, 2026.

The court scheduled a hearing pursuant to Rule 23(e) of the Federal Rules of Civil Procedure to be held before Senior U.S. District Judge David Alan Ezra in Courtroom 1, on the First Floor of the United States Courthouse, 501 West Fifth Street, Austin, TX, in-person, on Thursday, August 27, 2026, at 1:30 p.m. for purposes including determining whether the proposed Settlement is fair, reasonable and adequate and should be approved, whether the proposed Final Order and Judgment should be entered, whether the Settlement Class should be finally certified, whether the proposed Plan of Allocation is fair and reasonable, and to consider Lead Counsel’s application for an award of attorneys’ fees and Litigation Expenses.

REQUIREMENTS FOR CLASS MEMBERS TO RECEIVE SETTLEMENT DISTRIBUTION

In order to be eligible to receive a distribution from the Net Settlement Fund, in the event the Settlement is effected in accordance with the terms and conditions set forth in the Stipulation, each Claimant must take certain actions and be subject to certain conditions. A properly executed

Claim Form must be submitted to the Claims Administrator at the address indicated in the Claim Form, postmarked no later than fifteen calendar days before the Settlement Hearing, or submitted electronically through the website for the Settlement no later than fifteen calendar days before the Settlement Hearing. Each Claim Form shall be deemed to have been submitted when postmarked if properly addressed and mailed by first-class or overnight mail, postage prepaid. Any Settlement Class Member who does not timely submit a Claim Form within the time provided for shall be barred from sharing in the distribution of the Net Settlement Fund, unless otherwise ordered by the Court, but shall remain bound by all determinations and judgments in this Action concerning the Settlement. The Claim Form submitted by each Claimant must satisfy certain conditions:

• It must be properly completed including name, address, phone number and email address if any, signed and submitted in a timely manner.
• It must be accompanied by adequate supporting documentation for the transactions reported therein, in the form of broker confirmation slips, broker account statements, an authorized statement from the broker containing the transactional information found in a broker confirmation slip, or such other documentation as is deemed adequate by the Claims Administrator and/or Lead Counsel.
• If the Person executing the Claim Form is acting in a representative capacity, a certification of her current authority to act on behalf of the Claimant must be included in the Claim Form.
• The Claim Form must be complete and contain no material deletions or modifications of any of the printed matter contained therein and must be signed under penalty of perjury. As part of the Claim Form, each Claimant shall submit to the jurisdiction of the Court with respect to the claim submitted.

PROCEDURES FOR EXCLUSION AND OBJECTION

Settlement Class Members shall be bound by all orders, determinations, and judgments in this Action concerning the Settlement, whether favorable or unfavorable, unless such Persons request exclusion from the Settlement Class in a timely and proper manner. A putative Settlement Class Member wishing to make such an exclusion request shall mail the request in written form by first-class mail to the address designated in the Notice for such exclusions, such that it is received no later than twenty-one calendar days prior to the Settlement Hearing. Such request for exclusion must state the name, address, telephone number, and email address if any of the Person seeking exclusion, must state that the sender requests to be excluded from the Settlement Class in In re F45 Training Holdings, Inc. Securities Litigation, and must be signed by such Person. Such Persons requesting exclusion are also directed to state the information required in the Notice, including but not limited to the date(s), price(s), and number(s) of shares of all purchases, acquisitions, and sales of F45 common stock during the Class Period. The request for exclusion shall not be effective unless it provides the required information and is made within the time stated above, or the exclusion is otherwise accepted by the Court.

Putative Settlement Class Members requesting exclusion from the Settlement Class shall not be eligible to receive any payment out of the Net Settlement Fund. Any Settlement Class Member who does not request exclusion from the Settlement Class may object to the proposed Settlement, the proposed Plan of Allocation, and/or Lead Counsel’s application for attorneys’ fees and expenses. Any objections must:

• State the name, address, telephone number, and email address if any of the objector and must be signed by the objector.
• State that the objector is objecting to the proposed Settlement, Plan of Allocation, or application for attorneys’ fees and Litigation Expenses in In re F45 Training Holdings, Inc.

Securities Litigation.

• State the objection(s) and the specific reasons for each objection, including whether it applies only to the objector, to a specific subset of the Settlement Class, or to the entire Settlement Class, and any legal and evidentiary support, and witnesses, the Settlement Class Member wishes to bring to the Court’s attention.

• Include documents sufficient to prove the objector’s membership in the Settlement Class, such as the number of F45 common shares purchased or acquired during the Class Period, as well as the dates and prices of each such purchase, acquisition, and sale.

The Court will consider any Settlement Class Member’s objection to the Settlement, the

Plan of Allocation, and/or the application for an award of attorneys’ fees or expenses only if such Settlement Class Member has served by hand or by mail his, her or its written objection and supporting papers, such that they are received on or before twenty-one calendar days before the Settlement Hearing, upon Lead Counsel and Settling Defendants’ Counsel, and has filed said objections and supporting papers with the Clerk of the Court. Any Settlement Class Member who does not make his, her, or its objection in the manner provided for in the Notice shall be deemed to have waived such objection and shall forever be foreclosed from making any objection to any aspect of the Settlement, to the Plan of Allocation, or to the request for attorneys’ fees and expenses, unless otherwise ordered by the Court.

POTENTIAL SIGNIFICANCE FOR FRANCHISEES AND FRANCHISORS

This decision may have significant implications for both franchisees and franchisors in the context of securities litigation and public disclosure obligations. For franchisors considering or having completed initial public offerings, the case appears to underscore the critical importance of accurate and complete disclosure of franchise growth metrics, the sustainability of franchise development practices, and the creditworthiness of franchisees. Franchisors may want to ensure that growth metrics such as franchises sold and studio openings are defined consistently and disclosed transparently, and that any changes to metric definitions are clearly explained to investors.

The case appears to demonstrate that courts will scrutinize whether franchisors are inflating growth metrics by counting commitments that may never materialize into actual operating locations, or by changing definitions to make performance appear stronger than reality. Franchisors offering financing arrangements to franchisees must disclose the terms, availability, and any contingencies associated with such financing, as well as conduct appropriate due diligence on franchisee creditworthiness. The willingness of the court to allow securities claims to proceed based on allegations that a franchisor sold franchise rights without regard to whether franchisees could financially open those franchises may suggest that franchisors have disclosure obligations regarding the quality and viability of their franchisee pipeline.

For franchisees, this decision appears to illustrate that when a franchisor’s public disclosures misrepresent the health and sustainability of the franchise system, investors who purchase stock may have recourse through securities litigation, which can indirectly benefit franchisees by holding franchisors accountable for misleading practices. However, franchisees themselves may not be direct beneficiaries of securities settlements unless they also purchased stock during the class period.

The case also appears to highlight risks for franchisees when franchisors engage in aggressive growth strategies that prioritize selling franchise commitments over ensuring franchisee success, as such practices can lead to system-wide instability, reduced support, and ultimately harm to the franchise brand. The settlement approval process can demonstrate judicial recognition that when a franchisor’s business model proves unsustainable, both investors and franchisees may suffer harm, though through different legal mechanisms.

COMPARISON TO CASES IN OTHER JURISDICTIONS

Securities class action settlements involving franchisors are relatively uncommon compared to other industries, which may make this case noteworthy in the franchise context. The Western District of Texas’s approach to preliminary settlement approval aligns with the general framework applied by federal courts nationwide under Federal Rule of Civil Procedure 23(e), which was amended in 2018 to provide more specific guidance on settlement approval. Courts across jurisdictions appear to consistently apply the four-factor test examining adequacy of representation, arm’s-length negotiation, adequacy of relief, and equitable treatment of class members.

However, the specific context of franchise-related securities litigation can present unique considerations. In other circuits, courts appear to have addressed securities claims against franchisors in cases such as litigation involving publicly traded restaurant chains and fitness concepts, where similar issues of growth metric reporting and franchisee pipeline quality have arisen. The Fifth Circuit, which encompasses the Western District of Texas, has generally been receptive to class action settlements that provide meaningful recovery while avoiding litigation risks, consistent with this court’s approach.

The court’s willingness to approve a settlement representing 42.8% of likely recoverable damages can fall within the range commonly approved in securities class actions, where settlements often recover between 2% and 10% of estimated damages depending on the strength of claims and defenses. The court’s analysis of negative causation defenses may reflect a sophisticated understanding of securities litigation dynamics that is consistent with approaches in other circuits, recognizing that defendants in securities cases often have strong arguments that stock price declines resulted from factors other than the alleged misstatements.

The preliminary certification of a settlement class including all purchasers during an extended class period appears to be typical in securities litigation across jurisdictions. The court’s approval of a comprehensive notice program including individual mailing, email, publication in The Wall Street Journal, and internet dissemination seems to reflect best practices endorsed by courts nationwide. One possibly distinguishing feature of this case is the focus on franchisespecific metrics and practices, which may receive less attention in securities litigation involving non-franchise businesses, suggesting that courts must develop expertise in franchise industry practices to evaluate such claims effectively.

LAW AND ECONOMICS PERSPECTIVE

From a law and economics perspective, this settlement may reflect rational decisionmaking by both parties in the face of uncertainty and transaction costs. The settlement amount of $10.5 million represents a compromise between the plaintiffs’ maximum theoretical recovery of $234 million and the defendants’ likely successful negative causation defense that would reduce damages to approximately $24.5 million. Economic theory may suggest that parties will settle when the expected value of settlement exceeds the expected value of continued litigation minus litigation costs.

Here, plaintiffs faced substantial litigation costs including expert witness fees, discovery expenses, and attorney time, as well as the risk of an adverse verdict or successful defense on causation grounds. Defendants faced not only litigation costs but also the risk of a larger judgment, reputational harm from continued litigation, and management distraction. The settlement appears to have eliminated these costs and risks for both parties while providing certain recovery to class members.

The case also may illustrate information asymmetry problems in franchise securities markets, where franchisors possess superior information about franchisee quality, territory availability, and the sustainability of growth practices, while investors must rely on public disclosures.