Get Kaisered V AKT Franchise 120-Cv-01037-CFC-JLH - Doc 1-Main

Case 1:20-cv-01037-CFC-JLH Document 1 Filed 08/04/20 Page 1 of 34 PageID #: 1
IN THE UNITED STATES DISTRICT COURT

FOR DISTRICT OF DELAWARE
AKT inMOTION INC., a New York

corporation, and AKT FITNESS LLC, a New
York limited liability company, and ANNA
KAISER, an individual,
Plaintiffs, Case No.:
-against- DEMAND FOR JURY TRIAL
AKT FRANCHISE, LLC, a Delaware limited

liability company, and Xponential Fitness
LLC, a Delaware limited liability company,
Defendants.
COMPLAINT
Plaintiffs Anna Kaiser, AKT inMotion Inc. and AKT Fitness LLC, for their Complaint
against Defendants AKT Franchise, LLC and Xponential Fitness LLC, allege as follows:
INTRODUCTION
1. After having developed her ground-breaking dance-based cardio fitness technique
and wellness brand over a period of 20 years, widely known as AKT (Anna Kaiser Technique), and
built out luxury boutique fitness studios in New York City, East Hampton and New Canaan, CT,
Ms. Kaiser sought to scale up her business. After exploring various opportunities, Ms. Kaiser
agreed to sell the substantial intellectual property assets of her brand and business Plaintiff AKT
inMotion to build a national franchise company business, formed as Defendant AKT Franchise
LLC, that would be run under the umbrella of the boutique fitness holding company Defendant
Xponential Fitness LLC (“Xponential”).
2. Simply put, Defendants AKT Franchise and Xponential, by the actions of Mr.
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Geisler, who serves as CEO of both companies, have intentionally and materially breached their
obligations as set forth in the Asset Purchase Agreement (“APA”), Consulting Agreement and
other Purchase Documents1 entered as of March 22, 2018 resulting in substantial damage to
Plaintiffs AKT inMotion, AKT Fitness and Ms. Kaiser.
3. Plaintiffs seek, among other things:
(a) monetary damages from AKT Franchise’s numerous material breaches of its
obligations under the APA, including its failure to pay Post-Closing Cash
Payments to AKT inMotion, as well as AKT Franchise’s breach of the implied
covenant of good faith and fair dealing in the APA by demanding that AKT
inMotion agree to new terms as a condition precedent to the Post-Closing Cash
Payments, and declaratory judgment excusing AKT inMotion from performing any
further obligations under the APA, including continuing negotiations of a
Franchise Agreement, and excusing it from the Restricted Covenants that will
inhibit it from operating its Seller Studios;
(b) monetary damages from Xponential for materially breaching its obligation in the
APA to guarantee AKT Franchise’s nonpayment of Post-Closing Cash Payments
due and owing to AKT inMotion;
(c) monetary damages from Xponential and AKT Franchise’s knowing and reckless,
or alternatively, negligent, misrepresentation with respect to the value of the
Closing Equity Payment in equity of H&W Franchise Holding, LLC, a Delaware
limited liability company and the parent of Xponential, made to AKT inMotion as
part of the Purchase Price under the APA;
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Defined terms herein have same meaning ascribed to them in the APA, attached hereto as Exhibit A.
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(d) monetary damages with respect to AKT Franchise’s multiple material breaches of
the Consulting Agreement with AKT Fitness, including the failure to pay monthly
consulting fees and documented expenses;
(e) monetary damages resulting from damage to Ms. Kaiser’s Persona due to Mr.
Geisler’s defamatory and disparaging statements about Ms. Kaiser’s actions
relating to the Franchise Business and her performance of services under the
Consulting Agreement for AKT Franchise that have irreparably and substantially
impaired the quality and character of Ms. Kaiser’s image and reputation, and
declaratory judgment that Ms. Kaiser’s grant of the Persona License to AKT
Franchise is terminated in its entirety; and
(f) for such further relief as referenced herein and as determined after full discovery of
the wrongful conduct of AKT Franchise and Xponential, as this Court deems
proper.
JURISDICTION AND VENUE
4. This Court has jurisdiction over the subject matter of this action pursuant to 28
U.S.C. § 1332 in that Plaintiffs are citizens of New York and Defendants are citizens of Delaware,
where they are incorporated, or California, where they have their principal places of business. The
amount in controversy exceeds $75,000 exclusive of interest and costs.
5. The Court has personal jurisdiction over each of the Defendants because each
Defendant is a corporation formed under the laws of Delaware.
6. Venue is proper before this Court pursuant to 28 U.S.C. § 1391, and the parties
agreed that venue is proper in this Court under the APA and Consulting Agreement from which this
action arises.
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PARTIES
7. Plaintiff AKT inMotion Inc. (“AKT inMotion”) is a corporation organized under the
laws of the State of New York and has its principal place of business located in the State of New
York.
8. Plaintiff AKT Fitness LLC (“AKT Fitness”) is a limited liability company organized
under the laws of the State of New York and has its principal place of business located in the State
of New York.
9. Plaintiff Anna Kaiser is an individual who resides in and is a citizen of the State of
New York.
10. Defendant AKT Franchise, LLC (“AKT Franchise”) is a limited liability company
organized under the laws of the State of Delaware and has its principal place of business located in
the State of California.
11. Defendant Xponential, a Delaware limited liability company with its principal place
of business located in the State of California, is the sole member of AKT Franchise and a Guarantor
under the APA.
FACTUAL BACKGROUND
Ms. Kaiser develops AKT brand and business
12. Ms. Kaiser is an internationally recognized fitness professional.
13. Ms. Kaiser developed her transformational AKT technique and programming over a
period of twenty years.
14. After a career in dance, Ms. Kaiser founded her business in 2011 and opened her
first studio in New York City in 2013. The quick success of her business was followed by
additional studios, pop-up locations, local programs in other cities, an online video platform and
retreats. AKT inMotion invested substantial funds in the buildout of luxury studios. All of Ms.
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Kaiser’s studios featured carefully curated, intensive programming, rigorously-trained fitness
professionals and luxury amenities, all with vigilant attention to clients. Ms. Kaiser’s studios also
offered nutrition, cryotherapy, cosmetic, lifestyle and many other revenue-generating activities.
The studio experience was supplemented by the AKT On Demand online streaming video platform
that she launched while opening her studios. Ms. Kaiser was one of the first to develop a streaming
platform of this nature. Ms. Kaiser also developed a national fitness apparel line and partnered
with luxury and well known clothing brands.
15. Ms. Kaiser became known for her personal training of celebrities, television
appearances, including regular appearances on Live! With Kelly and Ryan. Ms. Kaiser’s media
presence – including more than 500 interviews with top publications and television shows ranging
from Vogue, New York Times, WWD and Good Morning America, substantially enhanced the
brand.
16. As a result of the success of the brand she developed, in 2017, Ms. Kaiser started to
take meetings with potential investors and partners to explore the marketing and development of
the brand in certain west coast markets or on a national level.
17. In summer 2017, Ms. Kaiser met with Mark Grabowski who was then with TPG
Growth. He recommended franchising and discussed the franchising model implemented by
Anthony Geisler with Club Pilates. In fall 2017, Ms. Kaiser and her then CFO flew to Los Angeles
and met with Mr. Geisler who explained that Xponential intended to serve as the holding company
of up to 10 fitness brands and a franchise brokerage firm, which company he expected to be a
billion dollar business in three years. Mr. Geisler claimed to be an expert in franchising.
Parties Enter APA and Related Purchase Documents
18. After entering a Letter of Intent in January 2018, negotiations continued for several
months. During negotiations, Anthony Geisler made numerous representations to Ms. Kaiser about
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the development of a franchise based on AKT: (i) a new franchise corporation would be formed;
(ii) Ms. Kaiser would be integrally involved in growing the franchise business and the brand; (iii) a
model AKT franchise studio would be developed and opened in 3 months because Ms. Kaiser’s
existing studios were luxury studios that could not serve as a model franchise studio; (iv) Ms.
Kaiser’s studios would receive upgrades; (v) within 3 months of the closing the deal, the franchise
corporation would commence selling 25 studios a month, each studio would be open within 3 to 6
months, with the expectation of selling 500 franchises within 3 years; and (vi) Ms. Kaiser’s 20%
equity share in the to-be-formed franchise corporation was represented to be valued at $20 million
in three years.
19. On or about March 22, 2018, AKT inMotion, as Seller, Kaiser, as Equityholder,
AKT Franchise, as Purchaser, and Xponential, as Guarantor, entered into the APA, pursuant to
which AKT inMotion agreed to the development of a franchise business built on Ms. Kaiser’s
fitness technique, wellness brand and the IP assets she had developed. Pursuant to the APA, Ms.
Kaiser and AKT inMotion sold certain IP assets to purchaser relating to the AKT boutique fitness
studios, online services and branding, and AKT Franchise sought to use those assets in connection
with a Franchise Business.
20. Pursuant to Section 2.1 of the APA, AKT inMotion was to receive the following
compensation, among other consideration:
a. Two Million One Hundred Fifty Thousand Dollars ($2,150,000) which was paid
at the closing;
b. 3,798.9 Class A-1 units of H&W, the parent of Xponential, valued at the Agreed
Fair Market Value ($1 million), which were issued to AKT inMotion at the
Closing; Ms. Kaiser had agreed to take this equity instead of cash in the same
amount that was earlier promised;
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c. Eight Hundred Fifty Thousand Dollars ($850,000) payable to AKT inMotion in
three (3) equal annual installments of $283,333.33 on each anniversary of the
date of the APA, defined in the APA as Post-Closing Cash Payments; the Post-
Closing Cash Payments due to AKT inMotion on March 22, 2019 and March 22,
2020 have not been paid; and
d. Earn-Out Payments were to be paid to Ms. Kaiser based on an assumed 20%
interest in AKT Franchise. No Earn-Out Payments have been made to AKT
inMotion, and AKT Franchise has declined provide requested information to
determine whether the Earn-Out Payments are due as required under Section 2.6
of the APA.
21. Pursuant to Section 2.9 of the APA, Xponential agreed to guarantee the Post-
Closing Cash Payments set forth in Section 2.1. The guarantee was a material inducement for
AKT inMotion to enter the APA (third Whereas Clause of APA). Following notice, Xponential
has not satisfied its obligation to guarantee the nonpayment of the Post-Closing Cash Payments in
material breach of the APA.
22. In connection with the APA, AKT Franchise, which had been formed to buy the
assets of AKT inMotion, delivered an Amended and Restated Limited Liability Company
Agreement (“LLC Agreement”), which provided that AKT inMotion could designate one of the
three Managers on the Board of Managers, and Ms. Kaiser was named as the first Manager for
AKT inMotion. Ms. Kaiser understood that this agreement served to entitle her to be
substantially involved in the operation and management of AKT Franchise consistent with the
representation made to her during negotiations leading up to the APA.
23. Pursuant to 6.2(b) of the APA, AKT Franchise agreed to indemnify AKT
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inMotion for all “Losses,” as defined therein, including legal fees and expenses, relating to any
breach of any covenant or agreement by AKT Franchise contained in any Purchase Document,
which includes both the APA and Consulting Agreement.
The Consulting Agreement
24. Pursuant to the APA, AKT inMotion and Kaiser agreed to and caused AKT
Fitness to execute and deliver a Consulting Agreement with AKT Franchise. AKT Franchise
agreed to pay Consultant a Consulting Fee equal to $250,000 per annum as well as reasonable,
documented expenses. Pursuant to this Consulting Agreement, AKT Fitness agreed to cause
Kaiser to use commercially reasonable efforts to assist the AKT Franchise in all aspects of its
business, including promoting the brand, creating and distributing ongoing content, managing
trainings, attending discovery days, field calls, meeting with prospective and existing franchisees
at discovery days, developing manuals, public relations and such other services as AKT Franchise
reasonably requested, not to exceed an average of forty (40) hours per week for Ms. Kaiser and
AKT Fitness. AKT Fitness and Ms. Kaiser fully performed the Consulting Agreement.
AKT Franchise Begins Operations Although Its Development of a Model

Franchise Studio is Substantially Delayed and the Promised Rapid Growth Did Not Materialize
25. Anthony Geisler serves as the CEO of AKT Franchise and Xponential. The LLC
Agreement provides that AKT Franchise, is to be managed and operated by a Board of Managers
comprised of three persons, Mr. Geisler, Mr. Grabowski and Ms. Kaiser. Pursuant to the LLC
Agreement, the Managers have complete authority to operate and manage the business of AKT
Franchise, including, the hiring of officers and employees to operate the Franchise Business.
There have been no meetings of the Board of Managers. Ms. Kaiser has requested Board of
Managers meetings, but all were declined by Mr. Geisler. Ms. Kaiser has been frozen out of the
management and operations of AKT Franchise from the outset, and she was not involved in the
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hiring of officers and personnel to operate the business.
26. On June 6, 2018, less than three months following the closing of the APA,
H&W’s controlling member (TPG Growth) entered into a term sheet to sell its 63.2% interest in a
management buy-out led by Mark Grabowski and Anthony Geisler to Morgan Stanley AIP GP LP
for an amount reflecting a material reduction in the value at which Ms. Kaiser’s shares in H&W
were issued less than three months earlier. Ms. Kaiser immediately objected to Mr. Geisler. Mr.
Geisler refused to increase the number of shares provided to Ms. Kaiser so that the value of the
Closing Equity Payment would equate to the Agreed Fair Market Value of $1 million as set forth
in the APA less than three months earlier.
27. Mr. Geisler hired all officers and personnel of AKT Franchise. Even before there
was a model AKT franchise studio in place or studios to support, AKT Franchise hired a ten
person management team at an expense of almost $1 million a year before the opening of the
model franchise studio. Ms. Kaiser was not involved in the strategy for putting a management
team in place. Key personnel on the management team were inexperienced and lacked expertise
to run the franchise operations.
28. AKT Franchise had agreed to develop a model franchise studio within
approximately 3 months from the Closing in order to commence sales of franchise studios
because AKT inMotion’s existing luxury studios could not serve as the model. Contrary to its
representations, a model AKT franchise studio was not opened until fifteen months later in June
2019. Thus, the commencement of sale of franchises was delayed and the growth of the business
slowed. As of this time, while approximately 100 franchises have been sold across the United
States, only approximately 6 franchise studios opened other than the Seller Studios.
29. Although no Board of Managers meetings were called at Ms. Kaiser’s request,
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Ms. Kaiser regularly voiced concerns to Mr. Geisler about the management and operation of the
franchise business. Similar concerns have also been raised by other franchise owners. Franchise
owners have also reached out to Ms. Kaiser about their issues with management and operations.
AKT Franchise Has Been Built on the AKT IP Assets Acquired from AKT inMotion
and Ms. Kaiser’s Substantial Continuing Efforts to Develop the AKT Brand Through Her
Consulting Services and the Operation of Her Existing Studios
30. AKT Franchise has developed the business based on the Intellectual Property that
had been developed by Ms. Kaiser and AKT inMotion and Ms. Kaiser’s significant and valuable
continuing efforts to promote the brand.
31. Ms. Kaiser has provided extensive assistance to AKT Franchise to grow the
Franchise Business by hosting in her studios: potential franchisees, Discovery Days, trainer
certifications, personal friends of AKT Franchise management, and franchise owners for classes.
She has also traveled for studio openings in other states, city tours, broker conventions and AKT
brand events. She has developed the current AKT trainer certification and continues to work to
improve upon it as well as created ongoing options for continuing education, Q&A’s, invited
trainers to her virtual online classes and supported trainers in social media. When open franchise
studios in other states expressed that they were not receiving adequate marketing/digital support
from AKT Franchise, Ms. Kaiser stepped in with a range of assistance including: creating and
setting up virtual platforms; offering ways to engage with their communities and local event
planning; and taught virtual classes for franchise studios to develop brand enthusiasm and to
encourage membership enrollment.
32. As requested under the Consulting Agreement, Ms. Kaiser prepares weekly
videos featuring custom choreographed workouts that were shared with franchise studios to use in
all workouts, classes and sessions.
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33. Since entering the APA in March 2018, in addition to teaching and personal
training sessions at her studios, Ms. Kaiser has been involved in extensive events, podcasts and
continuously develops media attention. She cultivates celebrity appearances, partnerships,
collaborations, press, notoriety to the brand, visibility, and major TV appearances. In 2020 alone,
Anna has secured the following appearances:
 Super Bowl – Ms. Kaiser trained Shakira for her 2020 Super Bowl Half
Time Show, took photos with Shakira in AKT apparel, took videos with
Shakira performing AKT content and brought in for AKT over 300M press
hits in a month (E!News, Extra, Today Show, NY Post, Yahoo, Shape, etc.)
 Live w/Kelly and Ryan (huge increase in traffic to site and social channels)
 Viral social video of AKT Dance w/Kelly Ripa, Elsa Marie Collins
 DJ Chris Porter w/AKT dance content – coming into studio, rapping his song
live while Anna performed AKT content with Kelly Ripa
 Digital wins: IG Lives with Venus Williams, Lauren Bosworth, Jackie Cruz,
Chris Porter, headliner for national COVID event with Men’s & Women’s
Health
 She presented an online workout with Jackie Cruz, an actress on Orange is
the New Black, to raise funds for social justice.
Ms. Kaiser has garnered extensive media attention, including, as examples, features in Shape,
Hamptons Monthly and Modern Luxury Miami. NBC News did a feature titled “How Anna Kaiser
became the reigning queen of fitness?”
34. AKT Franchise’s marketing efforts have been inferior and ineffectual. Ms. Kaiser
has personally funded her photo shoots for social media because (i) AKT Franchise marketing is
inadequate and ineffective; (ii) AKT Franchise management has indicated that they do not want
Ms. Kaiser involved in marketing and media collateral or creation of assets; and (iii) Ms. Kaiser
believes it is essential to have high quality social media to drive membership enrollment, class
attendance and loyalty to the brand; and (iv) AKT declined to fund such essential shoots and did
not invite Ms. Kaiser to any video or photo shoots in LA (after the first shoot) unless she personally
covered all travel and lodging expenses. AKT Franchise has declined approval of potential
personal appearances sourced by Ms. Kaiser which she believed would benefit the entire franchise
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business.
35. Based on her initiative and expertise, during the COVID pandemic, Ms. Kaiser
guided the Seller Studios, located in New York and CT, through a pivot to a virtual studio model
with live streaming. Ms. Kaiser spearheaded the model, and AKT Franchise adopted Ms. Kaiser’s
live streaming virtual studio as a model for other franchise studios.
AKT inMotion Continued to Operate Its Studios, Referred to as Seller Studios in the APA
36. Under Section 5.11(a) of the APA, AKT inMotion agreed to operate its existing
studios as franchises of AKT Franchise in the Ordinary Course of Business, and it did so.
37. AKT Franchise and AKT inMotion also agreed to use “commercially reasonable
efforts” to enter a Franchise Agreement not “materially inconsistent with the terms” of Section 5.11
of the APA. Section 5.11(a) further provided that, in the event such Franchise Agreements were
not executed by the third anniversary of the agreement (March 22, 2021), the license granted to
AKT Motion to use AKT Operating Affiliates Intellectual Property terminates unless extended by
mutual agreement of the parties.
38. The APA provided that following AKT Franchise’s compliance with certain
obligations, AKT inMotion would pay a weekly royalty of 7% of Gross Sales to AKT Franchise
(the “7% Royalty Fee”).
AKT Franchise Intentionally, Materially Breaches APA and Consulting Agreement
39. Pursuant to Section 2.1(c) of the APA, the first Post-Closing Cash Payment of
$283,333.33 was due on March 22, 2019. On March 27, 2019, AKT inMotion notified AKT
Franchise’s counsel and demanded payment of the first Post-Closing Cash Payment. AKT
inMotion and its counsel sent two email reminders to AKT Franchise’s counsel on April 3, 2019
and April 13, 2019.
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40. On or about April 16, 2019, when Ms. Kaiser called to follow up on payment of the
Post-Closing Cash Payment, Mr. Geisler, CEO of AKT Franchise, demanded that Ms. Kaiser invest
the Post-Closing Cash Payment of $283,333.33 as equity into AKT Franchise although she had no
obligation to do so. Ms. Kaiser never agreed to do so. The Post-Closing Cash Payment due March
22, 2019 was never paid.
41. AKT inMotion did not receive the studio upgrades that Xponential and AKT
Franchise promised. After AKT inMotion transitioned the operations of the Seller Studios to
Xponential’s and AKT Franchise’s Club Ready platform for purposes of booking classes, private
training sessions and services in February 2019, AKT Franchise materially breached the APA by
charging AKT inMotion a 2% marketing fee (the “2% Marketing Fee”) on top of the 7% Royalty
Fee from the Gross Sales of Seller Studios. Such 2% Marketing Fee is not set forth in Section
5.11(c) of the APA. AKT inMotion repeatedly emailed and called Mr. Geisler, AKT Franchise’s
VP of Finance Brandon Wiles and AKT Franchise’s President Melissa Chordock regarding the
wrongful charges, and they stated that the withheld funds would be returned. AKT’s Franchise’s
unilateral taking of such fee constitutes an intentional, material breach of the APA. The 2%
Marketing Fee continues to be deducted as of today.
42. AKT Franchise also materially breached the APA by failing to provide sufficient
franchisor services in exchange for the 7% Royalty Fee paid by Seller Studios commencing in
February 2019. As set forth above, AKT Franchise was operated by inexperienced management
personnel, offered ineffective sales and marketing strategy, provided an inferior online Club Ready
platform for clients to book services and fulfill orders, and did not offer adequate support to
comply with franchise business mandates. In addition to constituting a material breach of the APA,
the insufficient and inferior franchisor services caused the Seller Studios to lose substantial revenue
as compared with the period of time preceding the effectiveness of the APA.
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43. In October 2019, nearly seven months after the first Post-Closing Cash Payment of
$283,333.00 should have been made to AKT inMotion on March 22, 2019, AKT Franchise
initiated a discussion about a revision of the Dilution Adjustment in Sections 2.2 (c)and (e) of the
APA. The Dilution Adjustment as defined in Section 2.2(e) provides for a reduction in Earn-Out
Payments “due to the issuance of additional Equity Securities of the Purchaser or ‘phantom’ or
similar incentive equity to an employee, officer, consultant or advisor of the Purchaser or its
subsidiaries in exchange for services provided to or to be provided to the Purchaser and its
subsidiaries.” AKT Franchise demanded that AKT inMotion agree to a written amendment to the
Dilution Adjustment clause in the APA. AKT inMotion did not agree and continued to demand
payment of the Post-Closing Cash Payment as set forth in the APA.
44. In 2020, AKT Franchise continued to demand the execution of the Dilution
Adjustment amendment as a condition precedent to paying the Post-Closing Cash Payments. AKT
inMotion’s former CFO and counsel raised with AKT Franchise’s counsel that the proposed
Dilution Adjustment amendment was materially inconsistent with the APA, but AKT Franchise
was insistent about the amendment. AKT inMotion declined to execute the amendment. In
demanding a new condition precedent to paying the Post-Closing Cash Payments, which payments
were due to AKT inMotion without further obligation, AKT Franchise breached the covenant of
good faith and fair dealing implicit in the APA in addition to breaching the APA by failing to make
the Post-Closing Cash Payments.
45. Pursuant to Section 2.1(c) of the APA, the second Post-Closing Cash Payment of
$283,333.33 was due on March 22, 2020. On May 22, 2020, AKT inMotion sent a formal written
notice of nonpayment to Purchaser and Guarantor. Such Notice of Nonpayment dated May 22,
2020 pursuant to Section 2.1(c) of the APA notified Purchaser and Guarantor as to its default on
the first and second Post-Closing Cash Payments due to AKT inMotion. A confidential second
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letter was sent on June 23, 2020 reiterating the demand for first and second Post-Closing Cash
Payments, among other things.
46. AKT Franchise has not received the Earn-Out Payments set forth in Sections 1.2(d)
and 2.2 of the APA that were due for the period commencing on March 22, 2018. On June 29,
2020, AKT inMotion requested that AKT Franchise provide its business records kept in the
ordinary course sufficient to demonstrate AKT Franchise’s distributions as set forth in Section
2.2(c) of the APA and any and all other documentation necessary to determine the calculation of
Seller’s Earn-Out Payments due as of May 31, 2020. AKT Franchise has not provided this
information. Under the Section 2.6 of the APA, AKT Franchise is required to provide this
information, and its failure to do so constitutes a material breach of the APA.
47. Although AKT Fitness and Ms. Kaiser performed all requested services under the
Consulting Agreement and, in fact, they performed services above and beyond those requested in
order to contribute added value to the franchise business, AKT Franchise failed to make the
payments due on the Consulting Agreement due in April, May, June and July, 2020 as well as the
documented expenses incurred by AKT Fitness. On May 18, 2020, AKT Fitness contacted AKT
Franchise about the nonpayment of the Consulting Fee. Several emails were sent, and no
substantive response was received.
48. Despite the fact that AKT Franchise was not making the monthly payments, it was
regularly demanding continued performance by AKT Fitness under the Consulting Agreement.
49. On June 23, 2020, a Notice of Material Breach of the Consulting Agreement was
transmitted to AKT Franchise pursuant to Section 1.2 of the Consulting Agreement. Under Section
6.2(b) of the APA, AKT inMotion seeks indemnification by AKT Franchise for its Losses,
including legal expenses and costs, in connection with the breaches of the Consulting Agreement
because the indemnification provision covers any breaches of Purchase Documents such as the
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Consulting Agreement.
50. Due to AKT Franchise’s failure to cure its multiple material breaches of
nonpayment under the Consulting Agreement, on July 24, 2020, AKT Fitness sent to AKT
Franchise a Notice of Termination of the Consulting Agreement.
Termination of Persona License
51. In Section 5.10 of the APA, Ms. Kaiser as Equityholder granted a Persona License
to AKT Franchise on an exclusive basis for 3 years and thereafter on a non-exclusive basis in
perpetuity for use in connection with the Franchise Business. Such Persona License included Ms.
Kaiser’s “picture, photograph, image, name, nickname, signature, likeness, biographical details,
opinions, quotations, performances, characteristics, endorsements, voice, and/or other indicia of her
identity” etc. as set forth in the definition of Persona in Exhibit A of the APA.
52. AKT Franchise and Xponential’s CEO, by Mr. Geisler’s actions, have irreparably
damaged the quality and character of Ms. Kaiser’s Persona. Among other things, during a franchise
owner conference call on June 24, 2020 held on Zoom, to address concerns raised by AKT
franchise owners, Mr. Geisler defamed and disparaged Ms. Kaiser and her performance of services
under the Consulting Agreement. Although Ms. Kaiser was operating her Seller Studios as
franchises pursuant to the APA, she was excluded from this franchise studio owner conference call.
Following the call, certain of the franchise studio owners telephoned Ms. Kaiser and informed her
that Mr. Geisler defamed and disparaged her as follows: Mr. Geisler stated that Ms. Kaiser’s
actions were impairing the franchise business, questioned her support to franchisees, and
complained about the level of the payments to her under the Consulting Agreement as compared
with “officers” of AKT Franchise. These franchise owners apprised Mr. Geisler that they
purchased their franchises based on Ms. Kaiser’s prestige, expertise, media savvy and content and
that she was integral to the brand.
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53. On July 29, 2020, AKT inMotion and Ms. Kaiser sent AKT Franchise a
written notice terminating the Persona License in its entirety due to AKT Franchise’s
intentional, material breach of the Persona License.
AKT Franchise Failed to Engage in Commercially Reasonable Efforts to Enter a Franchise

Agreement Applicable to Seller Studios
54. Pursuant to Section 5.11 of the APA, AKT inMotion and AKT Franchise agreed to
engage in commercially reasonable efforts to enter Franchise Agreements applicable to AKT
inMotion’s pre-existing Seller Studios “not materially inconsistent with the terms of this Section
5.11.”
55. In the fall 2018, AKT Franchise provided a form of Franchise Agreement to AKT
inMotion. Within a few weeks, AKT inMotion provided comments on the Franchise Agreement.
At that time and over a period of time, AKT inMotion raised issues with the form of Franchise
Agreement on several fronts: (i) the Franchise Agreement would require that AKT inMotion (a)
cease offering certain of the luxury services that it had provided to its clients prior to the APA,
and (b) operate the Seller Studios in a manner that would reduce their gross revenues; (ii) the
cross-default provisions in the Franchise Agreement potentially could impact the APA and
Consulting Agreement, a scenario that other franchise owners did not have; and (iii) the
termination provisions applicable to model franchise studios did not take into account the unique
issues faced by AKT inMotion’s luxury studios. Ms. Kaiser also asked to do her own social
media for the Seller Studios in order to provide premium and effectual marketing. Ms. Kaiser
continued to discuss the Franchise Agreement and the unique issues necessary to operate the
Seller Studios within the Franchise Business, but the parties were not able to finalize the
Franchise Agreement.
56. Although the payment of the Post-Closing Cash Payments due annually under the
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APA were independent obligations of AKT Franchise, in 2020, AKT Franchise took the position
that it would withhold the Post-Closing Cash Payments and they would not be paid until (a) the
Franchise Agreement was executed; and (b) AKT inMotion agreed to the Dilution Adjustment
amendment in which it sought to have AKT inMotion agree to a dilution of its 20% equity interest
in AKT Franchise inconsistent with the terms of the APA.
57. In 2020, at the same time it was demanding a Franchise Agreement that would
harm the commercial interests of AKT inMotion and the operation of the Seller Studios, AKT
Franchise was failing to provide adequate franchisor services for the Seller Studios under the
APA. AKT Franchise’s operations were suffering from mismanagement by officers and
personnel who were inexperienced and lacked the expertise and skills to run the business and
support the franchise studios, and the Club Ready platform, which AKT Franchise required that
franchisees use for class booking, sales and other operations, was inferior and insufficient. Ms.
Kaiser voiced her concerns to AKT Franchise. Similar concerns were raised by other franchise
owners.
58. When conference calls and an owners council were set up, Ms. Kaiser was
excluded. Other franchise owners asked if Ms. Kaiser could join, but they were told that Ms.
Kaiser was an “employee” and not a studio franchise owner even though she was operating the
Seller Studios as franchises under the APA. Ms. Kaiser was deprived from participating in such
conference calls and council to address the deficiencies in franchisor services and the Club Ready
platform, among other issues. Ms. Kaiser’s exclusion was implemented in matter that harmed her
status as the founder of the AKT, the original creator of its IP assets and the very person who was
relied on by AKT Franchise to provide her signature content for weekly classes and private
training sessions for clients throughout the Franchise Business.
59. Due to AKT Franchise’s continued withholding of the wrongful 2% Marketing Fee
18
inconsistent with the APA and AKT Franchise’s uncured material breach of the APA by failing to
make the Post-Closing Cash Payments, substandard sales and marketing content for AKT
Franchise, the inferiority of AKT Franchise’s platform for clients to purchase classes, services
and retail goods, particularly during the pivot to virtual classes during the Covid pandemic, AKT
inMotion undertook remedial measures to ensure that it clients would have an adequate and easy
to use platform in order to enroll in virtual live-streamed classes, newly scheduled indoor and/or
outdoor classes, where available, to schedule private training sessions, and to purchase other
services and goods.
60. AKT inMotion has taken all reasonable steps as of this date to address issues
relating to the form of Franchise Agreement applicable to the Seller Studios and its commercial
interests. AKT inMotion could not proceed with the Franchise Agreement as proposed by AKT
Franchise because it would harm its commercial interest, including the operation of the Seller
Studios and the revenues of such studios.
COUNT I
INTENTIONAL, MATERIAL BREACHES OF CONTRACT

AGAINST AKT FRANCHISE
61. Plaintiff AKT inMotion hereby realleges and incorporates all prior allegations as if
set forth fully herein.
62. AKT inMotion and Ms. Kaiser have fully performed their obligations under the
APA.
63. AKT Franchise’s failure to make the Post-Closing Cash Payments due on March 22,
2019 and March 22, 2020 to AKT inMotion pursuant Section 2.1(c) in the amount of $566,666.66
constitutes an intentional, material breach of the APA.
64. Notices of such non-payments were sent to AKT Franchise. AKT Franchise has not
19
cured the non-payments. The first Post-Closing Cash Payment is overdue more than one year.
65. In failing to make the Post-Closing Cash Payments, AKT Franchise has engaged in
conduct that does not comport with good faith and fair dealing and its breaches are material in
nature because they have frustrated the purpose of the APA.
66. Wherefore, AKT inMotion demands judgment against AKT Franchise in an amount
to be determined, but which is currently not less than $566,666.66, plus pre -judgment interest,
default interest pursuant to Section 2.1 of the APA, reasonable attorneys’ fees and costs.
COUNT II
INTENTIONAL, MATERIAL BREACHES OF CONTRACT

APA.
69. The APA provided for the Seller Studios to operate as franchises of AKT Franchise
under the APA. Following AKT Franchise’s compliance with its obligations under Section 5.11(c),
the APA provided that AKT inMotion would be required to pay a 7% Royalty Fee based on its
Gross Sales and would receive franchisor services in exchange.
70. Inconsistent with Section 5.11(c) of the APA, AKT Franchise unilaterally withheld
and usurped a 2% Marketing Fee from revenue generated by the Seller Studios commencing in
February 2019 in addition to the 7% Royalty Fee. Such 2% Marketing Fee is not set forth in
Section 5.11(c) of the APA and is materially inconsistent therewith. AKT Franchise intentionally,
materially breached the APA by withholding the 2% Marketing Fee from the Gross Sales of Seller
Studios. AKT inMotion notified AKT Franchise of the wrongful withholding of the 2% Marketing
20
Fee inconsistent with the APA.
71. AKT Franchise also failed to provide reasonable and adequate franchisor services to
the Seller Studios under Section 5.11(c) of the APA in exchange for the 7% Royalty Fee paid by
AKT inMotion from the Gross Sales of the Seller Studios commencing in February 2019. AKT
Franchise operated the Franchise Business by inexperienced management personnel, offered
ineffective sales and marketing strategy, provided inadequate support to Seller Studios, and
provided an inferior Club Ready platform to book classes and fulfill orders, private training
sessions and services. Among other things, the insufficient and inferior franchisor services have
caused the Seller Studios to lose substantial revenue.
72. Wherefore, AKT inMotion demands judgment against AKT Franchise in an amount
comprising (a) the 2% Marketing Fee that was wrongfully withheld from the Gross Sales of Seller
Studios, and (b) the monetary damages resulting from the inferior franchisor services that damaged
the operation of Seller Studios, plus pre-judgment interest, reasonable attorneys’ fees and costs.
COUNT III
INTENTIONAL, MATERIAL BREACH OF CONTRACT

APA.
75. Pursuant to Section 5.11(a) of the APA, AKT inMotion and AKT Franchise agreed
to engage in commercially reasonable efforts to enter Franchise Agreements applicable to AKT
inMotion’s pre-existing Seller Studios “not materially inconsistent with the terms of this Section
5.11.”
21
76. AKT Franchise has failed to engage in commercially reasonable efforts to enter
Franchise Agreements applicable to AKT inMotion’s pre-existing Seller Studios.
77. AKT Franchise unreasonably demanded a Franchise Agreement that would require
that AKT inMotion (i) (a) to cease offering certain of the luxury services that it had provided to its
clients prior to the APA, and (b) to operate the Seller Studios in a manner that would reduce their
gross revenues, thereby also reducing the 7% Royalty Fee to AKT inMotion and overall revenues
of the Franchise Business; (ii) to consent to cross-default provisions in the Franchise Agreement
potentially that could impact the APA and Consulting Agreement, a scenario that was not pertinent
to other franchise owners; and (iii) to abide by termination provisions applicable to model franchise
studios that did not take into account the unique issues faced by AKT inMotion’s pre-existing
luxury studios. Ms. Kaiser continued to discuss the Franchise Agreement and the unique issues
necessary to operate the Seller Studios within the Franchise Business, but the parties were not able
to finalize the Franchise Agreement.
78. By demanding unrelated conditions, AKT Franchise also has not undertaken
commercially reasonable steps to enter a Franchise Agreement. Although the payment of the
Post-Closing Cash Payments were independent obligations unrelated to the execution of the
Franchise Agreement, in 2020, AKT Franchise took the position that it would withhold the Post-
Closing Cash Payments and they would not be paid until (a) the Franchise Agreement was
executed; and (b) AKT inMotion agreed to the Dilution Adjustment amendment whereby AKT
Franchise sought to have AKT inMotion dilute its 20% equity interest in AKT Franchise
inconsistent with the terms of the APA.
79. In 2020, at the same time it was demanding a Franchise Agreement that would
harm the commercial interests of AKT inMotion and the operation of the Seller Studios, AKT
Franchise was failing to provide adequate franchisor services for the Seller Studios under the
22
APA. AKT Franchise’s operations were suffering from mismanagement by officers and
personnel who were inexperienced and lacked the expertise and skills to run the business and
support the franchise studios, and the Club Ready platform, which AKT Franchise required that
franchisees use for class booking, sales and other operations, was inferior and insufficient. Ms.
Kaiser voiced her concerns to Mr. Geisler and management personnel at AKT inMotion. Similar
concerns were raised by other franchise owners.
80. AKT inMotion has taken all reasonable steps as of this date to address issues
relating to the form of Franchise Agreement applicable to the Seller Studios and its commercial
interests.
81. Wherefore, AKT inMotion demands judgment against AKT Franchise in an
amount damages to be determined at trial plus pre-judgment interest, reasonable attorneys’ fees
and costs and declaratory judgment that AKT Franchise is excused from (i) from continuing
further negotiations with respect to a Franchise Agreement for Seller Studios; (ii) from operating,
and/or has no further obligation to operate, its Seller Studios as franchises of AKT Franchise
under Section 5.11 of the APA and it may operate such Seller Studios without any restriction of
any kind; and (iii) from paying AKT Franchise any Royalty Fee under Section 5.11(c) of the APA
or any other fees of any kind from the operation of the Seller Studios.
COUNT IV
INTENTIONAL, MATERIAL BREACH OF CONTRACT

AGAINST XPONENTIAL
82. Plaintiff hereby realleges and incorporates all prior allegations as if set forth fully
herein.
83. Pursuant to Section 2.9 of the APA, Xponential agreed to guarantee the Post-
Closing Cash Payments set forth in Section 2.1. The guarantee was a material inducement for AKT
23
in Motion to enter the APA (third Whereas Clause of APA).
84. On May 22, 2020, AKT inMotion sent a notice to Xponential, as Guarantor, of the
nonpayment of the Post-Closing Cash Payments due on March 22, 2019 and March 22, 2020 and
demand of payment was made.
85. One June 23, 2020, AKT inMotion sent a further notice to Xponential, as Guarantor,
of the nonpayment of the Post-Closing Cash Payments due on March 22, 2019 and March 22, 2020
and payment of the Post-Closing Cash Payments were demanded along with interest and attorneys’
fees.
86. The Guarantor has failed to make the payments.
87. Wherefore, AKT inMotion demands judgment against Xponential in an amount to
be determined, but which is currently not less than $566,666.66, plus pre-judgment interest, default
interest pursuant to Section 2.1 of the APA, reasonable attorneys’ fees and costs.
COUNT V
FRAUD
AGAINST XPONENTIAL AND AKT FRANCHISE
88. Plaintiff hereby realleges and incorporates all prior allegations as if set forth fully
herein.
89. As part of the Purchase Price, instead of $1 million in cash, AKT inMotion agreed
to take 3,798.9 Class A-1 units, in H&W Franchise Holdings, the parent of Xponential, and
contributed by Xponential (the “Closing Equity”), based on Xponential and AKT Franchise’s
representations to Ms. Kaiser and AKT inMotion that such stake was valued at $1 million. Ms.
Kaiser agreed to take the equity stake in H&W to demonstrate her commitment to AKT Franchise
and its parent companies.
90. The APA specifically included a definition of “Agreed Fair Market Value” defined
as “the Closing Equity Payment collectively, One Million Dollars ($1,000,000) assuming a
24
valuation of Parent of Three Hundred Million Dollars ($300,000,000).”
91. Upon information and belief, at the same time Xponential was making the
representation to AKT inMotion and Ms. Kaiser with respect to the APA, H&W’s controlling
member (TPG Growth) was in negotiations and entered into a term sheet to sell its 63.2% interest
in H&W in a management buy-out led by Mark Grabowski, Anthony Geisler, and Morgan Stanley
AIP GP LP for an amount reflecting a material reduction in the valuation of H&W represented to
AKT inMotion and Ms. Kaiser. Ms. Kaiser immediately objected to Mr. Geisler and Mr.
Grabowski. Mr. Geisler and Mr. Grabowski refused to increase the number of shares provided to
Ms. Kaiser.
92. Upon information and belief, when Xponential and AKT Franchise made the
representation to AKT inMotion and Ms. Kaiser that H&W was valued at $300 million dollars,
they knew such representation was false, and, nonetheless, made such representation knowingly
and/or recklessly. The representation was made by Xponential and AKT Franchise to induce AKT
inMotion and Ms. Kaiser to agree to the APA including the Total Consideration therein.
93. AKT inMotion and Ms. Kaiser reasonably relied on the representation of Xponential
and AKT Franchise with respect to the $300 million valuation of H&W that was communicated to
them in negotiations leading up to entry of the APA and it was expressly included in the APA in
Section 2.1 and in the definition of Agreed Fair Market Value.
94. AKT inMotion and Ms. Kaiser were damaged as a direct result of Xponential and
AKT Franchise’s misrepresentations because the Total Consideration received under the APA was
less than agreed.
95. When she learned of the sale of TPG Growth’s interest in H&W at a $149.4 million
valuation of H&W, Ms. Kaiser promptly asked Mr. Geisler and Mr. Grabowski to issue the
requisite number of shares of H&W to AKT inMotion that would have been equivalent of $1
25
million at the time of the Closing, but they refused.
96. Wherefore, AKT inMotion demands judgment against Xponential and AKT
Franchise in an amount to be determined, but which is not less than $500,000, plus pre-judgment
interest, punitive damages and costs, and/or the APA should be reformed to require Xponential to
provide AKT inMotion with additional equity in H&W in order that AKT inMotion’s total equity
in H&W is equivalent to $1 million consistent with the valuation of H&W at the time of the June
2018 buyout by TPG’s Growth’s interest in H&W by Mr. Geisler, Mr. Grabowksi and Morgan
Stanley AIP GP LP.
COUNT VI
NEGLIGENT MISREPRESENTATION
AGAINST XPONENTIAL AND AKT FRANCHISE
98. As part of the Purchase Price, instead of $1 million in cash, AKT inMotion agreed
to take 3,798.9 Class A-1 units, in H&W Franchise Holdings, the parent of Xponential (the
“Closing Equity”), based on Xponential and AKT Franchise’s representations to Ms. Kaiser and
AKT inMotion that such stake was valued at $1 million. Ms. Kaiser agreed to take the equity stake
in H&W Franchise Holdings to demonstrate her commitment to AKT Franchise and its parent
companies.
99. The APA specifically included a definition of “Agreed Fair Market Value” defined
as “the Closing Equity Payment collectively, One Million Dollars ($1,000,000) assuming a
valuation of Parent of Three Hundred Million Dollars ($300,000,000).”
100. Upon information and belief, at the same time Xponential was making the
representation to AKT inMotion and Ms. Kaiser with respect to the APA, H&W’s controlling
member (TPG Growth) was in negotiations and entered into a term sheet to sell its 63.2% interest
26
in H&W in a management buy-out led by Mark Grabowski, Anthony Geisler, and Morgan Stanley
AIP GP LP for an amount reflecting a material reduction in the valuation of H&W represented to
AKT inMotion and Ms. Kaiser. Ms. Kaiser immediately objected to Mr. Geisler and Mr.
Grabowski. Mr. Geisler refused to increase the number of shares provided to Ms. Kaiser.
representation to AKT inMotion and Ms. Kaiser that H&W was valued at $300 million dollars,
they knew such representation was false, and, nonetheless, they made such representations
negligently. The representation was made by Xponential and AKT Franchise to induce AKT
inMotion and Ms. Kaiser to agree to the APA.
102. AKT inMotion and Ms. Kaiser reasonably relied on the representation of Xponential
and AKT Franchise with respect to the $300 million valuation of H&W that was communicated to
them in negotiations leading up to entry of the APA and was expressly included in the APA in
Section 2.1 and in the definition of Agreed Fair Market Value.
103. AKT inMotion and Ms. Kaiser were damaged as a direct result of Xponential and
AKT Franchise’s misrepresentations because the Total Consideration received under the APA was
less than agreed.
104. When she learned of the sale of TPG Growth’s interest in H&W at a $149.4 million
H&W valuation, Ms. Kaiser promptly asked Mr. Geisler and Mr. Grabowski to issue the requisite
number of shares of H&W to AKT inMotion that would have been equivalent of $1 million at the
time of the Closing, but he refused.
105. Wherefore, AKT inMotion demands judgment against Xponential and AKT
Franchise in an amount to be determined, but which is not less than $500,000, plus pre-judgment
interest, punitive damages and costs, and/or the APA should be reformed to require Xponential to
provide AKT inMotion with additional equity in H&W in order that AKT inMotion’s total equity
27
in H&W is equivalent to $1 million consistent with the valuation of H&W at the time of the June
2018 buyout by TPG’s Growth’s interest in H&W by Mr. Geilser, Mr. Grabowksi and Morgan
Stanley AIP GP LP.
COUNT VII
INTENTIONAL, MATERIAL BREACH OF THE PERSONA LICENSE
106. Plaintiff Ms. Kaiser hereby realleges and incorporates all prior allegations as if set
forth fully herein.
107. In Section 5.10 of the APA, Ms. Kaiser as Equityholder granted a Persona License
to AKT Franchise on an exclusive basis for 3 years and thereafter on a non-exclusive basis in
perpetuity for use in connection with the Franchise Business. Such Persona License included Ms.
Kaiser’s “picture, photograph, image, name, nickname, signature, likeness, biographical details,
opinions, quotations, performances, characteristics, endorsements, voice, and/or other indicia of her
identity” etc. as set forth in the definition of Persona in Exhibit A of the APA.
108. AKT Franchise intentionally and materially breached such Persona License on June
24, 2020 when Mr. Geisler made defamatory and disparaging statements about Ms. Kaiser to other
franchise owners during a conference call about the Franchise Business. Mr. Geisler attacked Ms.
Kaiser’s character and image, stating that her actions were impairing the franchise business, that
she was failing to support the franchise studio owners, and complaining about her performance of
the Consulting Agreement, referring to Ms. Kaiser as selfish and unworthy of the payments she is
due for the performance of her duties under the Consulting Agreement.
109. On July 29, 2020, Ms. Kaiser notified AKT Franchise of the revocation of the
Persona License in its entirety due to such intentional, material breach.
110. Wherefore, AKT inMotion demands judgment in the form of monetary damages
against AKT Franchise in an amount to be determined at trial, plus pre-judgment interest, punitive
28
damages and costs. Moreover, due to AKT Franchise’s intentional, material breach, Ms. Kaiser
seeks declaratory judgment that the Persona License set forth in Section 5.10 is permanently
revoked in its entirety.
COUNT VIII
BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING
IMPLICIT IN THE APA AGAINST AKT FRANCHISE
112. AKT inMotion has performed or caused to be performed all of its obligations under
the APA.
113. AKT Franchise breached the covenant of good faith and fair dealing implicit in the
APA by demanding that AKT inMotion agree to a modification of the Dilution Adjustment in the
APA as a condition precedent to paying AKT inMotion the Post-Closing Cash Payments. AKT
inMotion refused to accept such demand.
114. AKT Franchise’s coercive demand that AKT inMotion agree to a new term adverse
to its interest as a condition precedent to receiving part of the Total Consideration agreed under the
APA constituted a breach of the covenant of good faith and fair dealing implicit in the APA.
115. Wherefore, AKT inMotion demands judgment in the form of monetary damages
against AKT Franchise in an amount to be determined at trial, plus pre-judgment interest, punitive
damages and costs.
COUNT IX
NEGLIGENT MISREPRESENTATION AND/OR
BREACH OF APA AND LLC AGREEMENT
AGAINST AKT FRANCHISE AND XPONENTIAL
116. Plaintiff AKT inMotion and Ms. Kaiser hereby reallege and incorporate all prior
allegations as if set forth fully herein.
29
117. Xponential and AKT Franchise represented to AKT inMotion and Ms. Kaiser that
Ms. Kaiser would be integrally involved in the management of AKT Franchise and that within
three years of the Closing AKT Franchise would be valued at $100 million and the AKT
inMotion’s 20% equity in AKT Franchise acquired via the APA would be therefore be valued at
$20 million. Such representations were made to induce AKT inMotion to agree to the APA. AKT
inMotion and Ms. Kaiser reasonably relied on Xponential and AKT Franchise’s representations in
agreeing to the APA.
118. Consistent with its representation regarding Ms. Kaiser’s integral involvement in
the Franchise Business, AKT Franchise delivered as a Purchase Document the LLC Agreement that
expressly provided that Ms. Kaiser would serve as one of three Managers on AKT Franchise’s
Board of Managers, along with Xponential and AKT Franchise’s CEO Anthony Geisler and Mark
Grabowski, who led the management buy-out of TPG’s interest in H&W at half the value
represented to Kaiser during contemporaneous negotiations.
representation to AKT inMotion and Ms. Kaiser that AKT Franchise would be valued at $100
million dollars within three years, they knew such representation was false, and, nonetheless, they
made such representation negligently. In order to achieve such $100 million target within three
years, Xponential and AKT Franchise represented that they would open a model franchise studio
within 3 months after the Closing of the APA so that they could begin selling 25 franchises a
month and opening such franchises within 3 to 6 months of sale. AKT Franchise did not open a
model franchise studio for 14 months, thus delaying the commencement of sale of franchises and
obstructing and hindering the ability to achieve a $100 valuation within three years.
representation to AKT inMotion and Ms. Kaiser that Ms. Kaiser would be integrally involved in
30
the management of AKT Franchise and made her a Manager of AKT Franchise’s Board of
Managers at the time of the Closing, they knew such representation was false, and, nonetheless,
they made such representation negligently. Given that no Board of Managers meetings were
called, and Ms. Kaiser was frozen out of all management and hiring decisions for AKT Franchise
and her concerns with respect to management and operations were ignored, the representation that
Ms. Kaiser would be integrally involved in the management of AKT Franchise was false.
121. AKT inMotion and Ms. Kaiser have been damaged as a direct result of Xponential
and AKT Franchise’s misrepresentations because AKT Franchise’s delay in opening a model
franchise studio and commencing franchise sales have negatively impacted the promised growth of
AKT Franchise within a three year period, and the freeze out of Ms. Kaiser from management of
AKT Franchise deprived her of the ability to require AKT Franchise to implement actions
consistent with the representations made to AKT Franchise and Ms. Kaiser.
122. Xponential and AKT Franchise have engaged in conduct that does not comport with
good faith and fair dealing and its breaches are material in nature because they have frustrated the
purpose of the APA.
123. Wherefore, AKT inMotion and Ms. Kaiser demands judgment against Xponential
and AKT Franchise for monetary damages in an amount to be determined at trial, plus pre-
judgment interest, punitive damages and costs, and declaratory judgment that AKT inMotion and
Ms. Kaiser, as Selling Parties under the APA be excused from the Restricted Covenants in Section
5.2., 5.3 and 5.4 which were made in reliance on AKT Franchise carrying out its obligations under
the APA.
31
COUNT X
INTENTIONAL, MATERIAL BREACH OF THE
CONSULTING AGREEMENT
124. Plaintiff AKT Fitness hereby realleges and incorporates all prior allegations as if set
forth fully herein.
125. The Consulting Agreement was delivered to AKT Franchise under the APA. AKT
Franchise and Xponential represented to Ms. Kaiser and AKT Fitness that the Consulting
Agreement whereby they would receive additional compensation in connection with the sale of the
Acquired Assets to AKT Franchise, and AKT Fitness had a reasonable expectation that the
Consulting Agreement would continue for a period of 36 months until March 22, 2021.
126. AKT Fitness and Anna Kaiser have performed or caused to be performed all of its
obligations under the Consulting Agreement.
127. Without notice or explanation, AKT Fitness did not receive monthly payments for
consulting fees in April, May, June and July 2020, due on the 22nd of each month.
128. AKT Fitness has incurred reasonable documented expenses in the amount of $8,000
in connection with the performance of the Consulting Agreement that have not been reimbursed.
129. AKT Fitness inquired on numerous occasions about the status of the payments. On
June 23, 2020, AKT Fitness notified AKT Franchise by written letter that the failure to make
numerous payments constituted an intentional, material breach of the Consulting Agreement.
Following notice, AKT Franchise never cured this intentional, material breach.
130. Despite the fact that AKT Franchise was not making the monthly payments, it was
regularly demanding continued performance by AKT Fitness under the Consulting Agreement.
AKT Franchise have engaged in conduct that does not comport with good faith and fair dealing and
its breaches are material in nature because they have frustrated the purpose of the Consulting
32
Agreement delivered under the APA.
131. On July 27, 2020, AKT Fitness notified AKT Franchise by written letter of the
termination of the Consulting Agreement.
132. Wherefore, AKT Fitness demands judgment against AKT Franchise for the monthly
amounts due under the Consulting Agreement for the months of April through July 2020 during
which consulting services were fully performed as well as for the months of August through
February 2021 which were anticipated pursuant to the Consulting Agreement in the amount of
$208,333.33 in addition to the reasonable documented expenses incurred in the amount of
$8,000.00, plus pre-judgment interest, attorneys’ fees and costs as set forth in Section 3.1 of the
Consulting Agreement. In addition to damages, AKT Fitness seeks declaratory judgment that due
to the comprehensive material breach of the Consulting Agreement, it should be excused from the
restrictive covenants set forth in Sections 2.4 and 2.5 of the Consulting Agreement and/or such
Restricted Period shall be deemed to have commenced on April 22, 2020 when AKT Franchise first
failed to make required payments under the agreement. In addition, if AKT Fitness prevails on this
count before this Court, as the prevailing party, it is entitled to reasonable attorneys’ fees, costs
and disbursements pursuant to Section 5.5(d) of the Consulting Agreement.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs pray for judgment against Defendants, and each of them,
as set forth in this Complaint, and for such other and further relief as the Court deems just
and proper.
33
DEMAND FOR JURY TRIAL
Plaintiffs Anna Kaiser, AKT inMotion Inc. and AKT Fitness LLC hereby demand a jury
trial on all issues triable by a jury.
Dated: August 3, 2020 Respectfully submitted,
Of Counsel:
FARNAN LLP
Kerry A. Brennan
BRENNAN LAW FIRM PLLC /s/ Sue L. Robinson
902 Broadway, 6th Floor Sue L. Robinson (Bar No. 100658)
New York, New York 10010 Brian E. Farnan (Bar No. 4089)
212.729.1980 Michael J. Farnan (Bar No. 5165)
kerry.brennan@brennanlawpllc.com 919 North Market Street, 12th Floor
Wilmington, DE 19801
Telephone: (302) 777-0300
Facsimile: (302) 777-0301
srobinson@farnanlaw.com
bfarnan@farnanlaw.com
mfarnan@farnanlaw.com
Attorneys for Plaintiffs
34

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Case 1:20-cv-01037-CFC-JLH Document 1 Filed 08/04/20 Page 1 of 34 PageID #: 1

IN THE UNITED STATES DISTRICT COURT

AKT inMOTION INC., a New York

Plaintiffs, Case No.:

-against- DEMAND FOR JURY TRIAL

AKT FRANCHISE, LLC, a Delaware limited

1. After having developed her ground-breaking dance-based cardio fitness technique

Xponential Fitness LLC (“Xponential”).

Plaintiffs AKT inMotion, AKT Fitness and Ms. Kaiser.

3. Plaintiffs seek, among other things:

Payments to AKT inMotion, as well as AKT Franchise’s breach of the implied

inMotion agree to new terms as a condition precedent to the Post-Closing Cash

further obligations under the APA, including continuing negotiations of a

inhibit it from operating its Seller Studios;

APA to guarantee AKT Franchise’s nonpayment of Post-Closing Cash Payments

due and owing to AKT inMotion;

or alternatively, negligent, misrepresentation with respect to the value of the

Closing Equity Payment in equity of H&W Franchise Holding, LLC, a Delaware

part of the Purchase Price under the APA;

consulting fees and documented expenses;

Geisler’s defamatory and disparaging statements about Ms. Kaiser’s actions

Franchise is terminated in its entirety; and

JURISDICTION AND VENUE

amount in controversy exceeds $75,000 exclusive of interest and costs.

Defendant is a corporation formed under the laws of Delaware.

the State of California.

under the APA.

Ms. Kaiser develops AKT brand and business

12. Ms. Kaiser is an internationally recognized fitness professional.

period of twenty years.

Kaiser’s studios featured carefully curated, intensive programming, rigorously-trained fitness

with luxury and well known clothing brands.

the brand in certain west coast markets or on a national level.

Growth. He recommended franchising and discussed the franchising model implemented by

of up to 10 fitness brands and a franchise brokerage firm, which company he expected to be a

Parties Enter APA and Related Purchase Documents

with a Franchise Business.

compensation, among other consideration:

amount that was earlier promised;

c. Eight Hundred Fifty Thousand Dollars ($850,000) payable to AKT inMotion in

three (3) equal annual installments of $283,333.33 on each anniversary of the

2020 have not been paid; and

d. Earn-Out Payments were to be paid to Ms. Kaiser based on an assumed 20%

interest in AKT Franchise. No Earn-Out Payments have been made to AKT

inMotion, and AKT Franchise has declined provide requested information to

material breach of the APA.

representation made to her during negotiations leading up to the APA.

which includes both the APA and Consulting Agreement.

The Consulting Agreement

AKT Franchise Begins Operations Although Its Development of a Model

hiring of officers and personnel to operate the business.

in the APA less than three months earlier.

to run the franchise operations.

continuing efforts to promote the brand.

encourage membership enrollment.

all workouts, classes and sessions.

continuously develops media attention. She cultivates celebrity appearances, partnerships,

Anna has secured the following appearances:

became the reigning queen of fitness?”

live streaming virtual studio as a model for other franchise studios.

mutual agreement of the parties.

(the “7% Royalty Fee”).

AKT Franchise Intentionally, Materially Breaches APA and Consulting Agreement

and April 13, 2019.

22, 2019 was never paid.

Marketing Fee continues to be deducted as of today.