Planet Fitness’s long-time CEO says he was ‘blindsided’ by abrupt firing that sent gym’s stock plummeting — and barred him from talking to staff

Chris Rondeau, the former CEO of Planet Fitness.

Bernard Weil/Toronto Star via Getty Images

Planet Fitness’ board of directors asked its CEO Chris Rondeau to step down last week.Shares tumbled nearly 20% following the news.Rondeau told Insider he was “blind sided” by the board’s decision.

Former Planet Fitness CEO Chris Rondeau told Insider he didn’t know why the company’s board of directors asked him to resign last week, a move that sent Planet Fitness shares tumbling nearly 20%, shaving over $1 billion in market cap off the US’s largest network of gyms, down from $5.2 billion to $4 billion in less than a week.

Rondeau told Insider he was “seriously blindsided” by the board’s decision to remove him as CEO, but declined to answer additional questions about his termination, citing a confidentiality clause in his separation agreement. Rondeau remains on the company’s board of directors.

“I wasn’t finished,” he told Insider in a text message. “I had the best team best franchisees and an amazing business.”

Know more about Planet Fitness? Contact reporter Katherine Long via encrypted messaging app Signal (+1-206-375-9280) or email ([email protected]), or reporter Jack Newsham via Signal (+1-314-971-1627) or email ([email protected]). Use a non-work device.

Rondeau’s separation agreement bars him from contacting any Planet Fitness employees except those in the legal or human resources divisions “about your employment or the end of your employment with the Company.” (A separate non-solicitation clause blocks him from trying to recruit his former employees for new ventures.)

A Planet Fitness spokesperson did not respond to questions about Rondeau’s departure. Previously, the company had directed inquiries to a press release noting that the “management change is not the result of any material or unexpected financial events.”

Still, Rondeau’s ouster has generated a rash of price target reductions from Wall Street analysts. Jefferies, JP Morgan, and other analysts have downgraded the stock due to concerns over Planet Fitness’ executive transition.

The low-cost, low-frills gym saw same-store sales rise nearly 9% last quarter, according to its most recent earnings report. But inflation has caused the cost of opening new franchises to rise nearly 25%, leading some analysts to question whether Planet Fitness might consider increasing the price of its $10-a-month basic membership.

On a quarterly earnings call last month, Rondeau said ditching the $10-a-month membership might “cheapen the brand,” but that the company is trying to convince customers to upgrade to pricier membership tiers.

Rondeau has been a fixture at Planet Fitness nearly since the gym’s founding. He started working at the front desk of the company’s first location in New Hampshire in 1993 and was named CEO in 2013.

But his tenure hasn’t been without blemishes.

In 2018, a former Planet Fitness employee alleged in a hostile workplace lawsuit that Rondeau and another executive had sexual relationships with subordinates. The former employee, Casey Willard, called Planet Fitness a “debaucherous” workplace. Drinking on the job was encouraged, Willard said in the suit, at events like “Fireball Fridays” and “Beers with Peers” that sometimes started before 8:30 am. In her suit, Willard said she was drugged and raped by a manager on a work trip and then pressured into a relationship with her boss.

The suit settled in 2021 for undisclosed terms.

Rondeau, in a text message to Insider, said that he never had an inappropriate relationship with an employee, “absolutely not on my kid’s life.” In court papers, Planet Fitness denied most of Willard’s claims, including her claims about Rondeau.

Rondeau’s contributions to conservative politicians, including Donald Trump, attracted negative media attention in 2019. Rondeau gave just over $1,200 to Trump and another $1,000 to the congressional campaign of a former New Hampshire state senator.

Earlier this year, an investing newsletter said the gym could be violating consumer protection laws by making it purposefully difficult to cancel memberships. Though Planet Fitness’ often-frustrating billing practices are common knowledge – the company has an “F” rating from the Better Business Bureau – the information in the blog posts was cited by law firms after Rondeau’s ouster as a potential basis for shareholder suits against the company.

The lack of information about Rondeau’s firing has allowed rumors to proliferate. On X, formerly Twitter, Planet Fitness cofounder Mike Grondahl claimed that the board of directors has “been corrupt from day 1,” and that the company’s former general counsel was a “pedophile.” Grondahl declined to speak on the record.

Planet Fitness appointed board member Craig Benson interim CEO while the company looks for a new chief executive.

Know more about Planet Fitness? Contact reporter Katherine Long via encrypted messaging app Signal (+1-206-375-9280) or email ([email protected]), or reporter Jack Newsham via Signal (+1-314-971-1627) or email ([email protected]). Use a non-work device.

Read the original article on Business Insider

Leave a Reply

Your email address will not be published. Required fields are marked *