Things were looking pretty good for Chris Rondeau until last week. The CEO of Planet Fitness has overseen a growing empire: the brand is adding new stores, reporting revenue growth and making major new investments. But that all came to a screeching halt last Friday when Rondeau was asked by the company’s board to step down as CEO.
The boss has been part of the company’s furniture for decades: exactly 30 years ago, he started working at the company’s first location in New Hampshire before rising to the position of CEO in 2013.
But despite his seemingly unshakable position at the brand, Rondeau was ousted last week as part of what the company called a “transition to new leadership.”
Craig R. Benson, a member of the company’s current board, was announced as interim CEO.
A week later, Rondeau said he was “seriously blindsided” by the news and told Insider he still doesn’t know why he was asked to step down.
In a text to reporters, he wrote: “I’m not done. I had the best team, the best franchisees and an amazing business.”
It was also revealed that Rondeau’s severance agreement prohibits him from speaking to any of his colleagues outside of legal or human resources, to whom he can turn with questions “about [his] employment or termination [his] employment with the company,” as reported by Insider.
However, Rondeau will have an opportunity to reclaim his proverbial corner office.
When Planet Fitness announced the news of Rondeau’s departure, it said in a statement that the ousted CEO would be nominated for re-election at the company’s 2024 annual meeting.
Rondeau will also still have his finger on the pulse of the business – although Planet Fitness is no longer acting as CEO, Planet Fitness revealed that the executive will continue to serve the company in an “advisory role” to ensure a smooth leadership transition.
Recommended by Planet Fitness Luck to the same press release when contacted for comment.
Wall Street Fluctuations
Confused investors pulled out of Planet Fitness shares when the news broke, with the company’s share price down 15% to around $50 – its lowest since the pandemic bottomed out in August 2020.
“The change in leadership is not the result of any significant or unexpected financial events,” Planet Fitness said at the time of Rondeau’s departure.
And Rondeau did preside over tasty results in his latest investor update.
In its Q2 2023 earnings report, the former CEO revealed that the affordable fitness chain has more than 18.4 million customers and 8.7% same-store sales growth.
It increased its global sites by 26 to 2,472 and grew its membership by more than 300,000 during the second quarter, with Gen Z leading the way in sign-ups, suggesting the brand is already reaching future customers.
This good news has been offset by some economic issues that many other retail and service providers are also facing. Rondeau told analysts on the call that the cost of building new gyms is rising — up 25% compared to the pandemic.
Good locations are also increasingly difficult to find, he said: “We’re seeing retail vacancy rates down 16% from pre-pandemic, which makes it a bit more difficult for our franchisees to find the right space in the right location.”
In 2021, Planet Fitness agreed to settle with former Planet Fitness executive Casey Willard after the employee filed a lawsuit against the company alleging the company had a “debauched” environment that included sexual harassment and rape.
During a business trip in 2017, Willard said she was raped by a company manager and his friends, and reported the incident to both the police and the company.
Willard also alleged that the manager initiated a sexual relationship with her and that a culture of drinking during working hours was encouraged – sometimes she was drunk at 11 a.m. according to her manager’s guidance.
Planet Fitness said at the time that it investigated the claims, fired the employee for violating company policy and terminated Willard’s supervisor.
She disputed her other allegations as “baseless”.
Willard also claimed that Rondeau had sexual relations with subordinates, which he categorically denies. He told Insider, “Absolutely not on my child’s life.”
Rondeau did not immediately respond Fortune’s statement request.
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