Up until last week, things seemed to be going pretty well for Chris Rondeau. The CEO of Planet Fitness was overseeing a growing empire: the brand is adding new stores, posting sales growth, and rolling out major new investment. But that all came to a screeching halt last Friday when Rondeau was asked by the company's board of directors to resign as CEO.
The boss had been a part of the company's furniture for decades: he began working at the company's first site in New Hampshire exactly 30 years ago before rising to the title of CEO in 2013.
But despite his seemingly unshakeable footing in the brand, Rondeau was ousted last week in what the company called a "transition to new leadership."
Craig R. Benson, a member of the company's current board, has been announced as interim CEO.
A week later, Rondeau has said he was "seriously blindsided" by the news, telling Insider he still doesn't know why he was asked to step down.
In a text to reporters, he wrote: "I wasn't finished. I had the best team best franchisees and an amazing business."
It was also revealed Rondeau's separation agreement bars him from speaking to any of his colleagues outside of those in the legal or Human Resources departments, who he can approach with questions "about [his] employment or the end of [his] employment with the company", as per Insider.
However, Rondeau will have the opportunity to win back his proverbial corner office.
When it announced the news of Rondeau's departure, Planet Fitness said in a statement that the ousted CEO will 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 no longer acting as CEO, Planet Fitness revealed the exec will continue to serve the company in an "advisory role" in order to ensure a smooth leadership transition.
Planet Fitness referred Fortune to the same press release when contacted for comment.
Wall Street wobble
Baffled investors pulled out of Planet Fitness stock as the news broke, with the company's share price sinking 15% to around $50—the lowest since the pandemic floor of August 2020.
"The management change is not the result of any material or unexpected financial events," Planet Fitness said at the time of Rondeau's departure.
And Rondeau has indeed presided over palatable results in its most recent update to investors.
On its Q2 2023 earnings call the former CEO revealed the affordable fitness chain had more than 18.4 million customers and 8.7% same-store sales growth.
It upped its global site count by 26 to 2,472 and during the second quarter grew membership by more than 300,000 with Gen Z leading the way in sign-ups, suggesting the brand is already tapping into future consumers.
This good news was offset by some economic headwinds, which many other retail and service providers are also battling. Rondeau told analysts on the call that the cost of building new gyms is on the rise — up 25% compared to the pandemic.
Good locations are also increasingly difficult to come by, he said: "We're seeing that 16% decline in the vacancy rate of retail space versus pre-pandemic, making it slightly more difficult for our franchisees to find the right space in the right location."
'A debaucherous workplace'
In 2021, Planet Fitness agreed to a settlement with a former Planet Fitness manager, Casey Willard, after the employee brought a lawsuit against the company claiming the company had a "debaucherous" 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 a manager initiated a sexual relationship with her and that a culture of drinking during work hours was encouraged—sometimes she was drunk, following her manager's lead, by 11 a.m.
At the time, Planet Fitness said it had investigated the claims, firing an employee for violating company policy and terminating the contract of Willard's supervisor.
It disputed her other allegations as “baseless.”
Willard also claimed Rondeau had sexual relationships with subordinates, which he categorically denies. He told Insider: "Absolutely not on my kid's life."
Rondeau did not immediately respond to Fortune's request for comment.
