CrossFit Is Suing Reebok: Here's What You Need To Know

On Thursday, CrossFit, Inc. filed suit against Reebok for “breach of contract,” “breach of covenant of good faith and fair dealing,” and “violations of Massachusetts General Laws Ch. 93A (aka the Consumer Protection Act.)” 

So what does that actually mean? 

Reebok has been CrossFit’s exclusive licensing partner since 2010. The deal gave Reebok the right to sell apparel, footwear, and more using the CrossFit trademark. The deal also gave Reebok the comeback they so desperately needed. Who even cared about Reebok before CrossFit, anyways?

Since Reebok was the exclusive licensee, under the terms of the agreement, no one, not even CrossFit, could produce apparel or shoes using the CROSSFIT® trademark. In exchange, Reebok would pay CrossFit royalties on net sales of these products, as well as market those products according to an annual schedule.

The suit states that, in 2013, Reebok “secretly reneged on the terms of the agreement.” Without speaking to CrossFit, they began calculating royalties on a “fictional wholesale equivalent price.” 

The wholesale price on anything (e.g., a pair of Nanos) is going to be far less than the retail price. As a result, the royalty calculations were based on a number drastically different from the net sales numbers Reebok and CrossFit had calculated — and been using — the previous two years. The suit claims that this cut the royalties Reebok owed on certain sales channels by 50 percent. It also claims that Reebok knew that this never-agreed-upon calculation was likely to go unnoticed by CrossFit “due to the rapid growth of sales of licensed products” and that Reebok’s royalty reports never stated whether “net sales were based on wholesale prices or retail prices.”

This continued until 2016, when CrossFit had a third party perform an audit of Reebok’s books and records.

Fast forward another year: After refusal to provide critical data the auditor requested, new method proposals, concealed underpayments, and a lot of legal back-and-forth, Reebok acknowledged what they did. 

According to the suit, Reebok, in a “royalty reconciliation” document, “admitted that it had been making royalty payments ‘by calculating royalty at ½ the net sales for the eCom channel’ resulting in a payment shortfall of $1.65M.’” 

That’s a lot of money.

Reebok refused to pay the shortfall, but did start paying royalties as they were supposed to — for a hot minute, until they reverted back to their old calculation theory at the end of 2017. According to the suit, Reebok even took it a step further, applying their new calculation to both e-commerce and retail sales.

The underpayment has since risen to $4.8M including interest. 

The case also claims Reebok “failed to comply with marketing obligations” and has “breached the agreement in several other critical respects.” It highlights conflicting sets of data, as well as inaccurate, incomplete and outdated books and records. CrossFit also claims that Reebok has deliberately “failed to appropriately market and stock CrossFit branded products on the store.crossfit.com website operated by Reebok, while at the same time promoting and fully stocking the same products on the reebok.com website.” Sales through store.crossfit.com demand a higher royalty payment to CrossFit (10%) than sales through Reebok’s website.

The entire suit can be read here.

…Nike Games 2019?

CrossFit Games 2018: Alabama's John Coltey Came Out Of Nowhere

One of the amazing aspects of CrossFit is that anyone can start training and fulfill their potential. Take John Coltey, for example. 

CrossFit Games Team Hint: The Stationary Bike Returns

It sure seems that Dave Castro has grown completely enamored with bikes in the build-up to this year’s 2018 CrossFit Games. 

Emily Abbott Fails PED Test, Is Barred From CrossFit Games

Canadian CrossFit athlete and champion of the West Regional Emily Abbott failed a drug test and will be banned for four years, according to CrossFit.

20 Days Out From CrossFit Games: Elites Have Endurance On Their Minds

We’re just three weeks out from the 2018 CrossFit Games in Madison, Wisconsin, which means the fittest athletes on Earth are putting the final touches on a year’s worth of preparation to get to this point. Most of the work has already been completed — the hay is in the barn, if you will — as the 40 men and 40 women in the individual competition, plus the team and masters/teen competitors, will taper so that their bodies are ready for the grueling five-day test that awaits. 

Pros And Cons: The CrossFit Games In Madison Through 2021

In case you missed last week’s big news, the CrossFit Games has secured its home through 2021, agreeing to stay in Madison, Wisconsin, for the next four iterations of the epic fitness event. 

Four-Phase Program To Building The Perfect CrossFit Coach: Phases 2-4

CrossFit Gym Owner Damon Johnson Talks Through Rigorous Internship Program

What makes a great CrossFit coach? Gym owner Damon Johnson continues his two-part examination at the process of building the perfect fitness guru.

Week 3 Granite Games Qualifier: Breathe Deeply Before You Open This

The 2018 Granite Games Online qualifier is almost complete — just one more workout stands between you and a spot at this fitness jewel in St. Cloud, Minnesota, this September 7-9. That’s the good news. The bad news, or just less good news if you’re a glass half-full type, is that Granite Games has a monster in store to wrap up qualifying with Workout 5 and 6.

Always Be Crushing With Hunter McIntyre, Week 12

Raw strength day- everything is performed in super sets until you reach a functioning weight which you sustain for as along as possible 

Join PRO Now to Get Unlimited Access to FloElite!

Join Now

Already a PRO Member? Log In

Four-Phase Program To Building The Perfect CrossFit Coach: Phase 1

Damon Johnson is the owner and head coach at White Tail CrossFit in Leander, Texas. Give White Tail a follow on Facebook or Instagram.

One of the most important lessons I’ve learned as a gym owner is that my coaches are the ambassadors of my brand.

Granite Games Qualifier (Workout 3 & 4), Week 2: No Rings, Thank God

It’s time for the next workout of the Granite Games qualifier, so hopefully you submitted your scores from last week’s first workout and are ready for another grueling test. The Road to Minnesota for the 2018 Granite Games — September 7-9 in St. Cloud, Minnesota — will make a pit stop this week at the pull-up bar, dumbbell rack, and barbell, as this week’s two workouts promise to exploit any strength endurance weaknesses you may have.