Proponents of the reforms also cite other traps for gymgoers, including that gyms require members to phsyically come into a branch for a specific time to discuss their exit with staff; as well as unreasonably harsh fees or limits on pausing memberships and exit fees above the value of the remaining contract.
Consumer advocates have asked the government to craft the legislation to make it โas easy to cancel as it is to sign upโ, wording which closely resembled the phrasing of a Biden-administration push for similar laws. However, these were ultimately struck down by a US federal appeals court in July, days before coming into effect, due to procedural deficiencies.
Griffin takes particular issue with this phrasing. โAt the point someone wants to cancel a gym membership, it would be ridiculous if they had to do what they did to join, to require them to come in and do a consultation with a trainer, to go through a test of which equipment is safe, just to cancel. So that principle … would be silly in our case,โ he said.
Griffin said laws that would make it easier for people to exit contracts could go against the industryโs traditional business model, which incentivises revenue certainty from members by offering discounts.
Lynsey McGee: โHaving ongoing memberships, and making members want to renew is really important.โCredit: Flavio Brancaleone
โIf someone gets a deal, say for 12 months at a discounted rate, they gave that certainty to the owner of a gym, and the owner can bank on that income, so they can have the certainty to employ a requisite number of staff,โ he said.
โMembers have an expectation they can come into the gym at any time they want, use the equipment they want or get into a class they want. Gyms have to be ready for that.โ
He said gyms were obligated to โhold up their side of the contractโ even if a member didnโt show up frequently. โI think thatโs one of the things that might be forgotten here: You may not have turned up for your spin class or gone in to use the elliptical, but the gym still had to make the preparations as if you did,โ he said.
Lynsey McGee and Mac Redinbaugh, who run the independent Hiscoes gym in Sydneyโs Surry Hills, say smaller operators have to be more accountable to their members.
Redinbaugh said: โThis is a community gym. I eat my breakfast out the front. If I was making any part of this process unpleasant, Iโd have to eat breakfast next to these people whose lives Iโve made harder. If somebody doesnโt like something, they can come up and yell at me.โ
The pair say they have leant towards offering more short-term memberships and making it easier for people to cancel longer-term ones because they have seen ex-members return after an easy process.
McGee said: โMembership is basically our sole income. We might sell a couple of squash balls or Gatorade, but membership is far and away how we make money and run the businesses. So having ongoing memberships, and making members want to renew is really important.โ
Ultimately, McGee believes laws that would ban businesses from trapping customers by making it overly hard for them to cancel are welcome, but she wants careful consideration so that online-centric provisions donโt harshly apply to gyms and owners of small businesses with physical premises.
Redinbaugh said: โWe donโt have legal departments. Weโre not one of those predatory companies with big resources to find a way around laws like this.โ
AUSactive has a voluntary code of conduct, which has a limit on maximum membership length and cooling-off periods. Griffin believes the code is more sensible to improve the sector.
Memberships are the main income stream for the nationโs roughly 8000 gyms and fitness centres, accounting for about $2.2 billion of the sectorโs $3.7 billion annual revenue, according to IBISWorld analysis from this month. Personal training brought in about $472 million in revenue: classes generated $417 million, and casual entry fees totalled $304 million.
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CPRC CEO Erin Turner said that while some gyms had developed good practices, much of the sector โneeds to clean up their actโ.
โGyms definitely have a lot to answer for. I think theyโre the originators of subscription traps, something which has gotten worse in the online world,โ she said.
Turner said cumbersome or costly requirements to end memberships made it harder for customers to shop around and accept better offers.
โIf the only reason youโre making money from a customer is because theyโre trapped in, then thatโs what this law is trying to stop,โ she said.
Turner said plugging gaps in the consumer law was important. In addition to unfair contract term law loopholes, she said high pressure sales tactics from gyms were a notorious problem.
Laws already strictly limit unsolicited sales tactics such as cold calling, but if someone has registered for a gymโs free trial, it constitutes an existing relationship, meaning the gym can repeatedly call them pressuring them to take out a membership, Turner said.
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