If you are taking automatic payments from your members, you need a written contract authorizing you to do so. Most importantly, almost every state has a law governing health clubs taking recurring payments. Additionally, it will protect you legally. The last thing you want is for a member to sue you demanding money back claiming they never agreed to auto payments. Legal cases get nasty and waste a lot of time and money. Therefore, you can use a membership contract to head off a lot of potential legal issues before they arise. You can set yourself to avoid legal issues with these three elements of a good membership contract:
3 Elements of a Good Membership Contract
It is Self Explanatory:
In the law, we like to say, ”The document speaks for itself.” It is a legal defense that means a document doesn’t need additional explanation. If the document said I will sell you this car if you pay me $1,500.00, then that’s what it says. We don’t need a bunch of added interpretation. The document speaks for itself.
The same should be true for your memberships contracts. You contact needs to contain the essential elements like your gym’s name and contract info, the price, the auto-renewal term, cancellation policy, etc. You can read more about the essential terms HERE. Bottom line, your contract should answer all of your member’s questions. For example, if the member has to ask how to hold his/her membership, then your membership contract is not self explanatory.
Use Definitive Language:
You need to use words like ”shall,” ”must,” and ”will.” You should not use words like, ”should,” ”might,” or ”may.” The latter is referred to in the law as discretionary language. If you goal is the be consistent and treat all of your members the same, then you can’t use discretion. You have rules and procedures for a reason. If you require thirty days for a notice of cancellation, then your membership contract needs to say, ”Members SHALL provide thirty (30) days notice before cancelling.” This is opposed to saying, ”Members SHOULD provide thirty (30) days notice before cancelling.”
State Laws and Statutes:
Perhaps the most important element in your membership contract is you state’s legal language. Almost every state has some version of a Health Club Act. It is a set laws that tell you, as a gym owner, what must be in your membership contracts. Some will have language you must use verbatim in your contract. If you don’t have this necessary language in your contract, some states may bring criminal action against your.
The actual provisions you find in your membership contract are not as important as these three elements. Your membership contract is useless if it doesn’t protect you from legal exposure.