Almost every state we’ve reviewed has some version of a Health Club Act. Regardless of what your state calls it, this Act is a set of laws that govern gym membership contracts. While every state is a little different, there are common threads that are important for every gym owner to know.
Who Does It Apply To?
The first question we have to ask is whether your state laws apply to your gym. Most of our clients are micro gyms of some sort. This may include CrossFit, Power Lifting, Olympic Lifting, Yoga, Pilates, Functional Fitness, and Personal Training. We have yet to find a state law that does not include every one of these types of gyms. Therefore, we almost guarantee that if your state has laws governing gym contracts, your gym is covered under the law.
Do You Need a Written Contract?
It is our general practice to recommend that every gym has a written membership contract. However, are you legally required to have one? This is where we often have to educate the gym owner. The majorty of the laws we’ve reviewed say, ”If you have a membership contract, you have to include this particular language.” Because of this, we’ve had some discussions with gym owners who say, ”Fine, I just won’t have a memebrship contract. Then, I don’t have to comply.” However, this is shortsighed. What the gym owner is missing are the other sections of the law that say, ”If you are preselling membership, you have to have a memberhsip contract.” So, do you presell? We are willing to bet that you charge your clients in advance of them receiving the serivce. For example, you charge on September 1 for access to the gym in September. That is preselling by defintion.
What Needs To Be In the Contract?
Every state is different. However, as we aluded to above, there are commonalities. For example, most states say your contract has to state that if your client becomes disabled while he or she is a member, then you have to cancel their contract. Additonally, most states will require you to have language in your contract saying that if your gym moves from its current location, you have to provide clients a chance to cancel. Finally, a lot of states require you to have mandatory refund language at the end of your contract.
What’s the Worst That Can Happen?
So what? Right? It is unlikely that your state is ever going to audit your membership contract. So, why do you care? Because these statutes comes with serious ramifications. If your state requires you to have a membership contract with specific lanauge, and you do not, you are looking at potential civil and criminal penalities. If a client sues you under your memberhsip contract, you are not compliant with your state laws, you could be facing “Treble Damages.” Treble damages means three times the damges. So, if a client sues you for $1000.00, and your contract violates your state laws, your client could win up to $3000.00. Worse yet, other states will charge you with a third degree felony for failure to comply with its Health Club Act.
We are here to make sure you don’t expose yourself to legal issues. We call these legal holes. We are here to plug those legal holes. Membership contacts are a huge potential for legal holes. Just look at our blog and the number of articles we have writte about memberhsip contracts. They are serious. And, you likely have to have one in writing with very specific language. If you are unsure whether your contract meets your state law requirements, let us know.