Tuesday, 14 June 2011

Unfair Contracts – Why Bother?

High Court rules that terms in thousands of gym contracts are unfair, following OFT action
On 27 May 2011, the OFT [Office of Fair Trading] welcomed a ruling from the High Court that minimum contract length terms and a number of other key terms in thousands of gym membership contracts, recommended and enforced by Ashbourne Management Services Limited, are unfair and hence unenforceable.

While this is clearly not good news for Ashbourne (even though their MD John Clayton-Wright called it a “slam dunk win for us”), it will help the fitness industry as a whole to change for the better moving forwards.

All clubs should have a ‘no contract’ option
– for a start it gives your prospect a choice (contract or no contract, rather than join or don’t). If you don’t have a contract, you need a better business model. With no tie-in, you have to work harder every day to retain your members, which is a good thing for them and for your club.

Look at the bright new budget gyms – FitSpace, PureGym, TheGym, and EasyGym to name a few. All have no contract options and are selling this factor as a big differentiator. EasyGym suggest a list of “stuff you want”, including “No crazy annual contracts”. Sure, it is difficult for independent clubs to compete with the big chains and big names. Outsourcing collections is a good option, but don’t lose your independent focus – outsource on your terms where possible.

Clubs with no contract options often show better retention rates. 12 month retention at a club with a 12 month contract often looks good, but consider the 13 or 14 month retention rate, or look at retention as last visit date (as we often do), and you’ll see a very different picture.

The public’s perception of our industry as a whole is not good. Most people think that gym retention policy is a contract, pure and simple. Sadly, this is their belief or experience of gym retention, rather than inductions, exercise aspirations, goals, programme reviews, communication and support.

So the media coverage is welcome for several reasons, but mainly because it will help us to shift focus in keeping your members around for longer, and helping them to get better results and to get fitter.

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