The International Health, Racquet & Sportsclub Association is the fitness industry's only global trade association representing over 10,000 for profit health and fitness facilities and over 600 supplier companies in 75 countries.

 

 



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Monday
Jun152015

The Perils of Membership Contract Regulations

If you’re a longtime IHRSA member, you know that laws, be they local, state, or federal, can have a significant impact on the profitability, and even the viability, of clubs. And state legislation can sometimes be particularly troublesome.

As an example, in the ’70s and ’80s, many states passed laws designed to regulate membership contracts; and clubs that didn’t abide by them were required to pay a fine.

Back then, state legislatures held all of the power in terms of which proposals would become law, and how those bills would affect clubs. But today, fortunately, IHRSA can help you create contracts that will benefit both you and your members; and it can also assist with other important matters.

Each year, IHRSA’s advocacy team works to defend the industry’s interests against harmful legislation. Year after year, bills are introduced that would impose new regulatory burdens on clubs, rather than updating and fine-tuning old, outdated sections of existing laws.

In 2014, for example, IHRSA tracked 153 pieces of legislation in all 50 states and the District of Columbia; 108 of them would have had a direct impact on clubs, and 13 would have posed a specific threat to their profitability.

In general, states seek to regulate contracts in ways that would pose an additional administrative or financial burden on clubs. While the proposed restrictions vary, some would prohibit or restrict the use of automatic renewal provisions; apply outdated and unnecessary notification requirements; or restrict ability to use cost-effective ways to collect dues, e.g., electronic fund transfers (EFTs).

Have no doubt, membership contract regulation remains a live issue.

Last year, for example, IHRSA worked with its lobbyist in Trenton, New Jersey, to derail legislation that would have imposed unnecessarily burdensome—and quite costly—member notification requirements for clubs in the Garden State.

In Pennsylvania, it worked to exclude club membership agreements from being included in legislation, which, if enacted, would have severely restricted the use of automatic renewal provisions in service contracts.

IHRSA supports automatic renewal positions that permit contract continuation at the end of the original term on a case-by-case, at-will, basis. This provides customers with the greatest amount of choice and flexibility. When contracts renew automatically, clubs don’t need to sell long-term contracts to offset the expense of renewing current members.

Fortunately, IHRSA has a great track record when it comes to stopping dangerous new legislation.

Despite the fact that questions about contracts linger in some states, you can still draft an agreement that will satisfy all involved—if you pay close attention to the laws that are already in effect in your state.

Start by reviewing your membership agreement regularly to confirm that it’s in compliance. Bear in mind that most states have detailed specifications regarding such things as contract language, font size, cancellation procedures, contract length, and renewal policies. Failure to abide by any of them can result in an invalid contract.

Further, if your state requires that you submit your contract for review, be sure to retain any correspondence relating to the process for your records; these documents will be essential in the event that you’re audited or sued.

Also, remember that your IHRSA membership offers access to the information, resources, and assistance you need to stay up-to-date on legal and legislative issues.

And, to support IHRSA's efforts to protect your business and bottom line from misguided regulations and legislation like contract restrictions, please support the Industry leadership Council. Contributions of any size are very welcome and put entirely to good use. Learn more at ihrsa.org/industry-leadership-council, and/or download the 2015 ILC Update & Pledge form today.

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