Beware of Pitfalls of Gym Contracts
By Shelley Basinger

Carolina senior Jordan McCaskill likes to head to the gym about five times a week to stay in good shape. In 2003, she joined Women's Workout Club in Chapel Hill. She checked a box on her contract that said “renew automatically.” By checking the box, she could get two years free as a promotion from the gym.

"If I hadn't checked the box, then I wouldn't have gotten my two years free, but who would have known they would have gone bankrupt?" McCaskill said.

Women's Workout Club sold all of its memberships, including McCaskill’s, to another gym.

"I had no clue on my contract that it said they had the right to take my contract and send it to a gym that could be a different price, different everything," McCaskill said.

The new gym is Ladies Fitness and Wellness, also in Chapel Hill. General Manager Kelly McLaughlin said staff members tried their best to appease new customers.

"For the people that were in the middle of their memberships, we game them the option of fulfilling their contract,” McLaughlin said. “Or they could break the contract by paying a $50 cancellation fee, which is our policy."

McCaskill paid the fine and eventually joined a different gym. North Carolina’s Consumer Protection Division lawyer David Elliot says there's nothing in the contract that says a gym can't sell its memberships.

"Without a statutory basis for getting out of the contract, there's just no legal way to get out without losing that money," Elliot said.

The statutory basis for getting out of the contract is a part of the Prepaid Entertainment Contracts Act. The statutes describe how a gym is allowed to transfer or sell its memberships. For example, the new gym must be within 8 miles of the old one, and it must be considered comparable to the old gym.

McCaskill also had problems with ABC Financial, which is Women’s Workout Club’s billing company. Many gyms use billing companies to get payments from their members. When a one, two, or three-year contract is signed, the facility sells the contracts to a billing company and is guaranteed full payment.

“They may have an individual who is contractually bound for three years,” Elliot said. “So rather than waiting to get the money month by month for three years, they will sell that contract to someone and take the money up front.”

Like the Attorney General’s office, the Better Business Bureau also receives complaints about gyms.

“A lot of the questions and complaints we get about gyms at the Better Business Bureau have to do with contracts,” said Beverly Baskin, president and Eastern Bureau CEO. “And most of the time it’s because the person who’s signing the contract hasn’t really read it or doesn’t understand it.”

Before signing a contract with a gym, there are a few things to take into account. Take a tour of the gym. Get a breakdown of prices and know how the gym’s cancellation policy works. Ask plenty of questions. And most importantly, read the contract.

Ask these questions when reading a gym contract. Buyers can cancel their membership within three business days of singing a contract. Is there a buyer’s right to cancel clause near where you will sign? The statutes explain how gyms are able to transfer gym memberships. Are the statutes clearly stated and bolded?

McCaskill’s right to cancellation clause wasn’t near where she signed, but at the top of the next page. Also, the state statutes weren’t listed on the contract. She says her experience has taught her a lesson.

“It’s a big eye-opener when you sign something, and it comes back to bite you,” McCaskill said. “I used to be like, oh whatever, just sign my name, get all the free discount—but not anymore.”