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| IHRSA Report | In Brief
he month of January is a busy time for every club, as consumers set
T
out to make good on their New Year’s resolutions to get healthy.
With each new member comes a signed contract. Contracts are a
critical component to the everyday operations of a fitness facility.
One of the key provisions in a club contract is the length of the
membership agreement and any continuation-of-services stipulations, also
known as automatic renewal.
New Year
During these tough economic times, state lawmakers have focused more
attention on consumer protection legislation to protect citizens from unscrupulous
Brings
businesses. In some states, this has meant increased scrutiny of health club
membership contracts, in particular continuation-of-services provisions. In 2009,
IHRSA successfully fought the passage of legislation seeking to restrict, or outright
Renewed
ban, automatic renewal in nine states.
“If a state passes a restriction or an outright prohibition of automatic member-
Vigilance
ship renewals, it would dramatically affect the bottom-line of every health club in
that state,” says Amy Bantham, IHRSA’s deputy vice president of government
relations. “There would be significant financial, administrative, and operations
Against
implications for clubs, if such legislation is not stopped.”
In 2010, one of the most immediate implications for clubs in states considering
passage of continuation-of-services legislation would be the creation of new con-
Harmful
tracts and the laborious process of having all current members sign new agreements
with the facility. As any club operator can imagine, this would be a costly, time-
Legislation
consuming burden. Often, legislation proposing restrictions would require that
written notices be sent to members notifying them of contract renewals within
30-90 days. For some facilities, this could necessitate the hiring of a new staff
person to constantly monitor renewal dates and organize the required mailings.
Clearly, this administrative burden would have an impact
on profits, especially when margins are thin.
What often becomes apparent is that legislators are
generally not ill-intentioned when drafting the legislation.
“We frequently find that lawmakers have not fully considered
the unintentional effects of their bills,” says Tim Sullivan,
IHRSA’s legislative analyst. “They’re not aware of the
impact it will have on business operators or on consumers
who will be inconvenienced and often end up paying
higher prices to cover the increased administrative costs.”
According to research, 70-80% of IHRSA member clubs
offer month-to-month agreements, and clubs report that
this is the most popular membership agreement option
they offer, being utilized by 40-45% of members. Legislation
that restricts or prohibits month-to-month memberships
would thus severely limit this popular consumer choice.
“As IHRSA reaches out to legislators to educate them about the impact on
businesses and consumers, we’ve continually seen the dramatic impact that
grassroots advocacy can have on issues such as automatic renewal,” says Bantham.
In Mississippi, North Carolina, and Texas, fitness professionals took part in IHRSA
Grassroots Initiative campaigns by writing letters to their state legislators oppos-
ing bills in their state. In Texas, nearly 200 letters were sent to legislators on a bill
that would have placed restrictions on the use of automatic renewal clauses in
contracts. Thanks, in part, to industry advocates, the bill failed to move forward.
In 2010, IHRSA will continue to actively monitor legislation in all 50 states. Fit-
ness professionals will be notified promptly of any legislative issues of importance
to the fitness industry, including continuation-of-services legislation, that are
introduced in their state legislature during the upcoming legislative session.

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.org
For information or to make a contribution to the Industry Defense Fund, log on to http://ihrsa.org/pledge.
96 Club Business International | JANUARY 2010 | www.ihrsa.org
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