Proposed reforms in Australia are addressing various practices related to gym membership cancellations. Consumer advocates have highlighted issues such as requirements for physical branch visits to cancel, fees or limits on pausing memberships, and exit fees that may exceed the value of the remaining contract. Legislation has been proposed to make membership cancellation as straightforward as the sign-up process, a concept that mirrors a previous initiative in the United States which was overturned due to procedural deficiencies.
Overview of Proposed Reforms and Concerns
Consumer advocacy groups have identified several practices within gym membership cancellation processes. These include requirements for members to physically attend a branch for cancellation discussions, the imposition of fees or restrictions on pausing memberships, and exit fees that may exceed the value of the remaining contract.
Advocates propose legislation designed to make canceling a gym membership as simple as enrolling. This approach aligns with a prior initiative by the Biden administration in the United States for similar laws, which were invalidated by a federal appeals court in July due to procedural deficiencies.
Industry Perspectives
AUSactive, an industry body, through its representative Mr. Griffin, has expressed concerns regarding the proposed principle of making cancellation as easy as enrollment. Griffin indicated that requiring a member to undergo the same consultation or equipment testing procedures for cancellation as for joining would be impractical. He also stated that laws simplifying contract exits could conflict with the industry's established business model, which often offers discounted rates in exchange for membership certainty.
Griffin explained that providing discounted rates for longer contract periods offers gyms predictable income, enabling them to maintain staffing levels. He noted that gyms are obligated to uphold their contractual commitments to members, preparing facilities and classes regardless of individual member attendance. AUSactive maintains a voluntary code of conduct that addresses maximum membership lengths and cooling-off periods, which Griffin suggests is a more effective approach for sector improvement.
Small Business Considerations
Lynsey McGee and Mac Redinbaugh, operators of Hiscoes gym in Sydney, highlighted that independent gyms prioritize accountability to their members. They have adopted a strategy of offering more short-term memberships and facilitating easier cancellations for longer-term options, observing that this approach encourages former members to return. While memberships constitute the primary revenue source for their business, McGee indicated support for laws that prevent businesses from complicating customer cancellations, provided that such online-centric provisions are carefully adapted to avoid unduly burdening small, physical-premises businesses. Redinbaugh added that small businesses often lack the legal resources of larger corporations to navigate complex regulations.
Financial Overview of the Fitness Sector
According to IBISWorld analysis conducted this month, memberships are the principal income stream for Australia's approximately 8,000 gyms and fitness centers. Memberships account for approximately $2.2 billion of the sector's annual revenue of $3.7 billion. Other revenue sources include personal training ($472 million), classes ($417 million), and casual entry fees ($304 million).
Erin Turner, CEO of the Consumer Policy Research Centre (CPRC), commented that while some gyms have implemented effective practices, a significant portion of the sector requires improved conduct. Turner asserted that complex or costly membership termination requirements limit customers' ability to explore and accept alternative offers, identifying these practices as among the early examples of what are now known as 'subscription traps' in the online sphere.