Membership Contracts and Why You Need Them

Membership Contracts and Why You Need Them

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Memberships are an ideal way for any business to generate revenue, but this is especially true when it comes to fitness businesses. Memberships are a commitment both mentally and financially, and they provide business owners with a recurring revenue stream so they can focus more on providing an amazing service instead of new customer acquisition.

There are several necessary steps to take if you want to make a membership a successful business model for your company, but one of the first and most important ones will be developing your membership contract.

Start with outlining your fitness membership offering

Before you can write up a membership contract, you must be crystal clear on what the membership entails. Start by writing out a description!

●   What does the client get with this purchase?

●   Is it unlimited classes per month?

●   Does that include a personal training session?

●   Are any other services included?

●   Is it a limited use membership where the customer only gets 8or 10 classes each month?

Be clear about what access is given to your facility with the purchase of that specific membership.It is OK to have more than one membership offering!

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Questions to ask before building your contract

Membership contracts are not meant to be complicated, but the whole point is protecting you and your business, so you’ve got to get clear on the specifics. Each contract will have terms based on what you decide is appropriate for your company and your members.

Some of the questions you’ll want to ask yourself are:

●    What is the length of the contract? (i.e. Is this a 6 month commitment? 12 month? No commitment?)

●    What is the process and requirements for a member who wants to cancel? (Who do they contact? How do they contact you? Does it have to be in writing? Does email count or does it have to be a paper copy?

●    What are the penalties for cancelling early? (if any).

●    Under what circumstances can a customer cancel without penalty? (Be sure to check your consumer state laws regarding this as they will vary by state and you want to adhere to all laws!).

Just remember: We highly recommend that you require that cancellation requests be submitted in writing for your own documentation. Also, it is typical that a customer can cancel a gym membership without penalty if they move a certain number of miles away from a facility.

Overall, remember to be very clear in your communication with clients about the terms of the agreement and how to go about cancelling said agreement.

Membership contracts can protect your business

There are lots of reasons to put membership contracts in place, but one of the biggest reasons is to help protect you from customer charge backs.

Credit Card disputes can happen when a client sees a charge on their credit card statement and does not recognize the purchase. When they contact their credit card company to alert them of the“fraudulent” purchase, your business could lose that sale.

Businesses can protect themselves from this by making sure that their merchant descriptor is accurate with their payment processor and closely matches their business name. Sometimes, businesses will make a note of their “merchant description” on a sales receipt if it is different from their business name.

Other times, clients may dispute a charge because they believe they have been charged unfairly by a business and want their money back. As a fitness business, you likely have memberships as part of your package offerings, and it’s not uncommon for clients to forget about membership fees until after they see the transaction show up in their account.Because memberships are the most common type of revenue stream for fitness businesses, these are the transactions that are most likely to be called into question.

A strong membership contract, however, will prevent you from losing funds from charge backs incurred by clients who want refunds after their payment has been made.

How contracts can help you win a dispute

Cardholders are always supposed to contact the business first before disputing a charge. They are encouraged to contact the merchant and work it out.

However, if the cardholder cannot get in touch with the business or come to an agreement with the business owner regarding the charges, the cardholder may file a dispute with their credit card company to file a charge back.

When a disputed charge comes through, the business owner has an opportunity to respond by submitting evidence that the charge was legitimate to help them keep their money. Providing a copy of the contract with the customer’s signature attached lets the credit card company know that the cardholder was aware of the charge and agreed to the charge(s) based on the terms of the agreement. If a dispute is ignored by the merchant, favor is automatically given to the cardholder.

While you may not win every membership dispute just for having a contract in place, having one will be a key factor in your success if you do.

Conclusion

Having a membership contract in place is an essential step for the success of your fitness business. When you outline your offering clearly, set up the proper parameters, and enforce the contract when needed, a membership contract will protect you from unnecessary charge backs and help to keep your wellness business financially fit.

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About the author:

Ali Taber
Support Specialist
fitDEGREE

Ali is a former fitness trainer and studio owner who turned her sites to the world of software after closing her business during the heat of the Pandemic. Ali brings an awesome perspective to our team as a previous studio owner and sends the most detailed emails you will ever receive from a support person!  When she is not crushing it with fitDEGREE support, you can find her somewhere on a bike.