Why do gyms have contracts?
Gym contracts often have a bad reputation as being hard to cancel and unnecessarily binding. Even the idea of signing one of these contracts is enough to send some potential members running. Gym members often wonder ‘why do gyms even have contracts?’ And, honestly, it’s a good question. Most of us assume that it’s due to owners wanting to lock in their members so they can maximize profits, but in reality, contracts were created to benefit both members and gym owners alike. In this article, we are going to outline the benefits of having contracts so we can let go of the classic stereotype of gym owners stealing money from their clients once and for all.
5 reasons why gyms have contracts
Helps reduce liability
In their most basic form, gym contracts are simply an agreement between a business and its customers that helps to outline the expectations of both parties. They are also used to keep everyone safe in the event of an accident. By signing a gym contract, members have clear expectations of the services that are to be provided by their facility, and these contracts give them grounds for reimbursement should the gym fail to meet these requirements. This means that a big fitness facility can’t close its doors without first reimbursing all of its members for the remainder of their memberships. It also gives members the chance to voice their concerns should their gym begin slacking on things like sanitation. Gym contracts also help to keep gym owners safe in the event of an accident or injury within their facility. Contracts are usually a must-have for any fitness facility since they’re necessary for insurance and can protect them from a potential lawsuit.
Keeps prices for members low
Some gyms choose to operate by having contracts that bind members to anywhere from 6-12 months at their facility, with no option to cancel. But even the gyms that don’t require any long-term contracts often offer discounts to any members willing to sign up for anything longer than a monthly contract, with a noticeable discount off the monthly price. The reason you’ll find most gyms offering similar discounts is that it guarantees revenue for the allotted time frame and keeps members consistent with their workouts for at least as long as their membership lasts. These kinds of discounts help gym owners gauge their recurring revenue and also give members the option of partaking at a lower monthly rate than they would have previously, making this a win-win for both parties.
Helps with bookkeeping
Another reason gym owners push for longer contracts is that it makes it easier for them to gauge the facility’s expected revenue every month. Having members contractually obligated to pay their monthly fees ensures a certain amount of profit per month for the gym owner, regardless of whether or not members are showing up. Having these recurring monthly payments can help to relieve the anxiety that some owners experience surrounding their business being profitable. And because owners are able to see their expected income per month, they have the opportunity to run promotions designed to increase revenue during their slower months.
Keeps members committed
It might seem that contracts are created in the interest of gym owners, but they are also created to serve the interest of their members, especially when it comes to accountability. Someone signing up to a gym in the hopes of accomplishing a new fitness-related goal only to quit a month or two later is something that we see all too often in the fitness industry. By signing onto a yearly contract, it means that you will stay committed for an entire year—or at least your bank account will. This sort of accountability can help keep some members on track during the times that they feel tempted to quit. Longer contracts also serve as a sort of vetting process for members, especially if the club operates with some exclusivity. Requiring a 12-month commitment, for example, means that anyone who is not seriously committed to their fitness journey will be unlikely to sign up.
Outlines the payment agreement
Contracts are also helpful in the way of outlining the start and end date of a person’s membership as well as exactly how and when they will be paying for the services rendered. This can make all the difference for anyone using gym software to automate payments. Having this written agreement of when and how members are expected to pay ensures that their facility is seeing their revenue when they should and prevents front desk staff from having to chase down members for overdue payments. It also means that should a member decide to stop paying for their membership all of a sudden, there is a mutual understanding of the penalties that coincide with this decision.
Bottom line
Getting members committed to a long-term contract isn’t always easy since a lot of people are put off by the commitment. Although sticking to month-to-month membership might seem easier, there are clear benefits to getting members committed to your club. Keep in mind that having an easy sign-up process with obvious long-term benefits can help nudge new customers towards signing up for a longer membership. Enlisting the help of gym management software that allows for paperless contracts that can be signed prior to members walking through your doors, as well as flexible membership options, and easy debt collection makes the sign-up process easier for your staff, as well as your members. This can make all the difference when it comes to getting members signed up with you for the long haul. If this sounds like something your gym needs, click here for more information.
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