Joining a Pre-Paid Club

What do fitness and diet clubs, dance lessons and tae kwon do classes have in common? They’re all businesses covered under a special provision of the Consumer Protection Act, 2002 a law that helps keep their members’ finances fit. The act calls the type of agreements “personal development services agreements.” It protects you when you sign a contract with a membership club or service, if the cost to join is more than $50.

Quick Tips

Find out if the instructors are qualified.
Is the equipment appropriate and well kept? Be wary if a lot of the equipment is out of order. All equipment breaks down once in a while, but if a member answers “two months” when you ask how long it’s been since the bike broke, you may wish to go elsewhere.
Is the club clean? Dirty carpets and neglected washrooms may be an early sign of financial trouble.
Is there enough room in the club? Visit the facility at the time of day you’d want to attend. Classes should neither be so full there’s no room to move, or so empty they may be cancelled.
What are the club hours? Special sessions are sometimes reserved at particular times – children’s lessons on Saturdays, for example. Make sure the club schedule fits yours.
Even after you’re satisfied the club is for you, read the fine print in the contract. It should include:
- your full name, the club’s name and address;
- a full description of the services you are purchasing;
- the contracted price;
- conditions of cancellation and renewal;
- a complete explanation of the total amount you pay on joining, including the number and amounts of payments and additional charges for payment by instalment, if applicable;
- the start-up date for each service that is part of the contract;
- the dates the agreement begins and ends.

Your Rights

A 10-day cooling-off period. It’s easy to get caught up in the excitement of a club when touring the facility, but interest sometimes cools once you’ve had time to think about it. Under the Consumer Protection Act, 2002, you have the right to cancel within 10 days of receiving a written copy of the agreement the day all the services in the agreement are available, whichever is later. You don’t need a reason to cancel. All you need is to provide notice to the supplier.
The Consumer Protection Act, 2002 offers special protection for consumers who join a club that has not yet opened if the consumer is not using another club. Club owners can pre-sell memberships before the club is open, but the money must be held by a registered trust corporation that acts as a trustee. If you agree in writing to use another club, you have only 10 days from the start of those services at that club to cancel your contract.
A notice to cancel can be given in several ways. It can be hand-delivered (it’s wise to obtain a signature on a delivery receipt and keep it) or sent by registered mail. Registered mail may be the best option, as it confirms delivery. Make sure you keep a copy for your records.
If you’re joining a new club, take advantage of the 10-day cancellation period to use the facilities and make sure you’re happy with your choice.
Initiation fees cannot total more than twice the annual membership fee and the length of a membership contract cannot be longer than one year. No legislation can prevent the financial collapse of a club, but by limiting the contract to a year, if the club does go down, your losses won’t be as great as if you’d paid for several years in advance.
The club must offer you the option of paying membership dues and any initiation fees in monthly instalments. It can charge up to 25 per cent more than the total would be if payment were made upfront – but then there’s no danger of a big loss if the club goes bankrupt.
All contracts must end after one year. Contracts can be renewed only if the supplier complies with certain rules, including providing the consumer with a notice that the contract will be renewed at least 30 days before it is to happen. That notice must advise the consumer that the agreement will not be renewed if the consumer notifies the supplier not to renew the contract. If your membership is renewed, and you have not been provided with a notice, send the company an "illegal collection letter". You can demand your money back.
Under law, there’s a minimum warranty on the quality of services. In short, the services must be of reasonably acceptable quality. If they aren’t, you should consider filing a complaint.
Personal development services agreements must disclose certain required information. If a company isn’t delivering on the contract, or if you encounter an aspect that wasn’t disclosed but was required to be by law as part of the deal (e.g. an annual renewal fee), you have the right to cancel within one year.
Additionally, a contract may not add clauses that dispense with your basic rights under law (e.g. they can’t attempt to negate the 10-day cooling-off period.)
What if the club’s representations or sales pitches turn out to be false or misleading? Under Part III of the legislation, you have the right to cancel within one year if you can show you have been the victim of unfair business practices. The best way to do this is by sending a registered or hand-delivered letter. To find out more see, filing a complaint.