Office of Fair Trading
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Three gyms improve contract terms following OFT action
The three health and fitness club operators, with almost a million members between them, co-operated with the OFT's investigation and have given undertakings that they will no longer use contract terms or practices considered unfair by the OFT. Specifically the OFT has secured:
- extended rights for members to cancel their contracts early should their circumstances change in a way that makes attendance at the gym difficult or unaffordable - for example if they lose their jobs or suffer an injury
- a commitment not to describe membership as being of a fixed duration, if the contract automatically continues on a rolling basis after the initial membership period has expired
- greater transparency about key membership features, including initial membership periods and cancellation rights, and for these to be provided upfront as part of the sales process.
Cavendish Elithorn, Senior Director of the OFT's Goods and Consumer Group, said:
'Millions of people are members of gyms and a membership contract can easily be a financial commitment of over £500 per annum. We were concerned that contracts could unfairly lock people in if their circumstances changed - forcing them to continue paying even if they had lost their job.
We welcome these changes from Bannatyne's, David Lloyd and Fitness First. As well as making contract terms clearer, the revised contracts also grant members, and prospective members, more flexibility.
Meanwhile, we are continuing our investigation into some other companies in the sector and will provide an update in the coming weeks.'
The OFT launched its investigation after a previous High Court ruling against a gym management company found lengthy gym membership periods can be unfair when they lock people in without adequate cancellation rights when their circumstances change. The OFT had concerns that others operating in the sector might be using similar unfair contract terms.
The OFT is also reminding people to carefully consider the terms of the contract before they take out a membership at a gym or health club, be willing to shop around and find out what their options are if they want to cancel their membership. The OFT recently issued a consumer alert advising people of their rights.
NOTES
- See the case closure summary for further details of the undertakings provided by Bannatyne Fitness Limited, David Lloyd Leisure Limited and Fitness First Clubs Limited to the OFT, including copies of the undertakings.
- Undertakings under Part 8 of the Enterprise Act 2002 were given by Bannatyne Fitness Limited, David Lloyd Leisure Limited and Fitness First Clubs Limited and relate to alleged breaches of the Unfair Terms in Consumer Contracts Regulations (UTCCRs) and the Consumer Protection from Unfair Trading Regulations 2008.
- The UTCCRs protect consumers against unfair standard terms in contracts they agree with traders. The OFT can take legal action to prevent the use of potentially unfair terms. A term is likely to be considered unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations under the contract, to the detriment of consumers. A consumer is not bound by a standard term in a contract with a trader if that term is unfair. Ultimately, only a court can decide whether a term is unfair.
- 'Health and Fitness Clubs - UK' Mintel (November 2012) reported that David Lloyd Leisure Limited has 450,000 members, Fitness First Clubs Limited has 336,000 members and Bannatyne Fitness Limited has 185,000 members. Mintel also reported that average annual membership revenue was £485 per consumer in 2011.
- The OFT closed its investigation into Virgin Active Limited in April 2012. See case summary for further details.
