How to Maximize the Enforceability of Your Membership Agreement
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Paul R. Bedard, Esquire
The repeated and ongoing execution of membership agreements is obviously pivotal to the success of any health club. However, a signed membership agreement is not necessarily synonymous with an enforceable agreement. Moreover, a membership agreement that is in violation of your applicable laws will not only render the agreement unenforceable, it may also prove to be a financial liability. However, by understanding the laws as they apply to your business and by practicing sound sales and trade practices, you can maximize the enforceability of your membership agreement.
Membership agreements, like any other contracts, are typically found to be unenforceable for one of two general reasons: violations of statutory law or issues that give rise to a legal defense to the agreement. This article is intended to highlight the primary aspects of membership agreements that are most commonly addressed by state statutes and to summarize the most relevant legal defenses to health club agreements. However, this article is not intended as legal advice. Widely varying laws specific to each jurisdiction prohibit one-size-fits-all recommendations. Please consider these comments as merely an educational guide to assist you when you consult your own attorney for specific direction.
Commonly Addressed Statutory Requirements
First and foremost, you must audit your membership contract to ensure that it conforms to all applicable laws within your jurisdiction. The most relevant laws in this regard are most often found within your state's legal statutes. It is critical that you understand these applicable state statutes. And, health club owners and operators who operate in multiple states need to tailor their agreements to each state's specific legal requirements. Although requirements vary from one state to another, there are several key aspects of membership agreements that are commonly addressed by statute.
From an applicability standpoint, the definition of a "health club" varies across states. Where I practice law in Connecticut, a "health club" is "any corporation, partnership, unincorporated association or other business enterprise offering facilities for the preservation, maintenance, encouragement or development of physical fitness or wellbeing in return for the payment of a fee entitling the buyer to the use of such facilities. Such term includes, but is not limited to, 'health spas', 'sports and health clubs', 'tennis clubs', 'racquet ball courts', 'golf clubs', 'platform tennis clubs', 'gymnasiums, 'figure salons', 'health studios', 'weight control studios', and any organization primarily operated for the purpose of teaching a particular form of self-defense or martial art, such as judo, karate or kung fu, but shall not include any establishment from which a buyer may only purchase or become obligated to purchase services to be rendered for a period of not more than one month and which does not collect more than one month's payment in advance of the rendering of such services, nonprofit organizations, any massage establishment, any private club owned and operated by its members or any facility operated by the state or any of its political subdivisions." Some states have a very broad definition of what constitutes a "health club," whereas others define a health club more narrowly. It is important to understand your state's definition to determine what laws apply to your business.
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