In Ontario, most gym memberships or contracts are regulated by the Consumer Protection Act, 2002 (Act). The Act applies to any gym or other physical activity membership if you have to pay $50 or more in advance. These contracts as classified as “personal development services” agreements under the Act. The rules in the Act apply to most gyms, sports clubs, dance classes, martial arts clubs and yoga studios. They do not apply if the gym or fitness centre is a not for profit (such as a YMCA), is owned by its members or is run by a city or the Province of Ontario.
Recently, there have been some reports in the media that some gyms and other physical activity clubs have been reclassifying their contracts as “student tuition agreements” to avoid their obligations under the Act.
How a contract is classified can make a significant difference in your rights as a consumer. Of course, although a gym may try to classify a contract as a student tuition agreement, there is no guarantee that a court would agree with that classification. However, challenging this would require you to take legal action, which could take time and cost you money.
As mentioned, gyms and other physical activity clubs may try to classify their contacts as student tuition agreements, because there are strict rules for personal development contracts. Under the Act, you have the following rights when you sign a personal development contract:
- The contract must be in writing;
- The gym must give you a copy of the contract, if you do not receive a copy, you can cancel the contract at any time within 1 year of signing;
- After receiving the contract, you have a 10 day cooling off period, where you can cancel the contract, without any reason, and do not have to pay any penalty;
- The contract cannot be for longer than 1 year;
- Instead of being for 1 year, the contract can be on a month to month basis, but then you can cancel on 1 months’ notice;
- If there is an initiation fee, it cannot be more than double the cost of the annual membership;
- Gyms must offer an instalment plan that allows you to make equal monthly payments;
- The total amount paid under the monthly instalments must not be more than 25% of the fee if the full amount was paid at the time of signing; and
- There’s a minimum warranty on the quality of the gym services, which means that it must provide you with a reasonable use of its premises and equipment, the premises should be clean and there should be sufficient space and equipment.
If the contract is classified as a student tuition agreement, then none of these rights would apply. Sometimes gyms are trying to classify their contacts as student tuition agreements so that they can:
- Automatically renew the contract for more than 1 year;
- Not provide you with a copy of the contract; and
- Bill you for 2 months within the first few weeks.
Some consumers have complained that they are invited to attend free trial classes at a gym or club and then are pressured into signing a student tuition agreement. You should not sign any contract for a gym or a physical activity club until you have reviewed and made sure that it is a personal development contract that protects you rights under the Act.
This blog post was written by Paul Franco, a member of the Business Law team. He can be reached at 613-369-0363 or at firstname.lastname@example.org.