Clear agreements are important for clients and your business
Signing up a new client is always a good thing. However, for fitness club operating in Ontario, make sure that your agreements comply with the province’s consumer protection laws before clients sign on the dotted line.
Consumer Protection Ontario (CPO), part of the Ministry of Government and Consumer Services, has a mandate to promote a fair, safe and informed marketplace. CPO also administers several consumer protection statutes including the Consumer Protection Act (CPA).
The CPA is broad marketplace legislation and regulates most consumer-to-business transactions in Ontario. The CPA prohibits unfair and unconscionable representations to consumers and sets out mandatory terms for certain types of agreements.
Fitness clubs made the top 10 list of inquiries and complaints received at the Ministry of Government and Consumer Services in 2014 and 2015. The top four fitness sector issues reported in 2015 relate to: agreement cancellation; the 10-day cooling-off period; billing disputes and allegations of misrepresentation. Don’t let yourself or your club become the subject of a complaint. Make sure you are aware of and follow all requirements under the law.
Fitness industry agreements are called “personal development services agreements” under the CPA. Any time fitness-related businesses enter into an agreement with a consumer to provide goods or services worth more than $50, a written agreement must be in place. The CPA identifies specific details that must be disclosed to clients who sign these types of agreements. Services provided for health, fitness, diet, martial arts, sports, dance or other similar activities, where facilities or instruction are provided, fall under the disclosure rules for personal development services agreements. Any incidental goods that are provided in addition to these services (such as supplements, refundable access cards, etc.) are also covered by these rules.
Details that must be set out in these agreements include:
The client’s name.
The name, telephone number, fax number, email and address of your business.
The date the agreement is entered into.
The name of the person who solicited the consumer in connection with the agreement, the person who negotiated the agreement with the consumer, and the person who concluded the agreement with the consumer.
A list of the personal development services that will be made available to the consumer and the dates that they will be available.
A statement outlining the consumer’s rights under the CPA.
The total amount payable by the consumer and the terms and methods of payment.
The start and end date of the agreement.
The requirements for renewal or extension of the agreement.
You can find a full list of mandatory agreement disclosures online.
Before clients sign an agreement, it is a good idea to have a conversation about what that agreement contains. Let clients know that when they sign an agreement with you, they are entitled to a 10-day cooling-off period. Under the CPA, your clients can cancel an agreement at any time within the cooling-off period, without providing a reason. We suggest that consumers cancel the agreement in writing and for businesses to keep a copy of the cancellation letter for their records. Keep in mind that if an agreement is cancelled, you have fifteen (15) days to refund any payment made to the client.
Please note that if you charge a yearly membership fee, clients have the option of paying that amount in equal monthly installments. In addition, the total amount paid by installments cannot exceed the membership or initiation fee by more than 25 per cent. Also, if you charge initiation fees, the total amount for initiation fees cannot be more than twice the total annual yearly membership.
You should also know that the term of an agreement cannot last longer than a year. If an agreement provides for renewal, a written notice of this renewal with required disclosures must be sent out to clients at least 30 to 90 days before the agreement expires. If a client provides notice of cancellation before the expiry date, the agreement cannot be renewed or extended.
Finally, make sure your agreement terms are clearly stated, easy to understand and comply with consumer protection laws. Failure to provide the required information may result in the agreement being non-binding. Both you and your client will be better protected by a clear agreement that complies with consumer protection laws.
What’s New Under the CPA?
Effective April 1, 2015, Consumer Protection inspectors obtained new authorities that allow them to take a more preventative and targeted approach to enforcement. They are now allowed to proactively enter a place of business, examine documents relevant to their inspection, and issue warning letters and/or orders to address and correct agreement disclosures.
From January to April, 2016, our inspectors have conducted close to 100 inspections in the fitness sector. These inspections provided an opportunity to educate businesses about various requirements and promote compliance under the CPA.
Many agreements with consumers miss or incorrectly state key information related to:
The consumer statement of rights – This statement must be exactly as set out in the regulation.
Consumer notice of cancellation – The Act specifies that consumers may give notice of cancellation in any way to a business, either verbally or in writing. Additional terms in the agreement which specify that a consumer must cancel the agreement in person or with a specific individual are not allowed.
Renewal – If the agreement provides for renewal, the fitness club must still send out a notice of renewal in writing that complies with the CPA at least 30 to 90 days before the agreement expires. Failure to do so will mean the agreement cannot be renewed.
Statement of goods received – If goods such as an access pass are provided for a fee and are to be returned to the fitness club at the end of the agreement, there must be a clause in the agreement that complies with the CPA and explains the specifics of this arrangement.
Looking for more information?
Visit Consumer Protection Ontario online.
Contact us at 1-800-889-9768.
Key Information About Consumer Rights That You Should Share With Your Clients
A consumer may cancel an agreement at any time during the period that ends ten (10) days after the later of the day the consumer receives a written copy of the agreement and the day all the services are available.
A consumer does not need to give the supplier a reason for cancelling during this 10-day period.
In addition, there are grounds that allow a consumer to cancel an agreement. Consumers may also have other rights, duties and remedies at law. For more information, a consumer may contact the Ministry of Government and Consumer Services.
To cancel an agreement, a consumer must give notice of cancellation to the supplier, at the address set out in the agreement, by any means that allows a consumer to prove the date on which the consumer gave notice. If no address is set out in the agreement, a consumer can use any address of the supplier that is on record with the Government of Ontario or the Government of Canada or is known by the consumer.
If a consumer cancels the agreement, the supplier has fifteen (15) days to refund any payment the consumer made and return to the consumer all goods delivered under a trade-in arrangement (or refund an amount equal to the trade-in allowance).