Fiscal Fitness and Health Club Contracts

Sometimes, a firm’s competitors are a good source on what a company is or isn’t doing.

This was the case after I wrote two columns about Bally Total Fitness, the nation’s largest health club. One customer had told me Bally switched her contract from a one-year to a three-year. There were allegations of improprieties in the way Bally handled its customers, most regarding the difficulty of getting out of a contract with the club.

That first column, Nov. 23, inspired other complaints, and soon Bally gave a fuller explanation. On Dec. 14, I quoted its officials as saying they have a policy against misrepresentations by their employees. I finally said Bally should “get some benefit of the doubt.”

Quite a few readers did not like that column. Mark Donnelly of Studio City e-mailed me: “I was very surprised to find you so naive and gullible on the matter of Bally and its . . . policies. . . . To my mind, you did sloppy reporting, sir.”

Donnelly said he belongs to L.A. Fitness and likes it in part because, “A member is free to quit at any time with a 60-day notice. The difference [with] Bally is staggering.”

Meanwhile, I received two e-mails from proprietors of gyms in Santa Barbara and Simi Valley who contrasted their policies with Bally.

Gretchen Brinser, who along with her husband owns the 800-member Santa Barbara Gym and Fitness Center, said the longest contract they sell is one year.

“About half of our members purchase memberships on [such a] contract,” she wrote. “We call them continual members and they pay $29 dues monthly via electronic debit.” At the end of the first year, they go month to month.

“Administering the continual membership program is my job, and it involves a lot of computer time and paperwork. Every month, people close checking accounts, max out credit cards, freeze their memberships (taking time off for a $5 monthly fee), break their legs, break up with girlfriends. . . .

“While we may get one bad check over the counter every few months, we get about 10 electronic returns per month. Because we put a premium on member retention, we take a restrained approach to collections and end up absorbing more than half of these returns plus the bank fees. . . .

“We feel it’s important never to alienate a member even when they’re quitting, because we rely heavily on small-town word of mouth. So instead of being heavies and demanding people maintain contracts which they clearly have no more use for, we ask [such] people to buy out their contracts at $5 per month, as if they were freezing for the rest of the year. Most people find this a generous break.

“We have never, and will never, ding anyone’s credit rating for nonpayment on a gym contract. . . .

“Most of our continual members are . . . reliable payers. It’s just that those who aren’t are a lot of work. Because of this, I simply could not bear the thought of asking people to commit to contracts of longer than one year.”

Ronald Meek, managing general partner of Oakridge Athletic Club in Simi Valley, also e-mailed me.

“A dirty little secret in the health club business is that most people do not stick with their exercise program despite the best intentions,” he wrote. “A significant percentage never return after the first few weeks. . . .

“Oakridge Athletic Club . . . operates on a month-to-month membership basis. There is no contract. An existing member makes the choice every month whether to continue paying dues or void the membership. . . . I just thought you should know that all health clubs are not created equally. Please do not paint us all with the same brush.”

After receiving these messages, I contacted Sonny Reser, Western regional vice president for Bally, who was helpful with the second column, and arranged to see him. First, I faxed him the messages.

There’s no question, Reser informed me at his Norwalk office, that payment contracts, mostly for 36 months, form “the essence of our ability to keep membership rates low. These are based on the commitments to pay us.”

And with this policy goes a determination on the part of Bally to collect on these contracts.

“If you neglect to pay on our contracts, there will be a bad mark on your credit,” he said.

“But rest assured, that’s the worst that will happen to you. Whatever the collection efforts, they are done at that point. . . . We won’t take customers to court.”

Reser said that signing up millions of members to contracts also provides the finances for well-equipped and well-performing gyms. And he said, “There is no redlining at Bally. We open facilities in minority areas.”

Reser suggested I visit one of these, in Hawthorne, and then go to the Palos Verdes Estates club. Then I could see for myself that the two areas were treated equally.

I did go to both health clubs. The club in Hawthorne, where a majority of those working out in the midafternoon were black, was just as well equipped as the predominantly white club in Palos Verdes Estates.

The manager at the Hawthorne club, Tony Beard, said the sale price at Bally, $19 down and $19 a month for 36 months, is a good deal, and he added that members petition Bally to provide new pieces of exercise equipment. Often these, he said, are forthcoming.

So Bally has its arguments.

But I also think the advice in another e-mail from Robert Gordon, general counsel of the health club Bodies in Motion is pertinent when signing any health club contract.

Gordon writes:

“1. Read the contract before you sign it.

“2. If representations are made to the customer, have the salesperson show you where they are contained in the contract.

“3. [If] you can’t find the representations in the contract, have the salesperson write the representations on the contract and have him initial and date the addendum.

“4. Get a complete signed copy of the contract and addendum. . . .

“5. Don’t be reluctant to ask questions.”

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Ken Reich can be contacted with your accounts of true consumer adventure at (213) 237-7060 or by e-mail at ken.reich@latimes.com