New Zealand's gyms have been told to shape up, after a Commerce Commission review found some of them signed up customers to unfair contracts.
More than 700,000 New Zealanders belong to a gym or fitness centre. Photo: 123rf.com
The contracts included clauses allowing gyms to unilaterally vary their location and services, the commission said. Many contracts were not written in plain English, while others contained complicated and onerous cancellation processes.
The review considered 10 standard membership agreements from gyms, including household names like City Fitness, Club Physical and Les Mills.
However it has not stated in detail which breaches applied to which gyms, as the commission usually did in reviews of this type.
"This report samples only a segment of the market, and we value the cooperation of the gyms that supplied us with information," the commission said.
"As this is an incomplete market survey, we have provided a general discussion for the benefit of all market participants."
The commission said it was satisfied with the response of gyms to its review.
It said some of them re-wrote their contracts, or provided justifications for the criticised clauses to protect their legitimate business interests.
In response to the Commerce Commission report, Exercise New Zealand chief executive Richard Beddie said it was actually grateful to the Commerce Commission for giving guidance on how to be certain that contracts are fair.
"They identified issues that they thought the common gym contracts could improve on," he said.
"Most importantly, the gyms came back and said they were happy to change those and the changes were made."
Mr Beddie rejected a suggestion that he should have anticipated problems with or without a Commerce Commission report.
"The Commerce Commission has produced a very useful report," he said.
"Now we can work together with the clubs to make sure everyone is complaint."
Gyms were the third sector to be reviewed by the commission, following reviews into retail telecommunications and energy contracts.
Commissioner Anna Rawlings said there were a range of consumer complaints over gyms, with more than 700,000 New Zealanders belonging to a gym or fitness centre.
But she said the commission was satisfied with the response from gyms to its concerns, "with all providers demonstrating a desire to comply with the law, either justifying how the terms are necessary to protect their legitimate business interests or agreeing to amend their contracts".
For some it prompted a complete rewrite of their contracts, Ms Rawlings said.
"It was particularly pleasing to see gyms amending their termination clauses and associated fees.
"This includes some gyms reducing their 30-day notice periods for cancellations outside any minimum term down to between seven and 14 days.
"Some gyms also amended provisions relating to their liability to members, and variation clauses about their location and the services they offer."
The full review can be read online here (939KB).