Contracts and Retention

Discussion in 'Kuk Sool' started by SsangKall, Feb 23, 2010.

  1. SsangKall

    SsangKall Valued Member

    so the new masters thread brought up a subject that is a little sensitive (sensitive meaning it could turn a dinner between aquaintances into an argument between enemies); contracts. does signing up for a 1-3 year contract boost retention rates AND the virtue of being steadfast?

    whereas we teach kids about life i am not sure adults need to be taught life lessons in dedication from a dojang. they seem to want to learn techs for health and self defense. i dont think contracts work with that demographic
  2. Aegis

    Aegis River Guardian Admin Supporter

    1-3 years?? You would NEVER catch me signing up to anything that long for a martial art. I have issues even paying for a month at a time because I have lots of work commitments.
  3. unknown-KJN

    unknown-KJN Banned Banned

    Nonetheless, such long-term contracts do exist, Aegis. But I don't think it's a way to "coerce" people into a longer commitment, but rather a way to give a financial break to those who do know they want to commit to a long-range training program. FWIW.
  4. Mitch

    Mitch Lord Mitch of MAP Admin

    What would happen if my job moved after a year to another location where there is no Kuk Sool School? I know I want to commit to a long term programme, but events beyond my control and with a greater imperative (feeding my family) force my hand.

    Do I get my money back?

  5. unknown-KJN

    unknown-KJN Banned Banned

    Yup. According to most of the contracts I've seen, they do include a clause that allows you to not be responsible for additional payments, provided you can prove the move was beyond your control. Likewise with a doctor's notice for any disabling injuries (and of course, death - LOL). But I understand where the OP is coming from, as I have seen it used as a pressure tactic when signing people up, as a way to get more money up front (especially where the subsequent contract payments are split between the dojang and a separate finance company and/or collection agency).
  6. Mitch

    Mitch Lord Mitch of MAP Admin

    Who decides on what is proof and what is beyond your control. Just playing Devil's advocate, I've no experience on these things.

  7. unknown-KJN

    unknown-KJN Banned Banned

    IDK. I guess it would depend on the person running the MA studio. Some could be lenient while others not so much...
  8. VegasMichelle

    VegasMichelle Valued Member

    People seem to think long-term contracts are the norm and think that is the only option out there. In reality, there are schools out there with a 4-year contract option. But if you look closely, that same school has a day-to-day (pay-as-you-go) option, a monthly option, a 6 month option, a 1-year option, a 2-year option, etc. Most (not all...but most) school-owners are understanding people and try to work out the financials as best they can...even offering family discount plans if possible.

    What I notice is that the longer the contract option you decide to take, the greater the discount given. But if you know you are going to be moving alot or EVEN if you are UNSURE...why would you take a long-term option in the first place?

    It sounds like people want to have their cake and eat it too...meaning they want the biggest discount for the least amount of commitment, leaving the school-owner with the smallest security.

    It would be a completely different story if a school ONLY offered yearly or 2-year contracts and made you pay up-front! But AFAIK, I don't think they exist...atleast not in the US...because that business model is illegal (for a spa/gym/health club membership to only offer long-term deals without having short-term deals). But some out there try to effectively get away with it. I know of a place in Beverly Hills that offers 3, 4, 5-year contracts AND a daily pay-as-you-go option. The daily option is something like $129 for the day. This high price option basically guarantees that everyone who chooses to sign up...will sign up for a long-term contract because the daily price is simply ridiculous. FWIW, IMO, that daily price is there to stay within California Law.
  9. Mitch

    Mitch Lord Mitch of MAP Admin

    But you and I both know life isn't quite that simple, don't we? I might be fully intending to stay in an area, might have been living there for years etc, but (especially given the current economic climate) may be forced to move through no choice or fault of my own.

    At that point, I should be able to get my cash back, surely? Which, from what unknown-KJN says I probably can (though there is some uncertainty).

  10. VegasMichelle

    VegasMichelle Valued Member

    I'm not so sure how the UK works but in the US...if there is no "out-clause" in the contract...such as documented physical disability or death...a commonplace option is a "breaking of contract" penalty fee.

    Lets say you sign up for a 3-year contract at $100 per month for a total payment of $3600 but you need to cancel it because you are moving after only a year in. Believe it or not, in the US, there is something called an "early termination" fee. Instead of trying to enforce the full payment...many contracts allow you to break it by paying a small percentage.

    Even in the eye-gouging cellular/mobile phone market in the US...termination fees are roughly only $200....even though you may have signed a $150/mo all-inclusive 2-year data plan. So instead of playing $3600 (24 months at $150/mo) can get out of the contract for only $200...which isn't even that much considering in the US, when you sign up for a 2-year contract in the first place, they often given you a $100-200 phone for FREE which you get to keep.

    FWIW, I haven't seen these types of early termination fees enforced (or even offered) in WKSA schools...but they are definitely there in may BJJ schools. But then again many BJJ schools are often 2-3 times more expensive than WKSA schools so finances are a bigger consideration for them.

    If you BENEFITTED from getting a sizeable discount due to signing a long-term contract...I think the school-owner is entitled to a penalty fee. For example, using the previous example...if the normal monthly fee is $150/mo but you get a huge discount of paying only $100/mo provided you sign a 3-year contract....after a year, the school-owner should have earned $1800 ($150/mo for 12 months) but instead, due to your 3-year contract discount, you have only paid $1200 ($100/mo for 12 months). I would think the school-owner is entitled to the difference...namely $600 PLUS penalties specifically mentioned in the original contract.
    Last edited: Feb 24, 2010
  11. Ki_Power

    Ki_Power Banned Banned

    There are many loopholes out there...I know in California, There is a Business and Professions code section that states a gym or fitness business cannot continue to charge you monthly fees (Like auto pay) if you do not continue to use the service...and if you are paying auto and on a contract...once you quit, the contract is null.

    I don't take or use contracts in my school...only commitments!
  12. VegasMichelle

    VegasMichelle Valued Member

    Actually, in California, a company can continue to charge you for "a period not exceeding 1 year from the time of requested cancellation" if the original contract is longer AND none of the exceptions are met. And that is not the worst part! They can send the remaining dues to a collections agency and place a black mark on your credit history....which for some, who are trying to get loans for homes or a big deal. When you sue so that you dont have to pay...the original collections request made against you does NOT disappear for a period of 7 years in California.

    So I agree with you about some shady practices that goes on...I know of some gyms that require you to send written notice to HQs (because thats what the Law requires) and often times, HQs simply "loses" your letter or more frequently, claims to have "never received your cancellation letter" so they continue to auto-charge your credit card. LOL.

    But if you want an example of REAL shady businesses...look no further than New York Sports Clubs (NYSC). The vast majority of these gyms are in NY and cater to the New York market. But, they positioned their HQs in a much more business-friendly (ie consumer un-friendly) State of Pennsylvania. So try getting your money back from a is hard to do in PA.
  13. KSW_123

    KSW_123 Valued Member

    There is a difference between paying up front and a contract where you still pay month to month. There are strict rules in California regarding PIF's, paid in full.

    My opinion is that if a student doesn't want to train, I want them out of the studio. An unhappy student only there because of a contract is not something I want to deal with.
  14. Pugil

    Pugil Seeker of truth

    Don't you have 'recorded delivery' mail in the US? We do in the UK, so once someone has signed for the mail [in its little plain envelope], they can't deny having received it.
  15. Pugil

    Pugil Seeker of truth

    This is an example of what some Health Clubs (such as David Lloyd) do in the UK:

    2. Membership Term
    a) 'Initial term' means the full 12-month calendar period from the date you accept your membership, together with any partial month as mentioned in clause 3d.
    b) Your membership will begin on the first day of the initial term and will continue until it ends in line with clause A11.
    c) In line with clause A11, you can end your membership:
    • at the end of the initial term by giving at least one month's notice in writing; or
    • at any time after the initial term by giving three month's notice in writing.
    d) You cannot change your type of membership during your Initial Term.

    There are several other sections which I simply do not have the time to type out, although I will type the first line and-a-half from section 10. Suspending your membership
    a) You will only be able to suspend your membership free of charge in exceptional circumstances (that is, being made redundant or suffering a serious injury or serious illness which cannot be helped by exercise)...

    Section a) goes on for several more lines, and the Suspending your membership section also includes several more sub-divisions b - g.

    Then there are sections for Ending your membership, and also for Cancelling your membership

    Mind you, competition is so hot here in Cambridge (UK) for Health & Fitness clubs that anyone who wants to 'kick up a fuss' with the gym, will usually find that they don't really want the adverse publicity. Which means that there is usually more flexibility when 'negotiating' with them than what is written down in the Members' Handbook.
  16. unknown-KJN

    unknown-KJN Banned Banned

    I know you were asking VM, but allow me to answer this part of it...

    Here in the USA, we actually have 3 different varieties of mail/post that allow you to TRACK your letter/package, but the one which requires a signature acknowledging receipt is called "certified mail" and FWIW this particular type is the one used for legal purposes (I think). But I believe the "lost in the mail" excuse she was referring to was between a branch office and the headquarters for a chain of health clubs/spas, where such correspondence most likely wouldn't be certified as needing a signed receipt. However, the complaining client would undoubtedly resort to using it though, provided the person was aware of such technical trivia and how important it is to avoid any legal loopholes or shenanigans. :cool:
  17. Saja

    Saja Valued Member

    In many States, as well as in Canada, such long term contracts are illegal. In other States, they may be legal; however, the school owners may have had to post a bond to show good faith in being around long enough to honor the contract.

    Many of these laws came into effect after the fitness industry had some major issues with taking people for a loooonng ride. Remember Vic Tanny's
  18. WalkInPeace

    WalkInPeace Valued Member

    I have seen different contracts come up in the form of getting a discount if you make a long-term commitment. I know there is a Karate school locally where you have the option of paying a one time fee, and never paying anything again (it is a substantial fee, but it works out to be a savings over paying as you go until you reach black belt).

    I have also seen schools that offer monthly fees, and then a discount if you sign a contract for a year (you can sign the contract, and break that payment out over the year, too).

    However, it is generally known that these contracts are completely unable to stand up in court.

    What I would shy away from are schools that that only have contracts where you have to lay out a lot of money ahead of time, with no other options.
  19. KIWEST

    KIWEST Revalued Mapper

    My students ALL pay on a monthly basis by direct debit straight from the students bank. Payments can be varied with as little as 10 days notice. I use a very customer friendly billing company, who also put on many free seminars for school owners to help them improve and grow their business and also cover legal issues. These are often very beneficial to the students as well as the school owners as they can cover training issues, offer discounts on training seminars and also involve a lot of networking with other schools.
    The agreement they sign states that if they wish to leave, they should give 3 months notice and that if they cannot do this for some reason (ill health etc) then they will be asked to pay just one single months fee. In fact, all that happens if a student cancels without informing me is that they recieve a standard letter requesting one months fee. Although I believe this to be reasonable, I rarely bother to follow the letter up as it is not worth the hassle. Also my personal feeling is that if I haven't made that student want to come back then they should be able to leave without penalty. If the students informs me of their wish to cancel then usually I will simply contact the billing company myself and ensure that they only pay for the actual time in training.

    I have no problem asking people to sign up to this as my opinion is that if you are going to train in MA you need to make some kind of committment to it or you are wasting your time. Students who pay this way tend to train more often, test sooner and stay happy.
    However, not all billing companies are as flexible as mine. Some of them are more like finance companies and the student actually signs a finance agreement for the total cost of training for a given period. I personally, would not use a company which operated this system.
    I do not offer a "pay on the night" alternative as it involves far too much administration and takes too much time which should be used in teaching students IMO.
    However, where a student cannot commit to regular training due to shift patterns etc, I DO always try to work out a deal whereby they can train a given number of times each month for a set fee and if they do not make to those sessions then they can make up missed lessons the following month. It is not usually a problem as we have classes 5 days a week. I appreciate it is harder for part-time instructors only teaching once or twice a week.
    I do not offer a "cash out" option where you can pay a year up front as I do not wish to have the problem of someone wanting a large amount of money back having changed their mind about training or having to move away etc. This would not be good for my cash flow or the reputation of the school if there was any disagreement about whether a refund was acceptable.
    The other benefit of monthly direct debit payments is that it tends to put off some of the "less desirables" from joining the school!:evil:
  20. WalkInPeace

    WalkInPeace Valued Member

    The school I train at offers monthly payments. It also offers a contract for a year in which you get a discount. HOWEVER, you don't pay for the year up front; it is broken out monthly. It's basically for people that know they will have a firm commitment for the year. If you move, you just stop making payments.

    In town here, I know there are other schools that charge a one-time fee. You pay a few thousand dollars, and you never make another school payment again. I would be cautious in taking on that type of contract.

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