If you are providing a service in exchange for value, you have formed a legally binding contract. If you provide the service, you have a right to collect that value. Alternatively, if your client gives you value (usually money), they have a right to receive the service.
Verbal Contracts
You can have a verbal contract and enforce it. However, you are legally exposed because you will have a hard time enforcing it. If you have a lazy client who doesn’t pay you after taking private training services off of you, good luck forcing him/her to pay. They can simply lie and say, ”I never agreed to that.” We don’t like to think anyone will ever lie. However, when money is involved, almost everyone will lie to save themselves.
Written Contracts
To avoid this kind of scenario, and protect your business, you need a written membership contract. Written contracts will outline exactly what you and the member agree upon. “I agree to provide you one hour private training sessions for $60 per hour.” No one can later dispute the agreed upon service or price. However, there is much more you need in a membership contract. So, here are our five (5) essentials for any membership contract:
5 Essentials for Membership Contracts
- LIST YOUR EXACT SERVICES– Make sure your membership contract clearly lists what service(s) you are offering. “Fitness Training” isn’t specific enough. List services like Small Group Training, Private Training, Nutrition Counseling, etc. You can list more than one service, like a checklist, and then mark which services apply. Or, you can have a different contract for each service. There are pros and cons to both ways.
- STATE THE PRICE FOR THAT SERVICE– If you are going to sell a service, your membership contract needs to state the exact price of that service and how often you will charge the member. “Small Group Classes – $150.00/month. We will bill for this service on the same day each month.” “Private Training – $60/hr. We will bill for these sessions prior to each session.” Or, “Private Training sessions are sold in packets of twelve (12) sessions at a time.”
- OUTLINE AUTO RENEWAL REQUIREMENTS – If your membership services will automatically renew, make sure that is in your contract as well. State how often the membership service will automatically renew. “Monthly membership services automatically renew every thirty (30) days on the same day each month.” “Private Training sessions automatically renew at the end of your last session in each twelve (12) session package.”
- CANCELLATION POLICY – If you are planning to use automatic renewing contracts, you need a cancellation policy. How can a member get out of the contract? Does the member have to give you a thirty (30) day notice? Two (2) weeks notice? Does that notice have to be in writing? If there is an automatic payment scheduled within the cancellation window, will you process that payment?
- Some States have consumer protection laws that require you to have specific cancellation language in membership contracts. Make sure you check your State laws.
- SIGNATURE LINE– It might seem obvious, but it’s not always evident. At the end of your membership contract, have a signature line for the member to acknowledge that they have read the terms of the contract. Additionally, make sure you have a Standard Operating Procedure requiring you and your staff to ALWAYS get a signature.
If you already have a membership contract, compare it to this list. Do you have these essential terms? Or, if you are writing a membership contract for the first time, start here and build out. As always, we are here to help.
