"Chain Gym Contracts Unfair to Consumers, Restricting Mid-Term Cancellations"

Korea Consumer Agency Reviews Contracts of 20 Fitness Facility Operators
Business Operators Must Improve, Including Exemption of Business Responsibility

It has been found that chain gyms and fitness facilities such as Pilates and yoga studios are imposing unfair contract terms on consumers, including restricting mid-term cancellations or evading business responsibility, which requires caution from consumers.

On June 27, the Korea Consumer Agency announced that it had reviewed contracts from 20 nationwide chain fitness facility operators with a high number of consumer complaints. The agency found that every contract contained terms unfavorable to consumers, indicating the need for improvement.

According to the Korea Consumer Agency, from 2022 to March of this year, there were 13,807 consumer dispute resolution requests related to gyms and other fitness facilities. Of the 20 companies surveyed, 14 (70%) had contract terms that unfairly restricted mid-term cancellations or refunds, putting consumers at a disadvantage. Despite the common practice of consumers signing contracts at discounted rates, 12 companies (60%) prohibited contract cancellations only for discounted memberships. Three companies (15%) stipulated that mid-term cancellations for personal reasons were not allowed at all.

According to the Fair Trade Commission’s guidelines on “Calculation Criteria for Penalties and Refunds for Termination or Cancellation of Continuous Transactions,” users of fitness facilities have the right to cancel their contracts at any time. In addition, under the “Act on the Regulation of Terms and Conditions,” fitness facility operators cannot limit the scope of damages without reasonable cause or shift risks that should be borne by the operator onto the customer. However, 18 companies (90%) held users responsible for the loss of personal belongings, injuries, or disputes between members occurring during the use of the facility, regardless of whether the business operator was at fault.

Gyms are required by regulations to have at least one fitness instructor present at all times. However, three companies (15%) did not assign coaches during early morning hours and included clauses exempting themselves from liability for injuries occurring at those times. Cases of restricting membership transfers were also found. Five companies (25%) prohibited the transfer of discounted memberships, while two companies (10%) allowed transfers only to immediate family members or acquaintances. Four companies (20%) stipulated that transferred memberships could not be refunded.

The Korea Consumer Agency, through Korea Research, surveyed 509 consumers who had signed fitness facility contracts within the past year. The results showed that 59.0% (300 people) had signed contracts for six months or longer. The average contract amount was 491,872 won. Among the 300 consumers with contracts of six months or longer, 41.3% (124 people) said they were concerned about the possibility of the fitness facility going out of business.

Among respondents, 49 people (9.6%) had experienced the closure of a fitness facility. At the time of closure, the average remaining usage period was 3.9 months, and the average amount of unused fees that were not refunded was 262,388 won. Respondents cited “mandatory subscription to guarantee insurance” as a measure to prevent consumer losses from business closures in long-term contracts.

The Korea Consumer Agency plans to share these findings with the Fair Trade Commission and the Ministry of Culture, Sports and Tourism, and to jointly promote various measures to prevent consumer harm related to fitness facilities, including requiring business operators to take corrective action. The agency also advised, “Do not be swayed by price discounts from events or promotions, and carefully consider the actual period you can use before signing a contract,” and added, “To prepare for potential losses due to business closure, use credit card installment payments.”