Gym offers late members a fresh start

Planet Fitness has admitted that sloppy debt collection was behind the announcement of an amnesty offer last week, which could see thousands of its members being let off the hook for arrears.

The company, which has 24 gymnasiums across the country, said last week that while it was legally entitled to recover outstanding money from its members, it had to find a way to be fair and reasonable.

“We have decided to write off as much as 70 percent of money owing from an estimated 61 000 people,” said Mark Lambert, the head of customer services.

The 16-year-old company had turned more than R340 million in outstanding debt over to debt collectors.

“We realised that we are not experts at debt collecting,” Lambert said. The company said it had been “too soft” on debt collections. “We have been handling it internally for the past two years and the process is not as effective as it should have been,” he said.

Planet Fitness has now outsourced the process.

Lambert said that many members claimed they were not aware of their outstanding debt but that the company had records to prove its correspondence with members in arrears. “At the end of the day, we just want to be fair and the biggest objective is to retain members,” he said.

While the company would also write off the legal costs of pursuing outstanding debt, it was in the middle of a roll-out plan, which would eventually culminate in an additional 15 fitness centres across the country as well as the prospect of expansion into Nigeria.

“These write-offs are obviously a huge loss to us but it will not stop us expanding our footprint,” Lambert said.

The amnesties apply only to the auto-renewal portion of the debt. “The portion of the debt relating to initial contract periods with payments in arrears will still be actively recovered by our debt collecting company,” he said.

The amnesty, which is valid until the end of October, gives members a number of options.

Debt will be written off for those who were members years ago and who owe money relating to that period, but who have subsequently rejoined the gym and are active members.

People who rejoin the gym before the end of October will also be pardoned.

Gym members owing between one and 12 months’ membership fees will have the debt reduced by half and a renewal of the time period owed in membership time.

“For example, if a member owes six months at R’ a month, they will only pay for three months and receive a remaining three months worth of free membership at the gym,” Lambert said.

Trudie Broekmann, a senior associate at Webber Wentzel law firm, said provisions in the Consumer Protection Act, which partially came into force in April, were intended to prevent consumers from being tied to fixed-term contracts with automatic renewal clauses.

“The act regulates how auto renewal will work as form October 24, 2010. It will require suppliers to notify consumers before a fixed-term agreement will expire and unless consumers expressly agree to a renewal, such a fixed-term agreement will continue after its expiry date on a month to month basis,” she said.

“A consumer may cancel a fixed-term agreement at any time by giving 20 business days’ notice.”