Emilee Wentland
Gym memberships are notoriously hard to cancel.
There’s even an episode of “Friends” about it, in which Ross hypes up Chandler to finally overcome the obstructive practices that have prevented Chandler from canceling his membership.
“We were voted the best-equipped gym in New York two years running. Do you really want to give that up?” a membership salesman asks Chandler.
“Yes,” he replies. “I hate it here!”
This is a problem Americans face with memberships, gym or otherwise. They’re so hard to cancel. You can sign up for a free trial with two clicks, but you have to jump through hoops to get out of a contract.
If I can’t motivate myself to visit Planet Fitness once a week to walk on a treadmill for 30 minutes, do you think I’m going there to publicly admit my defeat? Absolutely not.
But gyms—and other membership-based business models—rely on that thought process for sales. Your local gym knows you don’t want to go through the hassle of canceling your monthly membership.
While Chandler’s story was for comedic purposes, this is a real problem customers face and it’s costing them money. That was the Federal Trade Commission’s rationale when it adopted the “click-to-cancel” rule. It requires sellers to make canceling a membership as easy as it was to sign up for said membership.
“The FTC’s rule will end these tricks and traps, saving Americans time and money,” said former FTC Chair Lina Khan in a statement last October. “Nobody should be stuck paying for a service they no longer want.”
The rule is formally called the Negative Option Rule, but gained the nickname “click to cancel.”
The original rule is from 1973—quite some time before people were signing up for a gym or massage membership through an app on their iPhones.
“It’s showing a trend of being consumer friendly and wanting transparency at the outset of someone subscribing or entering into a negative option program,” said Chiara Portner, a partner at law firm Lathrop GPM.
Is it here to stay?
The rule is being challenged in at least four petitions against the FTC. The petitioners claim the agency doesn’t have the authority to create such a rule “and violated procedural
requirements when doing so,” according to law firm Morrison Foerster. They also argue that the “rule is arbitrary and capricious and violates the First Amendment.”
Then, of course, there’s the unpredictable Trump administration, which has indicated a pro-business approach—though it’s up for interpretation what that actually means. Under Khan, the FTC promoted rules in favor of consumers, but new Chairman Andrew Ferguson could take a lighter approach to consumer protections.
Thirty states plus the District of Columbia already have automatic renewal laws in place. “Those still have to be followed if they’re more restrictive than the FTC rule,” Portner said.
IFA, franchisors have ‘mixed feelings’
International Franchise Association General Counsel Sarah Davies testified at an informal FTC hearing last year against the updated rule.
“Many of these franchisees invested in their franchise systems based on a business model that includes as a core component a membership program, and the proposed rule interferes in their private contracts with their franchisors,” Davies said in January 2024. “Recurring billing is not inherently deceptive or unfair.”
She has a point. Consumers love convenience and sometimes that need for simplicity overpowers their need to save the $50 a month for a membership they’re not using. Franchisees may invest their life savings in businesses with a model that leans on recurring membership fees, and if a new rule suddenly changes that, what are they supposed to do?
Davies argued that many membership-based brands offer the option to temporarily suspend a membership rather than cancel.
“A massage franchise system reports that approximately 10 percent of memberships are frozen at any given time, with 75 percent of those members electing to reactivate their memberships,” Davies said.
“Our fitness center brands similarly experience members electing to freeze memberships rather than cancel at rates as high as 40 percent,” she continued. “Customers electing to freeze memberships rather than cancel avoid paying a second initiation fee when returning and retain benefits and incentives offered to long-term members.”
MassageLuxe CEO Kristen Pechacek said she has “mixed feelings” about the rule. The brand is making labor and financial investments to accommodate online cancellations.
“Those things take time and resources,” Pechacek said. “It’s a bit of a limbo. Is this actually going to happen? … Is it going to get reversed? We’ve been in a little bit of a touch-and-go scenario.”
But while MassageLuxe didn’t offer online cancellation as of late March, the brand makes it easier for consumers to cancel or pause their memberships over the phone, if they don’t want to go to the studio, she said.
Guests can also pause their memberships for $5 a month and lock in their current rate when they come back.
“We want to make it easy, but we also want to talk to you about what value the membership has brought to you, where you’re at in your life, if you’ll ever come back,” Pechacek said. “And, of course, if perhaps just pausing your membership is the better option for you.”
As a consumer, I like the click-to-cancel rule. As a brand leader, I think I’d be wary. While gyms and other concepts can motivate and entice customers to use their memberships, they can’t force them into the business. With that said, if someone wants to throw in the towel, they should be able to—and with ease.
I confirmed I can quickly and easily cancel my Planet Fitness membership online, but I’m still holding out hope I can motivate myself to go. Unfortunately, the FTC can’t really help me with that.
Emilee Wentland is managing editor of Franchise Times, and writes the Continental Franchise Review® column in each issue. Send interesting legal and public policy cases to [email protected]