I’ll make this short and sweet. We are in Texas. We have a two year membership, paid in full-in advance, to a local gym. The gym has changed owners and the new
owners want to charge more and now are claiming that they will not honor existing contracts for the paid in full folks. They will, in their exhaulted generosity, prorate what you paid in relation to the new amount…or in other words, you don’t get all the months you paid for.
Admittedly, the extent of my legal expertise is only as bountiful as the cases appearing on Judge Judy, the Peoples Court, Judge Mathis, and Judge Joe Brown…which I watch religeously. From that knowledge I gathered that when a company buys another company they are also buying all debts as well as assets…unless of course renegotiated with the debtors. The letter they sent to us has semi-legal terms (and even references trade association by-laws as if they are legal statutes) but appears to be nothing more than a slight attempt to get you to renegotiate your rights away under the impression they have real legal grounds.
The local “court South” franchise changed hand a few yearsa ago and there was a lot of discussion if lifetime member, albeit few in numbers, would retain ther priveledges as well as the existing contracts. Publicity is a powerful tool. Lifetimers and others carried on as normal. Rates are competitive otherwise.
Do you have a copy of your original 2 year contract? It may have a clue.
A LOT OF PUBLICITY will turn the tide. A new owner/operator will likely honor all existing contracts as a matter of preserving good will. Notice how many politicians and others rearrange matters when they are subjected to the spotlight of public opinion. Get as many current members as possible to join you in writing first to the new management and secondly to every possilbe means of disseminating your message to the general public and POTENTIAL NEW MEMBERS!
Get as many as possible to jointly seek legal opinion, may even have a lawyer on the roster. I wouldn’t pay more till I saw leagal reason to do so and then would seriouslylook for another gym.
In California a few years ago, I was in a similar situation with a club I belonged to. A few members got together and talked to a lawyer (splitting the cost). If you’re on civil terms with other members, you might want to try this.
IANAL, but what I was told was that a contract cannot be unilaterally changed for the benefit of the person changing it. This is not intended to be legal advice, just what happened to me in similar circumstances.
Yeah, Desktop…that’s what I was hoping. In a recent People’s Court (laugh if you want) a carwash owner sold prepaid coupons…then the new owner didn’t want to honor them. Judge Millian said “too bad so sad”. I’m hoping it’s the case here.
I would first call up your state attorney general’s consumer affairs office. In many states, health club memberships are highly regulated to protect consumers. You may have lots of rights that aren’t set forth in your contract.
Next take a look at your contract to see what rights it gives you.
As a general legal principle, a transfer in ownership of a corporation will not cancel the obligations of the corporation. Nor will a merger. An “asset deal” – where one corporation purchases all the assets of another, but not the liabilities – can sometimes defeat an obligation. However, IIRC, courts have discretion in this area.
Of course, you probably don’t know how the transfer was structured, so it’s hard to say for sure what will happen.
But in my opinion, if you took this case to small claims court, you’d have a good shot at winning. Because regardless of legal formalities, all of the equities are on your side. Before suing them, I’d sweet-talk the gym a bit. IMHO, there’s a good chance they’ll back down if you push. As another poster mentioned, the last thing the gym needs is a big confrontation with a group of angry members.
You really have to look at the agreement, and the applicable laws of the state of TX. As for federal requirements, it is unlikely such an action by the new owners would be allowed b/c the common consumer is not sophisticated enough (as opposed to a merchant) to have Art. 2 UCC rules apply to them (the really short answer). Anyway, I don’t deal w/UCC much (if at all) so I’ll refrain from commenting further.
However, since both parties are presumably residents of the state of TX, TX state law may have something different, like different applicability requirements of their state UCC-type rules. An inquiry to the State Attorney General (or such equivalent) is really in order, as well as the local consumer rights bureau.
Also note, that if the previous owner declared bankruptcy, such obligations could very well be out the window.
It does not look like Texas has a statute about Health club memberships. I am not a Texas lawyer, but I did look. Many states have these statutes, and they usually have provisions that deal with prepaid memberships. The statutes are designed to protect consumers when clubs close or change ownership. but, as I said, Texas does not appear to have such a statute. You can look for yourself here. Therefore, as others have said, your rights will be determined by three things:
The contract between you and the orignal club management. That contract is still enforceable. You can sue the original club, if it has any assets left.
The deal between the old owner and the new owner. If it is an asset purchase, the new owner may not be liable. If it is a stock purchase, the new owner probably is. Good luck finding out which it is.
The equities and public opinion. If you raise a big enough public spectacle, or get the case in front of a friendly judge, the legalities may not matter very much.