Bally Total Fitness is going bankrupt for the second time in little more than a year.
Clark has long trashed the health club over their suspect business practices. Bally's is known to use high-pressure sales to get you to buy a membership. Once they have a contract, they do what's called "moving paper."
The club sells off the contract to a finance company that will take the paper on and pay them pennies on the dollar. That creates additional incentive for the club to sign up more members -- and hope none of them ever show up and all try to workout at once!
In a recent SEC filing, Bally's disclosed that the average member visits the club one-half of one time per week. You'd be hard-pressed to find any fitness expert who recommends a workout once every 2 weeks!
There is, however, a better way for health clubs to do business. It's where you pay month-to-month or quarterly with no real contract. That creates incentive for the club to help keep you on a healthy regimen so you'll keep coming back. They win and you win!
One final thought: We as consumers fool ourselves into thinking that by signing a contract we'll be more apt to work out at a health club. But it doesn't work that way; usually within 6 weeks, the average person stops exercising altogether after joining a gym.
One effect of the economic slowdown is that health clubs are faced with cancellations and fewer people joining up. They're desperate for members, so be on the lookout for special offers -- and try to negotiate them even further down from there.
Yet with opportunity, there is also hazard. Some clubs may ask you to pay for 1 or 2 years upfront. But if you do this and the club closes its doors, you're out the money. They're not required to have an escrow account to protect your money in the event of a closure.
That being said, some of the opportunities you'll see may include waiver of initiation fees, group affiliation discounts and more. The Los Angeles Times reports that some clubs are even calling up former members and offering special deals to get them back on board.
Again, the usual caveat: Never sign a long-term contract. Even with the best intentions, most of us stop working out within 6 weeks of joining a club. That's why Clark loves the no-contract clubs where you pay quarterly or monthly and can quit at will.
For those who overindulged in calories during the holidays, here's a word of warning to avoid getting eaten alive by health club salespeople. This industry basically has two business models. In the good one, you pay month-to-month or quarterly with no real contract. The sleazy business model, however, involves long-term contracts designed to give your checking account a workout. In the latter model, the downfall begins when they offer you a free tour of the facilities. The tour is done by a commissioned salesperson with the intention of getting you to sign a multi-year contract. When you sign, the salesperson gets a commission and the club sells off the contract to a finance company that will take the paper on and sell it off for pennies on the dollar. Then the club gets what's left. Clubs sell so many memberships this way that they have to hope that you don't work out -- otherwise there wouldn't be enough space for everyone!
The Feb. 2008 issue of Consumer Reports rates health clubs, with the worst rating going to Bally's Total Fitness. Bally's got bad marks in staffing, classes and equipment, plus the worst possible score for locker rooms, cleanliness and crowds. On the flip side, the best club is a chain that's in 15 states called Lifetime Fitness. In the second-best slot are on-site gyms at work and coming in third best were gyms at your local Jewish Community Center/YMCA/YWCA. Though Consumer Reports doesn't mention them, Clark also recommends checking out hospital-affiliated fitness centers. They're usually rehab-based or geared toward hospital staff. They're clean, well run and don't force stinking contracts on you. Most sell memberships to the public. One final word: Signing a contract will not get you to work out. You may have the best of intentions, but most people quit working out within weeks. So don't obligate yourself to a multi-year contract.
The workout facility Bally’s is going to be filing Chapter 11 bankruptcy but will stay in business. There are a few things you have to keep in mind when you are searching for a work out club though. Don’t sign a contract! If the club feels confident that they have a good product, why do they need to rope you in for three years? Look for good customer service. If you are new to the work out club game especially, you want to go somewhere where they have people walking the floor to help you if you have questions.
You have a better chance of surviving all types of cancer than ever before, and survival rates are extremely high in certain types. The reduction in people smoking has helped with that number. But exercise also helps tremendously. On that note, salespeople at gyms and health clubs are out in full force this time of year, trying to get you to join their club. But you want to consider this carefully. Signing a contract at a health club is not the same thing as working out. If you stop exercising, you still have to pay. And be especially wary of gyms that offer a discount (even 50 percent) if you join “right now!” These are sure to be ripoffs. Find a gym where you don’t have to sign a contract if possible. That way, if you slack off on working out, you’re not still paying. And, if you absolutely have to sign a contract to join the gym you want, just make sure you never give them access to your checking account.
You never want to sign a contract at a health club, especially a multi-year contract. Why? The entire business model for most gyms is to get your money ahead of time and then hope that you don’t ever work out. In one of its filings with the Feds, the health club Bally’s disclosed that the average member works out one-half of once per week. It’s just what happens after people sign these contracts. Bally’s is one of the most notorious clubs out there for its shenanigans with customers. Most recently, the company has been under the watchful eye of Wall Street for allegedly cooking its books. In addition, several consumers had expensive watches and money stolen from the club’s locked lockers. According to the Chicago Sun-Times, the people wanted to cancel their memberships but Bally’s wouldn’t let them. They claimed it was an isolated incident. A legitimate health club is interested in your physical fitness and doesn’t make you sign a contract.
When the new year rolls around, you will get tons of solicitations in your mailbox from health clubs. Health clubs come in two basic flavors. The first have contracts, commissioned salespeople and don’t care a hoot about you. The other kind does not have contracts and the people there actually encourage you to work out because they’re interested in your well-being. With the first kind of club, the salespeople know that most members stop working out within six months of joining a club. And that is what they hope happens. They have to sell tons of memberships to meet their quota, and they don’t care about what happens to you once you’ve signed the contract. They then sell your contract to a finance company, which also gets part of the cut. They are not interested in providing service; they just want to move people through the process and hope that they stop coming so they don’t have to deal with you. The good gyms care that you work out and that their facility is in working order. They don’t require a contract and instead sell month to month memberships. They want to please you so that you will continue to come back and work out. There is no reason why a health club should have a contract. So, join one that cares about you and not your wallet.
Clark often reports on ripoffs going on in the consumer world. Today, he has a Top 10 list of scams, schemes and scandals, provided by the state regulators who watch over financial analysts and brokers. Drum roll please…. The No. 10 scam is variable annuities. If you don’t know what these are and you don’t have any, good. If you do, you don’t want to put any more money into these plans. They have massive commissions and are absolutely horrible for your wallet. No. 9 are scandalous mutual fund companies. No. 8 is Internet fraud. No. 7 are “high yield investment” scams. Some that Clark has received calls on involve exotic overseas investments that are a complete scam. Insurance agents who sell people bogus investments come in at No. 6. Most insurance agents are honest, but a number of them have been involved in very scandalous affairs. No. 5 are church ripoffs. Just because someone seems religious does not mean that person is on the up and up. At No. 4, phony brokers. Just because someone says something is going to be a great investment doesn’t mean it will. Promissory notes – or fake CDs – are No. 3. These are promises that someone will pay you later if you give them money. But there is no guarantee, and it’s not safe. No. 2 is any kind of scam against seniors. If you’re not involved in your parents’ finances, be nosy! And, the No. 1 scam in the U.S. involving your wallet are Ponzi schemes. These are schemes where criminals recruit people to pay back other people who have invested, and then you have to recruit someone once you’re in. Eventually, these collapse because there are no more people willing to “invest.” There a lots of people who will sell you sizzle, but that’s all it is.
