Friday, 14 July 2017

The True Test of Fitness Centres in Malaysia

The recent sudden closure of True Fitness caused much havoc amongst gym users. True Fitness was established in Malaysia 12 years ago and this came to an end on 10 June 2017. Needless to say, members of True Fitness were taken by surprise by this unexpected closure which caused them great displeasure. Some members had been part of True Fitness since its early days, some even paid a large lump sum up front to use its facilities and some had joined the gym just before its closure.
            This review from a sports law perspective intends to offer a peek into some of the top issues to consider in order to protect members of a fitness centre and also, to prevent such a sudden closure from happening to other fitness centres in the future. 

1.     Is Fitness a Sport?  
-       Sport is defined as ‘an athletic activity requiring skill or physical prowess and often of a competitive nature’. The word ‘sports’ usually makes reference to activities like basketball, football or badminton. However, when the word ‘fitness’ is mentioned, it is commonly referred to as a hobby or some sort of physical activity to strengthen the musculoskeletal system. This conception however, should change as ‘fitness’ itself should be a sport on its own. If and when fitness is acknowledged as a sport, rules and regulations will need to be in place to control and regulate its activities.
Take CrossFit for instance. CrossFit has made a name for fitness as a sport because of the various competitions that they organise and the sport is regulated on an ad-hoc basis. CrossFit athletes are subjected to certain rules and regulations and competition standards, all enforced separately. Since majority of the competitions take place over a short span of 1 - 2 days, the high cost of placing sport governance means that the rules are enforced loosely and ineffectively.
-       From the Sports Law point of view, defining fitness as a sport would mean that the governance of fitness centres may fall under the ambit of Ministry of Youth & Sports. If that is the case, the Ministry may be able to step in to supervise this activity. At this moment, the membership of this fitness centre seems to be governed by the Domestic Trade, Co-operative and Consumerism Ministry which would lead to a governance and regulation with regards to the business of fitness centres. However, over and above the Domestic Trade, Co-operatives and Consumerism Ministry, if the issue of fitness centres falls within the realm of sports, the Ministry of Youth and Sports can govern and regulate the activity of fitness centres as a whole. 

2.     Football has FAM, Badminton has BAM, Fitness has???
-       Should an association or organisation be established to govern fitness centres? Possibly. Having an organisation overlooking fitness competitions and fitness centres would create a transparent governing system. This proposed organisation may have regulatory characters and enforcement powers which could form a uniformed method of maintaining and running a fitness centre.
-       In Malaysia, the Sports Commissioner’s Office acts as a ‘watchdog’ to regulate rules for all registered sports associations. With the involvement of the Sports Commissioner’s Office, the owner of fitness centres would then have to adhere to several rules before setting up a gym which would inevitably protect fitness centre members. However, the Sports Commissioner’s Office under the Sports Development Act 1997 is predominantly involved in the governance of sports-related clubs and/or associations. Sport events and tournaments may also fall within the watchful eyes of the Sports Commissioner’s Office. Perhaps the Sports Commissioner’s Office may not be the ideal office to regulate fitness centres as fitness centres are generally different in terms of character and purpose as opposed to sports clubs or sports tournaments.
If the ministry wishes to utilise a readymade and pre-existing authoritative organisation to govern the fitness centres, an amendment to the Sports Development Act 1997 to extend the powers of the Sports Commissioner’s Office to fitness centres may be another option. 

3.     Fees Before Flex
-       Joining a fitness centre or a gym is a double-edged sword. One can now get fit but one might also get stuck in a binding contract that at times, feels like forever. Just like the recent closing down chaos of True Fitness, members were not able to use the centre’s facilities although membership fees were fully paid for the remaining period of the year or even for years to come. The method of payment ought to be regulated by a proposed association or organisation mentioned earlier in the above paragraph.  This would ensure that gym goers will not be left in a state of limbo when the gym suddenly shuts down without any preliminary warnings.
-       Another option to explore is to impose rules on companies running fitness centres to subscribe to insurance specifically to protect membership fees. Such an insurance could reduce the impact of closure and could be activated when sudden closure of fitness centres occurs. 

4.     ‘Trust’ Fitness
-       A gym membership is a contract which allows members to use the facilities, effectively it is a ‘licence’ to enter a gym.  Due to this legal concept of ‘licence to enter’, gym owners could expel an individual should that individual be in contravention of any particular rule. The recent sudden closure of True Fitness to its gym members without proper notice and effective exit mechanism of its membership has amounted to a PR disaster and this will very likely attract legal suits against the gym.
-       When a member pays for his/her gym membership, he/she is akin to a trustee. Where an express trust (such as the trust between True Fitness and its members) fails, a resulting trust (an equitable reversion) takes place to return the undisposed beneficial interest to the settlor.
-       Debtors ought to segregate the creditor’s money from the debtor’s general assets so that in the event the debtor becomes insolvent, the creditor’s money is refundable. If the trust fails (which it has in this case of True Fitness), then the amount paid becomes the subject to a resulting trust in favour of the members who had originally advanced the credit/monies.
-       As True Fitness can no longer give its members the agreed beneficial interest in exchange for receiving membership money, the consideration paid should result back to the members.

If the fitness industry in Malaysia is regulated by proper rules and governed by organisations/associations just like the sports industry, members would automatically be protected. Currently, there is still a lack such regulation (as discussed above), therefore members have little option but to fall back on the vague and inaccurate laws set out by the Domestic Trade, Co-operatives and Consumerism Ministry.

By Richard Wee, Lesley Lim, Vincent Lim

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