The Biden Admin’s FTC Has Delivered a Blow to Planet Fitness and Other Low Cost Gyms

About a decade ago, I wrote a piece on the business model of low-cost gyms like Planet Fitness. Essentially, the business plan is built around getting as many people as possible to sign up, while ensuring they don’t actually use the gym regularly.

This is reflected in the gym’s design: anyone who’s been to Planet Fitness knows the weight room is usually upstairs or in a more remote part of the gym. That’s because people who lift weights tend to use the gym more often, and Planet Fitness doesn’t want that. They sign up around 6,000 members per outlet, but these gyms can only accommodate about 300 people at a time.

When you walk into a Planet Fitness, it’s all exercise bikes and treadmills. People don’t often get addicted to those. The space is designed to feel casual and inviting so members come in, use the treadmill a few times, get bored, and eventually stop coming — while avoiding the more intimidating weight room. It’s also why Planet Fitness has those ridiculous days once a month where members get free pizza at night or donuts in the morning. What the hell?

The business plan banks on one thing: most members won’t come in to cancel their memberships. It’s meant to be a hassle, and since the gym only costs $15 or $20 a month, most folks won’t bother (I can confirm this. I’ve been a member for 15 years and usually only use it during the winter months).

However, the FTC under the Biden administration is about to change that. A new rule, which will take effect in about 180 days, establishes a “click-to-cancel” option. It requires that any business offering online sign-ups must also allow customers to cancel online.

That means the Planet Fitness membership you signed up for after eating an entire pizza one night can be easily canceled a month later when you realize you never used the gym.

This is great news for people who never actually use their gym memberships. But honestly, it could be a downside for those who do use their low-cost gym regularly. To offset the lost revenue, gyms may either shut down or raise their prices. They will no longer be subsidized by members who can’t be bothered to go to the gym or cancel their memberships. But honestly, if I have to pay more, I’m going to go to a real gym.

via The Verge