Connect with us

2-Cent Rant

California Fitness Closes Down: 5 Important Lessons That Singaporeans Can Learn From This Episode

The money may have been lost, but we can still learn some lessons.

 

Earlier this week, news broke that all California Fitness outlets in Singapore have closed with immediate effect. The closing of the gym operator in Singapore has left its members affected. In all likelihood, members should expect no refund on any fitness package that they have pre-paid California Fitness for.

Here are some lessons that Singaporeans can learn from this episode.

# 1 Avoid Paying In Advance For Services Not Yet Rendered

Some businesses like collecting upfront fees for services not yet rendered. These include spa packages, gym packages, wedding packages and renovation packages. It amazes us how easy it is to convince people to part with their money for services that are not going to be rendered anytime soon.

Think about it, even if you did grocery shopping at NTUC and Sheng Siong on a weekly basis over the past 10 years, would you still have given them $4,000, in advance, for your grocery expenses?

The answer is no.

If people are smart enough not to pre-pay for their groceries in advance, why are they prone to handing over thousands of dollars to less reputable companies like California Fitness, a new spa, or an interior design company they just met at a road show?

# 2 Say “NO” To Hard Selling

At one point in our life, we would have encountered some form of hard selling.

It could be a person on the street trying to get you to “opt-in” your credit card for a monthly donation to some charities.

It could be your insurance agent friend telling you why you need to start investing in the latest investment-linked policy that his company has launched.

It could be the property agent that tells you property prices are going to rebound soon (it’s not), and that you will miss out on the boat again (you will not) if you don’t act immediately.

In the same way, gyms like California Fitness employ all sorts of hard selling techniques to get people to part with their money.

Train yourself to say “no” to these aggressive tactics.

# 3 Be Careful Of Upselling

If you had shown interest in signing up for a trial period at the gym, a trained salesman would find all ways to get you to part with more money.

For example, they will tell you that it’s cheaper to pick up a 4-year membership. If you agree that a 4-year membership is a better deal, they would convince you to enjoy a further “discount” by paying the full fee upfront.

If you hesitate because you do not have enough money, they would “help you” by suggesting a credit card instalment plan.

Here is an illustration of how the numbers would play out.

Package Price Per Month Payment Method  Amount Spent
1-year

 

$150 Monthly $1800 (assuming gym lasts for 1 year)
4-year

 

$100 Monthly $4,800 (assuming gym lasts 4 years)
4-year

 

$80 Upfront $3,840 (even if gym does not last 4 years)

 

The salesperson would tell you that a 4-year membership would be a lot cheaper. Furthermore, by paying the fee upfront, you can enjoy further “discount”. On a month-to-month basis, you are paying $80 instead of $150.

Sounds good? No. You are actually paying more in the long run.

Read Also: How Gyms In Singapore Make You Pay More

# 4 Getting An Interest-Free Credit Card Instalment Loan

When you get an interest-free loan instalment using your credit card, this is what happens.

The full amount owed to the company (i.e. California Fitness) would be paid by the bank. The bank then charges you via monthly instalment.

However, what happens now that California Fitness has closed its outlets is that gym members would still have to continue servicing the monthly instalment.

In other words, there are people who would still have to pay $80 a month for their membership over the next 4 years, in spite of the fact that the gym is no longer operating.

# 5 Lifetime Membership (NO)

Lifetime membership is one of the dumbest ideas around.

Think about the options available to lifetime members now that California Fitness has closed its outlets.

It is still possible that another gym operator, who is looking to expand its business in Singapore, could pick up the existing outlets that California Fitness has vacated along with their equipment, and perhaps, some of their members.

For members who signed up with California Fitness through a monthly membership, it is easy to transfer their membership to a new gym operator at the existing term. Most gyms in Singapore would not say no to a customer paying $150 a month. These members are not the problem.

The problem for any new gym operator is absorbing California Fitness members who have already paid in full previously, and who are entitled to continue using the gym facilities provided by any new company that absorb California Fitness, without having to pay any additional fee.

In some cases, it may even be a lifetime membership. No new gym operator would ever absorb a non-paying lifetime member.

Read Also: Why Singaporeans Continue Falling For Scams?

Moving Forward As Smarter Consumers

People in Singapore are and should be angry about the business practices employed by companies like California Fitness. At the same time, it is important for us as consumers to be smarter in discerning between ethical and unethical (and usually, non-sustainable) business practices.

If consumers take the time to educate themselves, they would be less prone to making such mistakes in the future.

Top Image

 

DollarsAndSense.sg is a website that aims to provide interesting, bite-sized financial articles which are relevant to the average Singaporean. Subscribe to our free e-newsletter to receive exclusive content not available on our website. Follow us as well on Instagram @DNSsingapore to get your daily dose of finance knowledge through photos.