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Freeze procedures enable fitness clubs and Martial Arts schools to provide an option for customers to “freeze” their account for a duration of time as part of their business policies and procedures. Clearly defined freeze procedures provide flexibility for customers who are in a situation where they cannot attend the facility for a short time period, but want to remain a member with their current contract.
Reasons for Freeze Procedures
- Medical. A customer with a medical excuse is allowed to freeze their membership for a specified amount of time to allow them to recover from their medical issue and return to full activity after that time period.
- Military. A customer is called away on military duty or overseas.
- Personal. Personal reasons include a customer leaving town for an extended time period or unforeseen circumstances.
- Student. College students are allowed to freeze their membership while they are away for the summer, or if they go away on an internship with the intent to return the following semester.
A freeze indicates a pause in processing payments for that account for the duration time period of the freeze. However, you may determine to charge a “freeze fee” for the months that the freeze is in effect to alleviate the loss of current income. During the freeze, the customer is usually unable to use the benefits of their contract or membership while the account is frozen.
The amount of a “freeze fee” and accumulated interest on contracts that are past due may be regulated by state or federal regulations.
Freeze Procedure Details
Freeze procedures have specific restrictions and requirements. Questions to ask yourself as you define your freeze procedures include:
- Length of time a freeze may be enacted. How long do you want to allow a freeze on contract? What is reasonable for your business? Will you allow exceptions to the rules?
- Freeze payments. Will you charge a monthly fee during the freeze? A fee for enabling a freeze? What is legal in your state regarding contract freezes?
- Number of freezes per year. How many times a year will you allow a freeze to be enabled on a contract?
- Number of freezes allowed during the term of the contract. Will you limit the number of times a contract may be frozen during the length of the contract? For instance, on a two-year contract, will you allow more than one instance of a freeze?
- Extending contract end date. Will you extend the contract end date according to the length of the freeze? This is standard practice when freezing an account. Do you clearly state this in your contract section on freeze procedures?
- How soon can your member or student request a freeze? Freezes usually require at least one successful payment processed prior to a freeze being enabled.
- Minimum length of freeze. If payments are processed once a month, the freeze minimum length of time is usually in 30-day increments. Payments resume on the same day of the month as the previous payment cycle. As a policy, you might allow an account to unfreeze earlier to provide your customer with access to the facility before the end of that 30-day cycle, but payments will resume on the regular payment processing schedule defined in the customer contract.
- Types of contracts allowed to be frozen. If you offer three (3)- and six (6)-month term contracts, will you allow those shorter than a year contracts to be frozen?
Open-End and Term Contracts
Offering contract freeze procedures applies to both open-ended and term contracts. A customer with an open-ended (also called month-to-month) agreement may want to stay with their original contract terms instead of cancelling and then creating a new contract with your facility.
Reasons Freeze Procedures Make Sense
Providing the ability to freeze with the intent to return to the facility is income you can count for a future date. Freezing a contract, versus cancelling and leaving the facility entirely, reduces the risk of losing that customer due to a temporary issue. Cancellation of a contract takes that customer out of your facility and leaves the door open for them to go to another facility when they are ready to sign up again. Freezing keeps that customer in your facility and places them in an inactive state, and automates the re-initiation of their full payments at the expiration of the freeze.
AAC allows facility and Martial Arts school owners to define their freeze procedures. We help you run your business, your way.
Contact us today to learn more. 1-800-233-8483.
All materials have been prepared for general information purposes only to permit you to learn more about Affiliated Acceptance Corporation and the services we provide. The information presented is not legal advice, is not to be acted on as such, may not be current and is subject to change without notice.