Boston Sports Clubs says they’re freezing all gym memberships while closed due the coronavirus “going forward.”
BSC’s parent company, Town Sports International, announced the change in policy in an email to members Wednesday night, after the gym chain faced intense criticism for laying off thousands of employees, ignoring account cancelation requests during the closure, and then charging monthly membership dues last week.
While BSC typically allows members to freeze their accounts for a $15 monthly fee, they said the automatic freeze would be free.
“We have adjusted our policies to align with your needs and industry best practices: As a result, your membership will be put on freeze — at no cost to you — going forward while we are temporarily closed,” the company said. “There is no action required on your part to enact the freeze.”
The update was also posted on BSC’s website.
The gym did not offer refunds for charging April membership fees while closed last week, to which Attorney General Maura Healey has said members who tried to cancel are legally entitled. However, they did promise to credit members for the days they were charged and upgrade their accounts for a year when gyms reopen.
“Members will receive additional days of membership access equal to the number of days paid for while the clubs were closed in your area,” Town Sports said. “In addition, all members will be provided with Passport Elite status for one year. Elite members will receive a free three-month guest membership for a friend when all our clubs reopen.”
Healey said she was pleased with gym’s decision. Her office, which received more than 870 complaints against BSC, had been working with the company to come to agreement.
“We’re pleased that following conversations from our office, BSC agreed to stop charging members while its clubs are closed and to allow members to cancel without paying a fee or penalty, as required by state law,” Healey told Boston.com in a statement Thursday morning. “We’ll be watching closely to make sure the company does right by its clients going forward.”
For the first time, the club — which has 30 locations in Massachusetts — also provided a workable option Wednesday for members to cancel their account during the outbreak through the “contact us” page on their website.
BSC has previously required members to request a cancelation or freeze their account by visiting their gym in person, which was impossible after they abruptly closed on March 16 and laid off all club-level staff. Several BSC members told Boston.com that the gym made it exceedingly difficult to cancel memberships even before the coronavirus hit. That said, one downside to canceling, as opposed to freezing, an account is that individuals would likely pay a new membership fee if they decide to rejoin BSC at a later date.
Town Sports — which also operates gym chains in New York, Philadelphia, and Washington, D.C. — said Wednesday that it is “doing everything in our power to survive the crisis so that we can rehire our 8,000 team members” when they are allowed to reopen. As of the end of 2019, the company had a total of roughly 9,200 employees, according to federal filings.
“We appreciate your patience, support and understanding as we work together through this difficult time,” Town Sports said.
Massachusetts has since ordered all non-essential businesses, including gyms and fitness centers, to close until at least May 4 due to the COVID-19 outbreak, though some experts say social distancing orders will have to remain in place longer to effectively limit the contagious disease’s spread.
The announcement Wednesday also came after Town Sports terminated an agreement to acquire the indoor cycling studio chain Flywheel Sports, according to a company filing Monday with the Securities and Exchange Commission. The company had planned to use the acquisition to refinance payments on millions of dollars in existing debt.
Even before the effects of the pandemic, Town Sports had been wrestling with financial challenges, to say the least.
According to its year-end filing, the company still has to pay $178 million of a $193 million loan due in November, but only had a cash balance of $18.8 million as of the end of 2019.
“We do not have adequate sources of cash to repay our debt,” Town Sports said in the SEC filing. “This raises substantial doubt about our ability to continue as a going concern.”