Length of memberships

[Enviroman]

A lot of the schools in the area that I teach in are really pushing three year contracts these days. Some of them are trying to get parents with kids as young as 3 to sign those three year deals. I can't imagine that. I don't know if they're enforcable in Virginia beyond the first year, does anyone know the easiest way to find out?

I'm fairly certain with this type of multi-year service contract, some state laws require that you give the customer an annual "way out" of the agreement. This may not be true in Virginia and you may want to call your local legislator's office, they'll probably be able to help you out. Mor elikely than not, a multi-year contract is just that. You are required to pay X money over Y years at a rate of Z dollars per month. If you do not you will be in breach of contract and they'll need to sue you to get the remaining funds.

[scottnshelly]

I don’t see any reason for a three-year contract except to make more money. As far as the three-year “black belt” contract, does that guarantee a student will reach “black belt” in three years? I’ve heard of a school in Oklahoma City that does that. That is despicable in my opinion.

None of the schools that I attended or taught at have any type of contract. If you came to class you could pay for that month; if you missed a month then you don’t pay for that month.

What is the benefit – other than the obvious one that I stated in the first sentence – of a long contract?

[MasterH]

I don’t see any reason for a three-year contract except to make more money. As far as the three-year “black belt” contract, does that guarantee a student will reach “black belt” in three years? I’ve heard of a school in Oklahoma City that does that. That is despicable in my opinion.

None of the schools that I attended or taught at have any type of contract. If you came to class you could pay for that month; if you missed a month then you don’t pay for that month.

What is the benefit – other than the obvious one that I stated in the first sentence – of a long contract?

You can add extra classes, a weapons class, XMA, a (multi year)leadership class. But it's about goal setting, added value to an overall program. And making more money, adding to the bottom line of a school, is part of the deal as well. Some TKD schools can, and do make Chodans in less than three years, an 8 week testing cycle with only 9 gups, you do the math. I personaly have a 12 week cycle. TKD is not the hardest MA to learn and that's where the 3 and 5 year goal setting programs come from.

[Enviroman]

I don’t see any reason for a three-year contract except to make more money. As far as the three-year “black belt” contract, does that guarantee a student will reach “black belt” in three years? I’ve heard of a school in Oklahoma City that does that. That is despicable in my opinion.

None of the schools that I attended or taught at have any type of contract. If you came to class you could pay for that month; if you missed a month then you don’t pay for that month.

What is the benefit – other than the obvious one that I stated in the first sentence – of a long contract?

You can add extra classes, a weapons class, XMA, a (multi year)leadership class. But it's about goal setting, added value to an overall program. And making more money, adding to the bottom line of a school, is part of the deal as well. Some TKD schools can, and do make Chodans in less than three years, an 8 week testing cycle with only 9 gups, you do the math. I personaly have a 12 week cycle. TKD is not the hardest MA to learn and that's where the 3 and 5 year goal setting programs come from.

Those goal settings are definitely rooted in financial gain versus some other non-financial reason (added value is what you said). By hanging that black belt carrot in front of potential customers you give added incentive to lock in for a longer period of time. Couple this with the statistical drop out rate of martial arts and you have what I consider to be an unethical business practice. It's very much like car dealers that offer loans to people with bad credit for new cars. They know, statistically, that the person probably won't finish out the contract (loan) but they get their money either way. Same here. Just because it is legal doesn't make it ethical.

[MasterH]

I don’t see any reason for a three-year contract except to make more money. As far as the three-year “black belt” contract, does that guarantee a student will reach “black belt” in three years? I’ve heard of a school in Oklahoma City that does that. That is despicable in my opinion.

None of the schools that I attended or taught at have any type of contract. If you came to class you could pay for that month; if you missed a month then you don’t pay for that month.

What is the benefit – other than the obvious one that I stated in the first sentence – of a long contract?

You can add extra classes, a weapons class, XMA, a (multi year)leadership class. But it's about goal setting, added value to an overall program. And making more money, adding to the bottom line of a school, is part of the deal as well. Some TKD schools can, and do make Chodans in less than three years, an 8 week testing cycle with only 9 gups, you do the math. I personaly have a 12 week cycle. TKD is not the hardest MA to learn and that's where the 3 and 5 year goal setting programs come from.

Those goal settings are definitely rooted in financial gain versus some other non-financial reason (added value is what you said). By hanging that black belt carrot in front of potential customers you give added incentive to lock in for a longer period of time. Couple this with the statistical drop out rate of martial arts and you have what I consider to be an unethical business practice. It's very much like car dealers that offer loans to people with bad credit for new cars. They know, statistically, that the person probably won't finish out the contract (loan) but they get their money either way. Same here. Just because it is legal doesn't make it ethical.

What would be "ethical" in your opinion? I do see your point, that is not lost on me, sir. Yet I need you to expand on it. I'm from an 8 week cycle, back in the 1980's. This is all I know, and moving to a 12 week cycle, was a huge deal. I respect your opinion and I hear your resoning, but I just don't see how a full time school can exist, with a well paid staff, in a small community, without these buisness tools. And that's what they are, only tools.

With all due respect, Mr. Enviroman

Master Huntley

[scottnshelly]

You can add extra classes, a weapons class, XMA, a (multi year)leadership class. But it's about goal setting, added value to an overall program. And making more money, adding to the bottom line of a school, is part of the deal as well. Some TKD schools can, and do make Chodans in less than three years, an 8 week testing cycle with only 9 gups, you do the math. I personaly have a 12 week cycle. TKD is not the hardest MA to learn and that's where the 3 and 5 year goal setting programs come from.

We can sit here and debate over the morality of contracts all we want and never get anywhere. I think they can have pros and cons. The only thing that really strikes me as grossly immoral is if you guarantee a student a certain belt rank after coming to a determined amount of classes or paying a determined amount of money. Belt rank is not about contracts and contracts should not be about belt ranks. Like I said, I have heard rumors of some of the big city schools guaranteeing belt ranks in a contract.

Also, as previously stated, I have attended many schools (10 or more) and taught at several schools (4 or 5) and never encountered any contract or membership agreement. We always just did things one month – or sometimes even one week – at a time.

Also, this forum is the first place that I’ve heard of regularly scheduled testing – 8 week cycle, 12 week cycle, etc. Everywhere that I’ve been we tested when there was one or more students ready to test. Sometimes there’d be more than one student ready around the same time, so those students would test. In the lower grades its more common to have a large group testing, but in the advanced ranks it was mostly one person at a time.

By the way, Enviroman, that was a very good analogy with the used car salesmen.

but I just don't see how a full time school can exist, with a well paid staff, in a small community, without these buisness tools.

That’s the point, in a small community we don’t need a well paid staff. The most I’ve seen in my area is one Head Instructor and one Assistant Instructor or two co-Instructors; it’s usually just one person teaching all of the classes. If you want a large successful business where you just sit back and watch other people do the work for you, you are in the wrong field.

[Enviroman]

What would be "ethical" in your opinion? I do see your point, that is not lost on me, sir. Yet I need you to expand on it. I'm from an 8 week cycle, back in the 1980's. This is all I know, and moving to a 12 week cycle, was a huge deal. I respect your opinion and I hear your resoning, but I just don't see how a full time school can exist, with a well paid staff, in a small community, without these buisness tools. And that's what they are, only tools.

With all due respect, Mr. Enviroman

Master Huntley

I'll try and answer this the best I can.

To me, an ethical contract is one founded on the following principles:

The signer has a good-to-great understanding of what he or she is getting in to. This includes a full disclosure of your own attrition rate, a full and detailed explanation that there is absolutely no guarantee of "black belt rank" or any rank, whatsoever, and that the signer fully comprehends that he or she will be responsible for the full amount of the contract whether or not they decide to leave (including, but not limited to, health problems, lack of interest, conflicting school schedules, and relocation).

Obviously, full disclosure like this will probably turn away quite a few people. Is that a bad thing? Well, it depends on what you are looking for. Full disclosure will definitely limit your class to the fully committed (or at least those that feel fully committed at the time) and/or the wealthy.

And to the crux of the issue: How to survive in a small business climate with high overhead and remain ethical. This is truly a dilemma faced by nearly every mom-and-pop retail/service shop out there. Things like creative marketing, gimmicky services, hidden (or at least not clearly marked) fees, and quick-and-dirty sales pitches will net you a cash flow for a while. But these types of things are generally disastrous to a small business in the long run.

Here are my keys to a successful small retail/service business:

1) Quality product. If you don't serve a good product, all of the gimmicks and marketing in the world won't keep you around.

2) Pleasant staff. Staff that remains pleasant and professional at all times is absolutely critical to a successful business.

3) Smart business model. Find a good location that you can seemingly afford with your projected cost analysis. If you haven't done a cost analysis you're going to be in trouble! Determine the minimum product turnaround necessary to remain afloat and use that as a baseline (in this case the least amount of students).

4) The ability to generate positive word of mouth. If you treat customers like they should be treated you'll find that they, in turn, tell their friends about you. Word of mouth is the fundamental marketing tool...

5) Marketing. Ah, the dreaded marketing. It's important to get your name out there. The yellow pages is a good start. Have a professional website. Have your website accessible to people (put it on business cards, on flyers, in an ad in the yellow pages).

6) Do have specials. Discounts for senior citizens, students, etc. Working on a sliding scale could bring in revenue that might otherwise be lost.

6) Lastly, communication. If a potential client emails or phones you, be prompt in returning their call/email! I can't stress this enough. Especially in the world of martial arts, timing can be critical. People are often "eaten up" by a McDojo or other slick salesman. Don't assume that you're the only place the person is calling, because you are most definitely not. Answer all of the person's questions honestly. If they ask "What is your monthly rate" answer truthfully. I can't tell you how many instructors that answer "Well, it varies. How would you like to come in and watch a class? We can discuss the payment options here." This is the lead-in line to try and pull a pressure sale. Bad idea.

Gosh, that was long. I'm not sure how informative that is, but I hope someone can pull something out of it.

[MasterH]

You've given me something to think about.

Honestly.

-Adam

[octopic]

I'm fairly certain with this type of multi-year service contract, some state laws require that you give the customer an annual "way out" of the agreement. This may not be true in Virginia and you may want to call your local legislator's office, they'll probably be able to help you out. Mor elikely than not, a multi-year contract is just that. You are required to pay X money over Y years at a rate of Z dollars per month. If you do not you will be in breach of contract and they'll need to sue you to get the remaining funds.

Interesting, do we have any lawyers on this board who can chime in on this issue?

[tkdBill]

Offering a quality program is the best way to ensure success in the MA business. Belts should never be guaranteed to anyone. I think we all agree on these points.

My advice to anyone who wants to open an MA school: insist on annual contracts. Call them "membership agreements" or whatever. You will always have to pay your rent and bills. If you can be sure of your income for several months into the future, you are less likely to fail. If you come across slow times, you have time to react and adjust your marketing (or your program) instead of just going belly up.

If a prospective student says that they will not make a committment, I suggest they go for more of a recreational program like the YMCA. My program is a serious martial arts program. I seldom lose a prospective student because of my contract, especially after they take a few trial classes.

I have several students who wanted to quit or "take a break" at some point in their training, but they didn't because of their contract. Today they are excellent martial artists and very happy that they stuck it out.

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