Standardized Contract Terms Introduced for the First Time to Prevent Sudden Closures and 'Eat-and-Run' Cases at Yoga and Pilates Facilities

Criteria for Calculating Penalties and Refunds Clearly Defined
Advance Notice of 14 Days Required Before Suspension or Closure

For the first time ever, the government has established standardized contract terms to prevent consumer harm caused by indiscriminate refund refusals and sudden, unannounced temporary suspensions or closures by yoga and Pilates facilities.

The Korea Fair Trade Commission has announced that, starting from the 20th, a new set of standardized contract terms for yoga and Pilates facilities will be implemented. These terms prohibit the unfair practice of reducing refunds based on the full pre-discount price rather than the actual amount paid when cancelling long-term prepaid memberships. The new terms also make it mandatory for business owners to inform members at least 14 days in advance in the event of a suspension or closure, and to disclose whether they have purchased guarantee insurance.

According to the Fair Trade Commission, consumer complaints received by the Korea Consumer Agency related to yoga and Pilates facilities have continued to occur, with 818 cases in 2021, 1,919 cases in 2023, and 1,211 cases in 2024. Notably, the proportion of closure-related cases among applications for consumer dispute mediation increased sharply from 1.7% in 2021 to 7.5% in 2023, and soared to 17% in January 2025. A field investigation found that about 10% of users failed to recover an average prepaid fee of 250,000 won due to closures and similar business interruptions.

Accordingly, the new standardized contract terms clearly stipulate that refunds for contract cancellations or terminations must be calculated based on the actual payment amount, not the pre-discount price. The penalty for early termination is limited to 10% of the total usage fee. In addition, application forms are presented separately for 'number of sessions' and 'duration of use,' allowing consumers to clearly understand the refund method applicable at the time of contract termination.

Stronger safeguards have also been introduced to prevent so-called 'eat-and-run' cases. If a business suspends or closes, the operator must notify members at least 14 days in advance. Operators are now obligated to notify consumers in advance about whether they have acquired guarantee insurance and the coverage details, so that consumers can verify the possibility of compensation in the event of business suspension before entering into a contract.

Furthermore, the new contract terms specify the consumer's right of withdrawal in accordance with the Door-to-Door Sales Act and the Installment Transactions Act. They also fairly outline the rights and duties of both parties, such as the operator's duty to appropriately manage reservations and the authority to dispose of uncollected items after prior notice. The Fair Trade Commission will post the new standardized contract terms on its official website and provide them to industry organizations and consumer groups, alongside promoting and educating stakeholders to ensure their adoption in practice.

This content was produced with the assistance of AI translation services.