Many elections are less than a month away — do you know which issues and candidates on the ballots may impact your bottom line? Well, don't feel bad if you don't. There are plenty of issues on the local and national political landscape, which have an impact on small business that it is almost impossible to keep track of. But it is important to at least be aware of the political climate.
“It really is important for club owners to track what is going on politically at the federal level and in their own backyard,” says Helen Durkin of IHRSA's Public Policy division. “And their own backyard is probably the real key for the industry. Sure there are things on a national level that will have an impact, but federal legislation is not the place that will make or break the fitness industry.”
While there are several legal fights that have been ongoing at the state level for the fitness club industry such as tax-exempt status of non-profits and government facilities that provide similar services, there are plenty of other battles to be fought from interruption of service legislation, mandatory use of AEDs, sales tax and more.
Although many small and regional operators feel that they are alone in fighting city hall [or town hall or the state capital] larger chains, such as 24 Hour Fitness, often find themselves in the same local battles.
“We are constantly looking at and taking action in local and national legislation that affects the business. It is one of the main things we look at as we come into new markets,” says Mark Mastrov, CEO of 24 hour Fitness. “Clubs often won't talk in one voice — the industry doesn't always do a good job of working together. Often, local clubs think they are affected by legislation differently than larger operators, but we aren't really that different. We all need to work together to help the industry.”
Mastrov says some of the battles the chain is championing at the local level include call registry legislation, which is being fought in Colorado and Texas [and has been adopted in 20 other states]. Meanwhile, in California, the chain is looking into legislation that limits contracts of more than $1,000 and has been at that level since 1978, according to Mastrov.
It is often these local fights that become the biggest ones for an industry.
“There are trends that build on the state level that need to be watched by everyone in the industry,” Durkin says. “States watch each other and often mimic what has been done elsewhere and may become national, without always being federal issues.”
Joseph Freschi, vice president and assistant general counsel for 24 Hour Fitness, agrees. “States tend to follow each other — health studio acts are a prime example of this,” he says. “AED mandates are something that can happen, as is the no call registry issue. It is important for everyone in the industry to keep up with what is going on federally, locally and in other states.”
Two of the bigger issues that may impact the industry on the national level, according to IHRSA, are the Improved Nutrition and Physical Activity Act and the Healthy Workforce Incentive Provision.
These are two different examples of activism. The first measure, the Improved Nutrition and Physical Activity Act, would authorize roughly $250 million for a series of programs aimed at educating the public about better nutrition habits and encouraging more physical activity, particularly among the nation's youth. Meanwhile, the Healthy Workforce Incentive Provision is seeking to change an existing law.
The current tax law excludes from employee income the value of “on-site” fitness centers provided by businesses. The drawback to the current law for commercial clubs, according to Durkin, is if an employer does not have facilities on premises but provides or subsidizes off-site health club services to employees. The value of that benefit counts as taxable income to the employee making it costlier for them to work out.
FIGHTING CITY HALL
These kinds of battles aren't easily won, be it on the state or on the federal level — just ask some club owners that have fought the system with mixed results.
When Dave Cohan, owner of Woodlyn, PA-based The Sports Club, found out there were several legislators among its members in the early 1990s he asked what could be done about what he felt was unfair competition from YMCAs. He was told that if he really wanted to get something done, he should get a law passed. So he did.
“Together with the National Federation of Independent Business (NFIB) we helped introduce a law that cleared the way for language in it that prohibits new non-profits to compete with local small businesses,” recounts Cohan, adding that the battle wasn't over there. “It has been challenged a number of times in the courts with some failure for our cause. Now, another health club is arguing the case on points we lost in those court cases — hopefully with a better outcome.”
Despite this long process and mixed bag, Cohan remains upbeat and politically involved, and encourages others to do the same.
“It is important to get active politically and remain aware of what actions have an impact on our businesses and our industry,” Cohan says. “IHRSA and other business organizations do a great job and have lobbying clout, but we need to work together to bring about change.”
Joe Moore, owner of Moore's Fitness in Ohio has had his own battles with tax-exempt centers run by the government, as well as a 10-year fight in the state over sales tax on memberships.
“They grouped health clubs in on a sales tax that targeted cigarettes, alcohol and other industries that are not associated with being fit or healthy,” Moore says. Meanwhile, the government recreation centers that directly compete with health clubs are exempt.”
Still, Moore battles on and recommends that all health clubs be aware of the legal battles in their cities, states and with the federal government.
“All health clubs have to be politically active and really watch what's going on in their communities,” Moore says. “We have strength now in lobbying that we didn't have 10 years ago, but each of us still has to stay aware of what is happening to our businesses.”
Whether you are looking at the political scene nationally or locally the key thing as a business owner is to realize what the climate is and make sure that you are aware of it and react accordingly, no matter what size business you operate.
“There are always some differences between larger chains and smaller operators — and even among those groups there are different subgroups that will be affected by laws differently,” says 24 Hour Fitness' Freschi. “But what we've seen is that alternative legislation is always going to be worse than something we all, as an industry, can agree upon as a group.”
There are many issues that affect the fitness industry directly and indirectly. To keep on top of what is going on politically around the country check out these sites:
www.SmallBusinessVotes.org — The political resource for National Federation of Independent Business (NFIB) members. The National Federation of Independent Business is the largest advocacy organization representing small and independent businesses.
www.businesslaw.gov — Developed mostly by attorneys at SBA's district offices nationwide, the site walks users through the process for every matter of the legal and political aspect of running a small business. It provides links to other sites within the federal government, as well as sites at the state and local levels, at law schools across the country, and at private-sector partners and organizations.
www.FirstGov.gov — The official U.S. gateway to all government information. It is the catalyst for a growing electronic government. Its work transcends the traditional boundaries of government and its vision is global — connecting the world to all U.S. government information and services.
www.ballotwatch.org — Ballot Watch is the Initiative & Referendum Institute's report on what's on the ballot and what may be headed there. The site provides regularly updated status reports on every effort under way to qualify an initiative or referendum for a statewide ballot.
www.ihrsa.org/publicpolicy/ — IHRSA's Public Policy Web site. Updates health club operators on national and local legal and legislative environments.
www.dnet.org — A project of the League of Women Voters Education Fun. The Democracy Network (DNet) is a public interest site for election information. Enter your zip code to find out who's running for offices on your ballot and where the candidates stand on issues.
www.chamberbiz.com/government — Provides information and links to local and national government regulations and issues. Chamberbiz.com is a network of state and local chambers and the U.S. Chamber of Commerce.
There are plenty of issues facing health clubs throughout the country [more than we could ever possibly list], but here are some of the hottest issues on the local and national level:
Unfair Competition: A continuing battle that often targets the tax-exempt status of non-profit operations providing competing business.
Call Registry Legislation: Telemarketing laws that prohibit solicitation, often even if the person contacted was referred to the company. Some states limit this to actual sales calls while others allow pure marketing calls.
EFT/Contract Laws: Several laws affecting EFT and contracts are either being introduced or battled on the local level including automatic renewal, renewal amount and sales tax.
Health Promotion Exercise Adoption Bill/Obesity Bill: A grant bill that excludes from employees' income the value for private corporate wellness programs, but not for services provided by commercial fitness facilities.
Mandatory AED: New Jersey has legislation pending making AEDs mandatory.