Membership Agreement Samples: The Definitive Guide
What is Membership Agreement?
Membership agreements are foundational legal tools that govern the terms between organizations and their members. They are used by various types of organizations including:
These entities may be operable in particular jurisdictions and under specific laws, but all of them have one thing in common: a membership agreement. Let’s take a look at what a membership agreement is and how it works.
Generally speaking, a membership agreement is a contract between an organization and a subscriber, usually an individual (or another legal entity), which outlines the following:
These elements may be slightly different depending on the regulations applicable to a particular agreement (for example, the requirements for a limited liability company operating in Georgia will differ from one in New York City), but these four components are generally considered the basics.
To put this in the context of an example , let’s consider that a fitness center is a limited liability company that has been organized in Georgia. Individuals attend an open house offering to provide free demonstrations of their services, and they are informed that if they join, the center will charge them monthly fees. Immediately after its December 20 open house, the center has 200 new members. On January 22, 2017, these individuals leave comments and reviews on Facebook and Yelp describing their experience. As a limited liability company in Georgia, the center will want clear rules governing member eligibility, non-discrimination, and expulsion with as few round-the-clock limits, restrictions, and exceptions as possible.
This is meant to serve as a basic introduction to membership agreements in accordance with the legal requirements for organizations that require such agreements. While Republicans, Democrats, and Libertarians each have their own opinions on the issue, it’s clear that everyone can agree that having a membership agreement is paramount for any organization utilizing them to serve their organization’s needs.
Key Features of a Membership Agreement
There are a few key elements that belong in every membership agreement.
A. Membership Requirements
A membership agreement should include the requirements for membership in the association to which the agreement applies. Typically, associations accept members 18 years and older, sometimes younger to reflect the age requirement for a vote in any given election. Usually, an individual does not have to be a citizen or legal resident of the country where the association is located. Many associations require a member to have a sponsor or to pass a certain test in order to join.
B. Fees
Membership fees are also generally included in a membership agreement. For example, a membership agreement may specify a one-time initiation fee or "dues" paid periodically. A 100% refund may be required of an individual if the individual meets certain criteria, such as leaving an employment position or passing away. Fees should be broken down into amounts that are reimbursable and amounts that are not. It is a good idea to make it extremely clear which portions of the fees are non-refundable and why they are not.
C. Obligations
A membership agreement should also contain the terms of the obligations that a member has. One important, vague obligation is to be in "good standing". What this means is spelled out in the agreement. An agreement can also explain the process for removing a member if the member does not fulfill his or her obligations. Lastly, a membership agreement may spell out the grounds on which an association may terminate a member who is delinquent in dues, a non-compliant member, a possibly disruptive member or a member who otherwise does not fulfill his or her obligations.
Different Types of Membership Agreements
There are a variety of membership agreements, depending on the type of business involved. For example, a gym will have a very different membership agreement than a bar or a country club. A country club membership agreement may be for life and may include a significant up front initiation fee, whereas a gym membership may be year to year, with little or no up front fee.
In addition to the length of the term of membership, the types of uses and restrictions on the use of a business’s services and facilities also vary widely. While some membership agreements will allow members to transfer their membership to someone else, other membership agreements do not. Determining whether a membership agreement is a valid contract also varies according to both the type of membership as well as the type of agreement.
Advantages of Using a Membership Agreement Sample
Utilizing a membership agreement sample can be highly beneficial for businesses and organizations in crafting a comprehensive and effective agreement. Firstly, it saves both time and money. Going through the process of drafting an agreement without an existing template can be labor-intensive and costly in terms of resources. By having a sample that is tailored to a specific business or organization, a considerable amount of preparation work is minimized.
Secondly, it results in a more thorough document. A well-written membership agreement is more than just a list of terms and conditions. It should be clearly written, easy to understand, and cover a variety of potential scenarios and contingencies. A membership agreement sample that has been professionally prepared takes all of these factors into account.
Thirdly, it can be created or modified by the company’s or organization’s attorney to fit its current needs or legal climate. This removes the worry associated with trying to draft a satisfactory agreement without legal expertise. Having a membership agreement created or modified by an attorney leaves the company’s management free and clear of worry when it comes to potential legal issues that can arise out of a poorly written or incomplete agreement.
How to Tailor a Membership Agreement
Even if membership agreement samples are a good starting point, there are a few steps you should take before you distribute them to your members. A membership agreement sample is designed to be the foundation for your organization’s membership agreement. The process of customizing a membership agreement sample to meet the unique needs of your organization or club involves several basic steps:
1. Review a membership agreement sample in detail. Cut and paste applicable verbiage, without regard to order or sequence, into a Word document that will become your membership agreement. Use track changes so you can see exactly what you’re doing as you cut and paste material from the membership agreement sample into your own membership agreement.
2. Conduct a thorough review against your requirements and rework the membership agreement template until the language precisely meets all of your requirements . It’s not uncommon at this stage to put your membership agreement aside and review it again with fresh eyes days (or weeks) later. Based on that second review, your membership agreement template may be spirited again another 10 to 20 times until you are confident that the final result meets your objectives, and you have adequately protected your organization.
You should also document all of your revisions, including the rationale behind each change. You may have a great idea – or you may have inherited someone else’s great idea! Even if your organization is small today, it is likely that your membership agreement has been revised by others in the past. As a result, there may be changes to your membership agreement template that you are not aware of. By documenting your reasons for making each revision, you will have a "road map" that will help you identify the most recent revisions to your membership agreement should your revisions be challenged in the future.
Legal Implications of Membership Agreements
Membership agreements should be reviewed by legal counsel before they are accepted from a potential member. Reviewing the membership policy and confirming the membership application process are also important to ensure that the applicant will have an opportunity to become a member of the club. Failure to use caution in this regard may result in claims for damages being made by a potential member who claim he or she was treated in a discriminatory manner (e.g., based upon race, color, religion, etc.).
Other legal issues to consider include confirming that the membership agreement does not violate state anti-spam laws or any rules relating to the use of electronic pricing. For example, California law prohibits sending unsolicited commercial e-mail messages and requires that recipients be provided with an opt-out mechanism (e.g., an opportunity to unsubscribe). Regarding pricing issues, some states prohibit pricing that is based upon the use of an e-mail address by requiring that retailers provide the best price without regard to the e-mail address of the customer.
Common Errors to Avoid
A common error in drafting membership agreements is to use the latest model agreement you found online or to copy and paste provisions from another organization’s agreement. Membership agreements should be tailored to meet the unique operation of your organization. The manner in which your organization runs its membership program may be very different from the other organization’s membership program, and adopting their policies and procedures could lead to compliance and enforcement issues. You should have a process in place for considering revisions to your agreements on a periodic basis as your organization changes and matures.
Another mistake organizations often make is to exclude certain terms from the membership agreement thinking that they are "guaranteeing" member rights by not deviating from them. In fact, members may be disappointed if an exclusion from the agreement proves to be a "hard case." If, for example, a specific termination right is not mentioned in the membership agreement but was previously included in a handbook, future members may expect that termination right to be available. That can turn into hard feelings among current members and could result in liability to the organization even if the provision is not mentioned in the membership agreement.
A related issue involves using casual language in the agreement. It is very important to be clear about the obligations you place on members. Putting something in a membership handbook or policy manual does not always bind new members. A membership agreement, however, is a contract expressly binding on members and offering them protections under the law.
Reviewing membership agreements as you are issuing new membership cards is one way to avoid these problems. Another practical tool is to require members’ OK of membership agreements before issuing them a bi-annual or annual statement of fees and required contributions, voting rights, etc.
Membership Agreement Sample Template
The following is a sample of what a membership agreement template might look like. It is important that your membership agreement is tailored to your unique needs and specific to your jurisdiction. You will want to seek professional advice when creating your membership agreement based on the requirements of your organization and your jurisdiction. Lines of text in italics and brackets are examples of things that may change within the agreement, depending on the unique needs of your organization and your jurisdiction.
Membership Agreement
THIS MEMBERSHIP AGREEMENT (Agreement) dated __________________, is made by and between ________________________________ (Company Name), a company incorporated in (Your Jurisdiction), (the "Company") and ________________________________ (the "Member"). For and in consideration of the mutual covenants and conditions contained in this Membership Agreement, the parties hereto agree as follows:
- Becoming a Member
- 1 Flextopia Membership Fees. In order to initially become a Member, the Company must pay a one-time, non-refundable fee of $______________________ (the Initial Membership Fee). If the Initial Membership Fee has been paid, the Company will be a Member of Flextopia LLC (Flextopia) for a one year period ending on the date one year after the date of this Membership Agreement (Membership Period) .
- 2 Membership Fees. After the Membership Period ends, in order to maintain its membership, the Company must pay Flextopia the then current fee to maintain the Membership (Membership Fee). The Company understands that the Membership Fee will change from time to time. The Membership Fee is currently $_________________ (Membership Fee). If Flextopia changes the Membership Fee, Flextopia will share this information online with the Company.
- 3 Membership Privileges. This initial payment in consideration of the benefits and privileges the Company will receive during the Membership Period. The Company will begin to receive the described benefits and privileges upon receipt of the Membership Fee by Flextopia. The membership privileges are not fully in place and available to the Company until the Membership Fee is paid and the management of Flextopia sets up the Company’s account. The Company understands and acknowledges that its membership in Flextopia as a transparent Member does not include Flextopia managing the Company’s books of accounts related to accounting and tax obligations. The Company will be responsible for ensuring that it engages a third party to provide these services.