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For many service-based businesses, cancellations can be very frustrating. In some cases, the wasted costs can even cause a significant hit to a business' revenue. Putting a cancellation policy in place can help deal with the costs that come with last-minute cancellations and no-shows, and it can work to reduce cancellations across the board.
Use this guide to learn the steps needed to create a comprehensive policy that's fair for the business and your customers.
What is a Cancellation Policy?
A cancellation policy outlines the terms that a customer should adhere to when they choose to cancel their appointment or subscription. It explicitly states who can cancel the appointment and under what terms and conditions they can do this. This will include the process of cancellation, the notice periods needed and any cancellation fees that apply. It should seek to highlight the consequences of certain situations such as no-shows, last-minute cancellations and late arrivals.
Download this template at Lawpath
When should I use a Cancellation Policy?
A cancellation policy is a document that many service-based industries choose to use when setting up a new appointment or onboarding new customers. This covers a wide range of establishments such as restaurants, beauty salons and hotels as well as subscription services like gym memberships, phone plans and software packages.
What does a Cancellation Policy include and not include?
What's typically included in a Policy?
A cancellation policy should include all of the terms and conditions surrounding the cancellation of an appointment. A few key factors to cover includes:
Timeframe. You will need to address how long a customer has to cancel a service with and without incurring a cancellation fee. It is common to opt for a 48-hour notice period after which a customer will incur a penalty.
Penalty fee. You need to explicitly state the penalty fee that a customer can expect to pay if they do not cancel their appointment within the specified time frame. This may be a standard booking fee or a percentage of the appointment's cost.
Contact information. Explain how a customer can go about cancelling their appointment, whether it be over the phone, or via email.
What's usually not included in a Policy?
You do not need to include customer's individual appointment details in your cancellation policy. The policy should be a generic document that applies to all clients that use your service.
How effective is a Cancellation Policy?
A cancellation policy will be upheld by Australian Consumer Law if the terms and conditions set out in the policy are reasonable and fair. Here are a few tips to make your policy effective:
- Creating a policy that charges a fee for late cancellations can help to claim back any lost costs from an empty appointment slot.
- The policy must be clearly communicated to customers when they book an appointment or subscribe to your service. You should also have your cancellation policy available on your website and advertised throughout your business.
- It's also important to note that you cannot enforce a cancellation fee on a customer who cannot attend their appointment due to a situation out of their control.
Do I need to engage a lawyer?
It's easy enough to put together your own cancellation policy using a template. However, it's always a good idea to ask a legal professional to look over your document to make sure that it covers all the necessary clauses. A lawyer can also tell you if the policy it would hold up in court, should it come to that in the future.
Get access to customisable Cancellation Policy templates online
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How do I write this type of policy?
Before you start writing your policy, you need to decide a few things, such as:
- How much notice a customer needs to give to cancel an appointment
- If you will offer a refund under certain circumstances
- A reasonable cancellation fee to charge that is in line with your business costs
Your cancellation policy does not need to be a long document. It should clearly state what happens in the case of a cancellation. To make the document understandable for everyone, you can divide the policy into subheadings such as:
- How do I cancel my appointment?
- What happens when I cancel my appointment?
- What happens in the case of no-shows or late cancellations?
Alternatively, you can opt for a short and snappy cancellation policy that reads a little like this:
'Cancellations that are made [time frame] or less before an appointment will incur to a rebooking fee of [penalty fee]. Cancellations that are made via [phone number or email address] sooner than [time frame] will be accepted and will not incur a cancellation fee'.
Where to get free legal documents and templates like a Cancellation Policy
A cancellation policy template can help you put together a policy for your business in minutes. If you're not sure where to find reliable templates, we've handpicked a few places for you below.
- Lawpath. Sign up to its subscription service, to browse, download and customise your first template for free.
- Lawdepot. Browse through a large selection of online legal templates and download them for free.
- WonderLegal. Take your pick of more than 140 legal templates before customising and downloading a template for a one-time fee.
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