The Online Coaching Market
The range of online coaching services has exploded in recent years. Online coaching offers a level of flexibility in terms of location and time that in-person coaching cannot provide. It is popular in many fields: from professional development, career and executive coaching, fitness and nutrition programmes, mental health and mindfulness, to language courses, creative arts, financial and start-up consulting, as well as relationship and life coaching. What these offerings have in common is that they guide participants digitally, foster targeted development, and provide interactive feedback.
Legal Requirements: Distance Learning Protection Act and Licensing Obligation
Online coaches require a licence pursuant to Section 12(1) FernUSG if they offer distance learning. Otherwise, the contract is void under Section 7(1) FernUSG. In the event of subsequent expiry, revocation, or withdrawal of the licence, the participant also has the right to terminate the contract without notice. For a long time, it was unclear whether this also applied in the B2B sector and what exactly constitutes distance learning.
Distance learning is defined in Section 1 FernUSG as: the contractual, paid provision of knowledge and skills where
- the instructor and the learner are exclusively or predominantly physically separated, and
- the instructor or their agent monitors the learner’s progress.
Federal Court Ruling: Repayment Obligation for Lack of Licence
Facts of the Case
The claimant was a participant in the defendant’s “9-Month Business Mentoring Programme Financial Fitness”, which cost a total of EUR 47,600. No licence pursuant to Section 12(1) FernUSG had been obtained for this programme. According to the course description, the programme consisted of two weekly online meetings, homework assignments, semi-annual “intensive workshops”, as well as personal and direct support. If required, participants were also entitled to two individual sessions with a personal coach; further team members and experts were also available.
The claimant paid half of the fee (EUR 23,800) to the defendant. After a few weeks, the claimant terminated the course and subsequently demanded repayment of the amounts already paid. The defendant then demanded payment of the remaining fees.
The claimant brought an action for repayment; the defendant filed a counterclaim for the outstanding fees.
Decision of the Federal Court of Justice (BGH)
By judgment of 12 June 2025 (III ZR 109/24), the BGH ordered the online coaching provider to repay fees totalling EUR 47,600. The contract was deemed a distance learning contract and was void due to the lack of a licence. The BGH clarified and expanded the scope of the Distance Learning Protection Act (FernUSG), holding that:
- The FernUSG also applies in the B2B sector. The purpose for which the learner participates in the course is irrelevant.
- “Provision of knowledge and skills” is to be interpreted broadly. It is sufficient that the agreement provides for the learner to receive knowledge, know-how, or any form of education. In coaching, knowledge transfer usually takes precedence over “consulting”. There are no minimum quality requirements for the instruction. Coaching is generally not merely consulting, but at least also involves imparting knowledge and skills. The actual learning outcome is irrelevant; only the agreement matters.
- The requirements for “monitoring learning progress” are low. Continuous monitoring is not required. The BGH did not change its previous case law in this respect. A single learning assessment is sufficient, and it does not even have to actually take place—it merely needs to be contractually owed. The learner’s entitlement to be asked oral questions by the instructor about the material learned is sufficient.
- It is often debated whether exclusive or predominant physical separation (Section 1(1) FernUSG) exists if the online course is conducted in real time. The BGH left this question open. In the present case—and probably in most cases—this is irrelevant, as learning videos and homework assignments already take place asynchronously and constitute a significant part of the coaching offering.
- The online coaching provider may, in principle, claim reimbursement of expenses saved by the claimant. However, in this case, the provider could not prove that the claimant had saved any expenses by participating in the course.
Further Implications of the Ruling for Online Coaching Providers
Even coaches who do not face repayment obligations are affected by the FernUSG. Anyone subject to the FernUSG must observe the following obligations:
Information obligations (Section 16 FernUSG): Coaches must provide comprehensive information to potential participants in commercial advertising for distance learning courses, including:
- A complete overview of the contractual terms,
- The requirements for participants,
- An overview of the essential content of the distance learning course.
Prohibition of advance payments (Section 2(2) FernUSG): Coaches may not demand advance payments. Remuneration must be paid in instalments corresponding to the value of the services provided during the contract term.
Rights of withdrawal and termination (Sections 4 and 5 FernUSG):
- Participants have a right of withdrawal, which also applies to contracts not concluded outside business premises or as distance contracts (Section 4 FernUSG in conjunction with Section 3(2) FernUSG).
- Participants may terminate the contract without giving reasons for the first time at the end of the first half-year and thereafter at any time (Section 5(1) FernUSG). In this case, only the proportion of the remuneration corresponding to the value of the services provided is payable (Section 5(2) FernUSG).
The terms and conditions of online coaching providers are also invalid to the extent that they conflict with these obligations and rights.
Corporations should consider whether to create provisions in the event of repayment claims. It should also be checked whether there is an obligation to file for insolvency.
As a rule, only the GmbH is liable in the event of insolvency. However, managing directors may be personally liable if they fail to file for insolvency in a timely manner in the event of insolvency or over-indebtedness. In the event of impending repayment claims, swift action is essential to avoid liability risks. Providers should carefully analyse their risks.
Who Is Affected by This Ruling?
This ruling affects anyone offering online coaching. Whether a particular course qualifies as distance learning within the meaning of the FernUSG must still be assessed on a case-by-case basis. However, in light of this ruling, this will regularly be the case if the course or consulting is conducted predominantly online and is not purely consulting.
Our Recommendations for Action
Legal review of offerings:
Have your courses reviewed to determine whether they fall under the FernUSG.
Apply for the necessary licences if required.
Adjustment of contractual terms:
Ensure your contracts comply with the information obligations and payment modalities of the FernUSG.
Risk management:
Factor in potential repayment claims and create provisions.
Act immediately in the event of impending insolvency to avoid personal liability risks.
