It is if you sign it. Every owner has the right to run his/her business according to his/her choice no matter how crazy it looks or sounds to you (as long as it not unlawful of harmful to all parties involved). If it's in your contract then you either have to honor it or leave.
Usually losing 50 lbs should not affect your skin tightness, but it all depends on your genetics. Just wait and see how your body will look after the weight loss and then you can evaluate your situation. Good luck!
I would also make sure she has medical clearance to workout. The intensity and the type of training program it depends on her fitness level and other existing limitations (if present). Usually lower impact movements as well as lower HR intensity should be some of the things you need to keep in mind....
I agree with Karin. This person is never going to be happy no matter what you do or offer him, so it's best to let him go. And if you try to give him suggestions of other places he might blame you again if things don't workout for him.