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Which States Have Health Club, Spa, and Fitness Center Surety Bond Requirements?

Health Club Members work out

With more than 30,500 Health Clubs, Studios and Spas in the US and close to 60 million health club members, it’s no wonder that Entrepreneur magazine singled out the fitness franchise industry as one of the key sectors that showed gains in a sluggish economy. But what happens if a health club closes unexpectedly? What happens to the dues the members paid?

To protect members’ investments, many states require fitness center owners/operators to post surety bonds as a requirement for obtaining a license. A health club, spa, fitness center bond guarantees its members the return of any prepaid fees or dues should the business close.

States That Require a Surety Bond:

California Health Studio Registration Surety Bond- the bond amount is equal to the total dollar amount of prepaid contracts for the previous 12-month period.

District of Columbia Health Spa Sales License Surety Bond- the minimum bond amount is $25,000 and increases up to $50,000 for annual sales exceeding $100,000.

Florida Health Studio Registration Surety Bond- a $25,000 bond is required if the studio collects fees beyond 30 days in advance, or charges service fees, or utilizes a third party to collect dues (such as EFT).

Maryland Health Club Registration Surety Bond- a bond in the amount equal to cover all outstanding liabilities up to a maximum bond amount of $200,000. An outstanding liability is considered any difference between the amount of money collected from a customer and the value of the services provided. For customers that pay monthly, the liability is considered one month's dues.

Minnesota Health Club Registration Surety Bond- a bond in the amount equal to cover all outstanding liabilities up to a maximum bond amount of $200,000. An outstanding liability is considered any difference between the amount of money collected from a customer and the value of the services provided. Lifetime contract liability will need to be calculated on a prorated basis of not more than 36 months.

New York Health Club Services License Surety Bond - a minimum $50,000 bond is required for sales of contracts for services not exceeding 12 months, a $75,000 bond is required for any contracts sold that provided services for terms between 12 and 24 months, and a $150,000 bond is required for any contracts sold that provide services with terms more than 24 months. Additional bond requirements apply to multiple locations.

North Carolina Health Club Surety Bond- a minimum $10,000 bond or a bond in the amount equal to cover all outstanding liabilities up to a maximum bond amount of $250,000. An outstanding liability is considered any difference between the amount of money collected from a customer and the value of the services rendered. Health clubs with multiple locations will need a bond for each location.

Oklahoma Health Spa Registration Surety Bond- a $30,000 bond for 500 or less contracts sold that exceed six months, a $40,000 bond for 501 to 1,000 contracts sold that exceed six months, a $50,000 bond for 1,001 to 1,500 contracts that exceed six months, a $60,000 bond for 1,501 to 2,000 contracts that exceed six months, and a $70,000 bond for 2,001 or more contracts exceeding six months. The bond requirement may be waived if the health spa can prove a net worth in excess of $1,000,000 or total assets of $5,000,0000 or more and been in business for more than 18 months.

Pennsylvania Health Club Registration Surety Bond- a minimum $50,000 bond is required for sales of contracts for services not exceeding 12 months, a $100,000 bond is required for any contracts sold that provided services for terms between 12 and 24 months, and a $200,000 bond is required for any contracts sold that provide services with terms more than 24 months. A health club can certify that they will not sell contracts for more than a 24 month term and have fewer than 300 persons have the following bond options: $50,000 for 150- 300 persons and $25,000 for fewer than 150 persons.

Tennessee Health Club Surety Bond- a $25,000 bond is required for each business location. The bond requirement can be waived if the health club files annual audited statements by January 1st of each year reflecting a net worth of $10,000,000 or more.

Texas Health Spa Registration Surety Bond- a $20,000 bond for prepaid memberships less than $20,000, a $25,000 bond for sales of prepaid memberships of $20,001 to $25,000, a $30,000 bond for sales of prepaid memberships of $25,001 to $30,000, a $35,000 bond for sales of prepaid memberships of $35,001 to $40,000, a $40,000 bond for sales of prepaid memberships of $35,001 to $40,000, a $45,000 bond for sales of prepaid memberships of $40,001 to $45,000, and a $50,000 bond for sales of prepaid memberships exceeding $45,001.

Utah Health & Fitness Services Permit Surety Bond- a $15,000 bond for 500 or less paid-in-full contracts sold, a $35,000 bond for 501 to 1,500 paid-in-full contracts sold, a $50,000 bond for 1,501 to 3,000 paid-in-full contracts, a $75,000 bond for 3,001 or more paid-in-full contracts.

West Virginia Health Spas Surety Bond- a $50,000 bond is required if the studio collects fees of more than $25,000, has contract terms greater than 3 months, or collects more than 1/3 of the contract price.

Virginia Health Club Registration Surety Bond- a $10,000 bond for 250 or less contracts sold, a $20,000 bond for 251 to 500 contracts sold, a $30,000 bond for 501 to 750 contracts, a $40,000 bond for 751 to 1,000 contracts, a $50,000 bond for 1,001 to 1,250 contracts sold, a $60,000 bond for 1,251 to 1,500 contracts sold, a $70,000 bond for 1,501 to 1,750 contracts sold, a $80,000 bond for 1,751 to 2,000 contracts sold and a $100,000 bond for 2,001 or more contracts sold If the health club will have multiple locations a blanket $300,000 option is available instead of individual bonds for each location.

Wisconsin Fitness Center Surety Bond- a minimum $25,000 bond is required.

What Types of Businesses Need a Surety Bond?

They include but are not limited to fitness centers, health clubs, body building clubs, health studios and health spas. However, because every state has unique requirements and terminology, it is recommended that health club applicants review state compliance rules and regulations prior to opening a business.

Does How or When I Collect My Dues Affect My Surety Bond Premium?

Yes. If you collect your dues annually, this is considered more risky since the potential claim amount is higher should you close your doors. But, if you collect membership dues monthly, the potential claim amount is less, which can make your premium lower.

How Much Will This Bond Cost?

The premium that you pay for a Health Club, Spa or Fitness Center Surety Bond is dependent on owner's credit and the bond amount required. For bond amounts over $50,000 business and personal financial statements are required.

Give us a call and our surety bond professionals can do the legwork for you. We’re happy to advise you on your state’s requirements. Call us at 1‑844‑432‑6637.

Contact SuretyGroup.com

Our Surety Bond Specialists are ready to assist you with your bonding needs.

Phone: 1‑844‑432‑6637
Emailinfo@suretygroup.com
Fax:     404-351-3237
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