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Registration FAQ

 



 

 

   

How To Change Business Status/Type

*NOTE: This section is informational only. If you wish to change the status of your business please telephone the Health Club Registration Unit BEFORE you proceed to take steps to change the status of your business. We may require additional information particular to your business for approval.

Please telephone the Health Club Registration Unit: 410-576-6350

Bonded to Bond Exempt*

The following instructions provide information on how to convert a business registration status from bonded to bond-exempt status. Be aware that bond exempt businesses are prohibited from collecting or accepting more than three (3) months of payment in advance for any memberships and from collecting or accepting more than $200.00 in initiation fees. Therefore if your business has accepted or will accept payments which are more than 3 months in advance or more than $200.00 in initiation fees, you should not register as a bond-exempt business.

A business which is currently registered as bonded must:

1. Discontinue selling memberships or programs for which you collect more than three months' payment during the initial membership or the renewal term and discontinue collecting initiation fees that exceed $200.

2. Submit a draft of the contract you plan to use once you are approved as a bond-exempt business. Your Notice of Consumer Rights should be amended in the contract draft sample to reflect the change in your bonding status.

3. Eliminate your outstanding liabilities. You may eliminate your outstanding liabilities by issuing refunds or providing services on your outstanding liabilities until all contracts entered where you have accepted three (3) month's payment in advance or more than $200.00 in initiation fees expire. Note that it is not enough to simply “stop writing” or entering agreements which require a bond.

4. After you have eliminated your outstanding liabilities you must:

• Submit a Schedule of Outstanding Liabilities (SOL) for all members, a corresponding CPA Report, and a copy (front and back) of the canceled refund check or a copy of the refund money order and cover letter sent to each member - (you may wish to request that the Division review your refund cover letter in advance of sending it and the refund checks to consumers); or

• Submit a Schedule of Outstanding Liabilities (SOL) for all members and CPA Report documenting no liabilities which require bonding.

5. Sign, date and return an Affidavit that will be prepared for you by the Division. You will need to contact the Division with the name and title of the officer of your business that will be signing the Affidavit on behalf of the business so that the Affidavit can be prepared and mailed to you.

Please note, you may not cancel your bond/letter of credit, nor may you allow your bond/letter of credit to expire until you are notified by the Division that your registration status is determined to be bond exempt. Failure to maintain your security could result in an enforcement action against your business.

Bond-exempt to Bonded Status Change*

The following instructions provide information on how to convert a business registration status from bond-exempt to bonded status. Be aware that bond exempt businesses are prohibited from collecting or accepting more than three (3) months of payment in advance for any memberships and from collecting or accepting more than $200.00 in initiation fees. Therefore if your business is currently registered as bond-exempt it may NOT accept payments which are more than 3 months in advance or more than $200.00 in initiation fees until it posts security and is registered as a bonded business.

A business that is currently registered as bond-exempt must:

1. Complete a Schedule of Liabilities (SOL) and have that document reviewed by an independent Certified Public Accountant for completion of a CPA Report.

2. Post security in the amount of your outstanding liabilities in the form of a bond, letter of credit, or cash deposit.

3. Complete the enclosed Statement of Compliance with the Financial Accountability Requirement (HS-R3) and forward it to us. Note that you are required to review your outstanding liabilities quarterly to account for any increases. Therefore when your outstanding liabilities increase due to the acceptance of payments in advance you must also increase your security.

4. Provide a new price sheet which contains information on the payment options you will offer.

5. Revise your contract. In your Notice of Consumer Rights, you should amend the disclosure regarding your bonding status. It should state that the business is bonded with the State, the type of security posted, and the amount posted.

6. Submit a check made payable to the "Office of the Attorney General" in the amount which reflects the appropriate annual registration fee for bonded businesses($1200) minus any registration fees already paid for the present registration term.


Pay-per-day

A pay per day business is defined as one who does not:

1. Charge an initiation or other fee that is not identified as a payment for specified future services;

2. Does not contractually obligate a buyer of health club services to payment in advance of the date the services are provided to the buyer; and

3. Does not collect from a buyer of health club services any payment in advance of the date the services are provided to the buyer.

 

Attorney General of Maryland 1 (888) 743-0023 toll-free / TDD: (410) 576-6372
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