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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.
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