Information for Owners of Health Clubs, Weight Loss Centers and Martial Arts Schools
Health Club Unit, Consumer Protection Division, Office of the Attorney General
200 St. Paul Place, Baltimore, MD 21202
(410) 576-6350 / Fax: (410) 576-6566
E-mail: healthclub@oag.state.md.us

WHO MUST REGISTER?

Businesses that sell health club services at a facility must register. Health club services include health clubs/gyms, weight loss centers, self defense schools, and personal trainers or athletic trainers who sell services and provide a facility.

WHEN MUST A HEALTH CLUB BUSINESS REGISTER?

A new health club business must register with the Consumer Protection Division prior to operating in the State of Maryland. An already registered health club business must register annually on September 1st. There are three types of registration: bonded, bond exempt and pay-per-day.

WHO MUST REGISTER AS A BONDED BUSINESS?

Your business must provide the Consumer Protection Division with a bond letter of credit or cash deposit if it:

1. Collects or accepts more than three (3) months of payment in advance of providing services from any member, including annual fees; or

2. Collects or charges an initiation fee or any other up-front fee more than $200 to any member; or,

3. Has not yet opened a facility, but collects any money in advance for services to be provided at a planned facility or facility under construction (pre-sales).

The annual registration fee for this type of health club is $1200.00.

What amount is adequate for bond or other security?

1) Existing business:

An existing club must post a bond with the Division that is adequate to cover all "outstanding liabilities" to its members. The "outstanding liabilities" of a business is difference between the amount of money each consumer has paid for services and the value of services the club has actually provided to the consumer. For consumers who pay on a monthly basis, outstanding liabilities includes payment for one full months' dues. If the club closes, the club is liable to consumers for the amount of its outstanding liabilities, and the consumers may make a claim on the bond.

Each year at registration, each business that is required to be bonded must file with the Division a "Schedule of Outstanding Liabilities" that has been reviewed and certified by an independent Certified Public Accountant. When approved by the Division, this schedule sets the minimum amount of the required bond. However, businesses that post the maximum bond of $200,000 for each facility are not required to submit a schedule of outstanding liabilities or a report by an independent Certified Public Accountant.

Please see the Instructions for Reporting Outstanding Liabilities and Instructions for the Report by a Certified Public Accountant for further information on calculating the amount of the bond and the content of the CPA report and schedule of outstanding liabilities. For the required surety language, please see the attached sample bond and sample letter of credit.

2) New business:

A business must contact the Health Club Unit for registration materials and additional information before it opens a a new facility or conducts any pre-opening activity. For pre-opening sales, a business must post a $50,000 bond before making any sales. This bond must be increased accordingly as sales exceed $50,000. The bond must always equal or exceed the total amount of money collected from consumers before the club opens. Unlike a bond for an existing facility there is no maximum.

WHO MAY REGISTER AS A BOND-EXEMPT BUSINESS?

Any health club that is not required to post a bond and register as a bonded business or that is not eligible to register as a pay-per-day business, should register as a bond-exempt business.

A bond-exempt business cannot accept more than 3 months’ dues or other payments in advance or charge initiation fees or any other up-front fees over $200. The annual registration fee for this type of health club is $300.

WHO MAY REGISTER AS A PAY-PER-DAY BUSINESS?

Health clubs who charge for their services only on a "pay-per-day" or "pay-as-you-go" basis are eligible to register as a pay-per-day business. 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 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.

WHAT IS REQUIRED FOR INITIAL REGISTRATION?

To register, each business must Register On-Line or complete and submit:

1. A General Registration Application;

2. For a business that is required to be bonded, a Statement Of Compliance With Financial Accountability Requirement Under Maryland Commercial Law Code. §14-12B-02(E);

3. For a business that is not required to be bonded (bond exempt and pay-per-day), an Application For Exemption From Financial Accountability (Bonding) Requirements;

4. The registration fee. ($1200 for a bonded business, $300 for a bond exempt business, or $75 for a pay-per-day business, made payable to "Office of the Attorney General."); and,

5. A sample contract for each type of payment schedule that will be offered by the health club. For example, if you offer contracts requiring the consumer to pay on a monthly basis, submit two copies of this type of contract. If you offer contracts requiring the consumer to pay on a semi-annual basis, submit two copies of this type of contract.

WHAT IS REQUIRED FOR REGISTRATION RENEWAL?

Annually in June, the Division mails registration renewal materials to health clubs that have previously registered. To renew their registration, businesses may Renew On-Line or submit via regular mail by September 1st the following:

1. The registration renewal materials (updating and correcting the information contained therein);

2. The registration fee. ($1200 for a bonded business, $300 for a bond exempt business, or $75 for a pay-per-day business, made payable to "Office of the Attorney General");

3. For a business that is required to be bonded, a Schedule of Outstanding Liabilities and a report by a Certified Public Accountant (See Instructions for Reporting Outstanding Liabilities and Instructions for the Report by a Certified Public Accountant);

4. Two (2) fully signed contracts for the three month period immediately preceding the filing of the registration renewal materials for each type of payment schedule offered by the health club. For example, if you offer contracts requiring the consumer to pay on a monthly basis, submit two copies of this type of contract. If you also offer contracts requiring the consumer to pay on a semi-annual basis, also submit two copies of this type of contract.

ARE THERE ANY MANDATORY DISCLOSURES HEALTH CLUBS MUST MAKE TO CONSUMERS IN THEIR CONTRACTS?

Health club contracts must contain a Notice of Consumer Rights ("NOCR"). This notices varies depending on whether the business is bonded, bond exempt or pay-per-day. See NOCR for Bonded Businesses, NOCR for Bond Exempt Businesses and NOCR for Pay-Per-Day Businesses.