1. Existing businesses:

An existing business must post a bond with the Consumer Protection Division that is adequate to cover all "outstanding liabilities" to its members (the amount of money the business would have to refund to members if it closed). If the club closes, consumers may make a claim on the bond.

Under the Health Club Services Law, the maximum bond that a business has to post is $200,000, regardless of whether the business' outstanding liabilities are greater than $200,000.

2. Sales before opening:

If a business is making sales prior to opening for business, the business must register and post a $50,000 bond before starting 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. However, once the business opens, it may reduce its bond to the amount required for an existing business.

Return to Health Club Information for Consumers page.