Health Club

Today approximately 40 million people belong to over 26,000 different health clubs in the United States. With the continuing expansion of health clubs, people are finding it more convenient than ever to buy health club memberships. But what would happen to those who bought a health club memberships from health clubs that might shut down in the future? Is their pre-paid membership protected from underhanded or poorly managed health clubs?

Health clubs are required to get bonded by many states to help protect the consumers. The health club will purchase and post a bond with the attorney general in the state, the attorney general guarantees the refund of membership fees if the health club goes out of business.

Health club bonds became necessary when a large number of clubs shut down as a result of inadequate financial management, or fraud. Some health clubs went as far as opening for memberships, collected pre-paid membership fees then closed. The heath club then kept the fees they collected and left thousands of paying clients without memberships. To counteract this many states created legislation requiring health clubs to purchase a surety bond with a licensed insurer.

Health club bonds are not limited strictly to health clubs that offer fitness training. Other types of pre-paid membership health organizations may also be required to post a bond with their state attorney general:

The typical bond amounts are based on the different types and lengths of memberships. In New York a health club must post a $50,000 bond if it offers 12 month memberships, $100,000 for 12-24 month memberships and $150,000 for membership contracts that last up to 36 months. Additionally, some states require health clubs that have more than one location to post supplementary bond amounts.

In states that require health club bonds, the club must show proof they have purchased a bond to the state attorney general. They also need to prominently display the bond to all customers who use the facility.