(a) In order to provide a degree of protection to members of health clubs, each health club shall post a bond in an amount of twenty-five thousand dollars ($25,000) for each location doing business in this state. The bond shall be made with a bond issued by a corporate surety authorized to do business in this state.
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Terms Used In Tennessee Code 47-18-318

  • Attorney general: means the office of the Tennessee attorney general and reporter. See Tennessee Code 47-18-2102
  • Health club: means any enterprise, however styled, which offers on a regular, full-time basis, and pursuant to a health club agreement, services or facilities for the development or preservation of physical fitness through exercise, weight control or athletics. See Tennessee Code 47-18-301
  • Health club agreement: means an agreement whereby a buyer purchases, or is obligated to purchase, any right to use health club facilities or services. See Tennessee Code 47-18-301
  • Operator: means any person, firm, corporation, or business entity which operates a health club. See Tennessee Code 47-18-301
  • Person: means a natural person, consumer, individual, governmental agency, partnership, corporation, trust, estate, incorporated or unincorporated association, and any other legal or commercial entity however organized. See Tennessee Code 47-18-2102
  • Reporter: Makes a record of court proceedings and prepares a transcript, and also publishes the court's opinions or decisions (in the courts of appeals).
  • Restitution: The court-ordered payment of money by the defendant to the victim for damages caused by the criminal action.
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Year: means a calendar year, unless otherwise expressed. See Tennessee Code 1-3-105
(b) The bond shall be maintained for two (2) years following the date on which the health club location ceases to conduct business in this state.
(c) In an action brought by the attorney general and reporter pursuant to part 1 of this chapter, the attorney general and reporter shall have the right to request that the total amount of the bond posted by the health club be awarded to the state for consumer restitution. Any person who has entered into a health club agreement that is not fulfilled by the operator may make a claim against the bond.
(d) This section shall not apply to any health club or health club operator that has, for at least seven (7) consecutive years, operated under substantially the same ownership and control. Any health club claiming the exemption pursuant to this subsection (d) shall maintain documentation as of January 1 of each year in which the exemption is claimed demonstrating the required period of ownership. Such proof shall be retained for a period of at least five (5) years from the end of the year in which the exemption is claimed. This documentation shall be made available for examination upon request of any law enforcement agency or the attorney general. A refusal to provide such documentation shall constitute a violation of this part.
(e)

(1) In lieu of the surety bond required in this section, a health club may maintain on file a current audited financial statement prepared by a certified public accountant licensed in this state that demonstrates that either the health club or the health club operator has a financial net worth of at least ten million dollars ($10,000,000) available to satisfy any claims.
(2) Any health club claiming the exemption pursuant to this subsection (e) shall maintain documentation as of January 1 of each year in which the exemption is claimed demonstrating at least ten million dollars ($10,000,000) available to satisfy any claims. Such proof shall be retained for a period of at least five (5) years from the end of the year in which the exemption is claimed. This documentation shall be made available for examination upon request of any law enforcement agency or the attorney general. A refusal to provide such documentation shall constitute a violation of this part.
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