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Have a question? +1 815-826-6324 (815-8-BondAI) phil@AmericasSuretyBonds.com
Army Veteran Owned | Expert Surety Bonds Since 2004
Opening an Anytime Fitness location in Alabama means registering with the Attorney General's Consumer Protection Division before you sell a single membership, and if you pre-sell memberships while the club is still under construction, Code of Ala. 8-23-3 requires a security bond on file as well. This $25,000 bond is the amount sold for Anytime Fitness franchise locations. Confirm the amount the Division will accept for your club before the bond is issued, since the statute sets a floor of $50,000 for pre-opening sales.
Alabama regulates health clubs under the Health Studio Services law, Code of Ala. 8-23-1 through 8-23-13. Every seller of health studio services registers with the Attorney General's Consumer Protection Division, and a studio that sells contracts for services at a planned club or one under construction must post a security bond of not less than $50,000 or an irrevocable letter of credit. This $25,000 listing is written for Anytime Fitness franchise locations. The bond protects members who lose money through breach of contract or bankruptcy of the club.
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Code of Ala. 8-23-3(a) requires each person who sells health studio services in Alabama to register with the Attorney General's Consumer Protection Division, listing every business location where memberships are sold. The Attorney General runs an online health studio registration portal and still accepts a paper registration form. Each seller must also have a registered agent in the county where the studio is located to receive service of process. Registration is required whether or not a bond is.
Section 8-23-3(d) is the part most franchisees misread. The bond requirement attaches to every health studio which sells contracts for services to be rendered at a planned health studio or a health studio under construction. Pre-selling founding memberships before the doors open is exactly that situation, and it is standard practice for a new Anytime Fitness club. The statute calls for a security bond in an amount not less than $50,000, or an irrevocable letter of credit from a surety company or lending institution permitted to do business in Alabama. The Attorney General's published bond form is printed at $50,000 and names the State of Alabama as obligee solely for the benefit of consumers damaged by breach of a health studio service agreement or bankruptcy of the principal.
This listing is written at $25,000 for Anytime Fitness franchise locations. Before the bond is issued, confirm with the Consumer Protection Division the amount it will accept for your club and your pre-sale plan. If the Division requires $50,000, the bond can be written at that amount instead. Do not file a bond the Division has not agreed to accept, because 8-23-3(c) lets the Attorney General seek a court order compelling a club to register and to have and maintain the required surety.
Under 8-23-3(e) a member who suffers loss from breach of contract or bankruptcy of the seller may sue on the bond and recover from the surety. The surety's total liability is capped at the bond amount no matter how many claims are filed, and if claims exceed the bond, the surety pays the full penalty to the Division for distribution to claimants. The surety then recovers what it paid from the franchisee, so the bond is a guarantee to members, not insurance for the owner. Bonded studios must keep records of the bond and premium payments open to Division inspection during business hours.
Section 8-23-2 excludes bona fide nonprofit organizations with IRS tax exempt status, such as a YMCA or YWCA, whose health studio functions are incidental to their overall purpose. A franchised for profit club does not qualify. Section 8-23-6 exempts only contracts entered into before August 13, 1984 and their renewals.
Code of Ala. 8-23-3(d) sets a floor of not less than $50,000 for a studio that sells contracts before the club opens, and the Attorney General's form is printed at that figure. This listing is the $25,000 amount sold for Anytime Fitness franchise locations. Confirm the amount the Consumer Protection Division will accept for your club before the bond is issued. If the Division wants $50,000, the bond is written at $50,000.
Registration under 8-23-3(a) is required of every seller of health studio services regardless. The bond language in 8-23-3(d) is tied to selling contracts for services at a planned studio or one under construction. Tell the Division your plan when you register and follow its direction, because 8-23-3(c) lets the Attorney General compel a club to maintain whatever surety the section requires.
Yes. The statute accepts an irrevocable letter of credit from a surety company or lending institution permitted to do business in Alabama in place of the bond. A surety bond is usually the cheaper route because the premium is a fraction of the amount and no cash or credit line is tied up.
The registration and the bond run to the person who sells health studio services at the Alabama location, which is the franchisee entity. Each location where memberships are sold must be listed on the registration. Ask the Division whether any franchisor arrangement changes what your club must file.
Member losses from breach of the membership contract or bankruptcy of the club. A member can sue on the bond and recover from the surety up to the bond amount. The surety then collects from the franchisee. It does not cover injuries, property damage or the club's own losses.
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