Surety Bond Encyclopedia

Health Club Services ($10,000) Bond - Statewide in Rhode Island

Brief Summary

The $10,000 bond is the smallest of three Rhode Island health club tiers, and it only fits a location with under 10,000 square feet of covered fitness space. Measure first, then bond each location at the right tier, so your registration goes through the first time.

RIGL 5-50-3 requires a Rhode Island health club seller to post a bond for each individual location before signing any contract for health club services. The $10,000 bond applies to locations with less than 10,000 square feet of permanently covered, non-court sport exercise, aerobic and fitness area. Larger locations need $20,000 or $30,000. Proof of bonding goes in with the health club registration.

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How to Apply for a Health Club Services ($10,000) Bond:

Measure the permanently covered, non-court sport exercise, aerobic and fitness area at each location.
Confirm the location is under 10,000 square feet for the $10,000 tier, or order the $20,000 or $30,000 bond instead.
Check whether any exemption applies, including the January 1, 1998 grandfather clause and the no initiation fee, 30 day membership exemption.
Complete the bond application in the seller's exact legal name, one bond per location.
Attach proof of bonding to the Rhode Island health club registration and pay the $100 registration fee.
Renew the registration each year with the $50 renewal fee and keep the bond in force.

Detailed Information About the Rhode Island Health Club Services ($10,000) Bond:

Check your square footage before you buy the bond

Rhode Island sets the health club bond by the size of each location, measured as permanently covered, non-court sport exercise, aerobic and fitness area. Under RIGL 5-50-3:

Less than 10,000 square feet: $10,000
10,000 to 25,000 square feet: $20,000
More than 25,000 square feet: $30,000

The bond is required for each individual health club location or facility, so a seller with three sites needs three bonds sized to each one. It must be in place before any contract for health club services is signed.

Who is exempt

The statute exempts three groups. An owner or operator in continuous operation in the same location for five years as of January 1, 1998 is exempt at that location. Nonprofit organizations are exempt, as are weight loss and control services that do not provide physical exercise facilities and classes, do not obligate the customer for more than 30 days, and do not require an initiation fee. A seller that charges no initiation fee and sells no membership longer than 30 days is also exempt if it posts a conspicuous notice of the exemption at its entrances or near its posted rates. The Department of Business Regulation describes the bond as applying to those intending to open a health club with an initiation fee as a condition of a contract.

Registration and filing

Under RIGL 5-50-2, a health club must register before it operates. The Attorney General's consumer protection unit handles registration. The fee is $100, nonrefundable, and registration is valid for one year from approval. Renewal is $50 a year. The registration form asks for proof of bonding under 5-50-3, and material changes must be reported within ten days. The Department of Business Regulation's commercial licensing section also posts the bond requirement and issues permits for pre-opening sales under RIGL 5-50-7. A club selling memberships before it opens needs that permit and a bond in the 5-50-3 amount, and it cannot sign contracts more than twelve months before the intended opening. Confirm with both offices where the original bond is filed and the exact obligee wording before the bond is issued.

What the bond is for

The bond backs the seller's obligations to members under Chapter 5-50, which gives buyers cancellation and refund rights on health club contracts.

Eligibility and Requirements for a Rhode Island Health Club Services ($10,000) Bond:

Bond in place before any contract for health club services is signed.
Separate bond for each individual health club location or facility.
Bond amount set by the covered fitness area at that location.
Registration under RIGL 5-50-2 with proof of bonding attached.
Written notice within ten days of material changes or relocation.
A pre-opening sales permit from the Director of Business Regulation if memberships are sold before the club opens.

Rhode Island Health Club Services ($10,000) Bond FAQs:

Is $10,000 the right amount for my club?

Only if the location has less than 10,000 square feet of permanently covered, non-court sport exercise, aerobic and fitness area. From 10,000 to 25,000 square feet the bond is $20,000, and above 25,000 square feet it is $30,000.

Do I need a separate bond for each location?

Yes. RIGL 5-50-3 requires the bond for each individual health club location or facility.

Is my club exempt?

You are exempt if you have operated continuously at the same location for five years as of January 1, 1998, if you are a nonprofit, if you run a weight loss service with no exercise facilities that charges no initiation fee and binds customers for no more than 30 days, or if you charge no initiation fee, sell memberships of 30 days or less, and post the required notice.

What does registration cost?

The initial registration fee is $100 and is nonrefundable. Registration lasts one year from approval and renews for $50.

We are selling memberships before opening. Is anything different?

Yes. RIGL 5-50-7 requires a pre-opening sales permit from the Director of Business Regulation before you advertise or hold a pre-opening campaign, along with the bond. Contracts cannot be signed more than twelve months before the intended opening.

How is the premium set?

The surety charges a percentage of the bond amount based on the owner's credit and the business's history. Larger tiers cost more because the bond amount is higher.