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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
For an Anytime Fitness franchisee opening in South Carolina, the $25,000 health club bond is part of getting the Certificate of Authority that lets the club sell memberships. You pay an annual premium instead of pledging bank credit for a letter of credit, most owners are quoted the same day, and the bond is issued to the South Carolina Department of Consumer Affairs for the certificate file.
South Carolina's Physical Fitness Services Act requires every center that sells prepaid or credit contracts running more than three months or costing more than $200 to maintain a surety bond with the Administrator of the South Carolina Department of Consumer Affairs. The Department sets the amount based on the estimated future cost of servicing contracts sold, up to $50,000. Every club also needs a Certificate of Authority, at $50 per location, renewed each year by December 31.
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Franchisees often assume the bond comes from the franchise agreement. It comes from state law. Under S.C. Code Section 44-79-80, every center that enters into prepaid or credit contracts for physical fitness services of over three months' duration or over $200 in amount must maintain a surety bond with the administrator. SCDCA's initial application asks the same questions and adds a $300 threshold for personal trainers. Brand affiliation does not change the test. Your membership agreement does.
The statute leaves the figure to the Administrator of the South Carolina Department of Consumer Affairs, based on the estimated future costs to service contracts sold, and caps it at $50,000. SCDCA's Initial Application (revised 07/2019) ties the financial responsibility assurance to the number of members currently enrolled or expected to enroll: $10,000 for 1 to 99 members, $20,000 for 100 to 499, $30,000 for 500 to 999, $40,000 for 1,000 to 1,499, and $50,000 for 1,500 or more. This page is set up for a $25,000 bond. Before it is issued, match the penal sum to the amount SCDCA assigns your center.
No person may offer physical fitness services in South Carolina without a Certificate of Authority from the administrator. The application package includes the formal application, a certified copy of the charter or articles of incorporation and bylaws, a Secretary of State certificate of authority or good standing if a corporation, the membership agreement, any contract to be issued, and a list of every outlet in the state. The fee is $50 per outlet, renewed annually at $50 per outlet. SCDCA's renewal window runs November 1 to December 31.
A copy of the certificate must be posted conspicuously at every location where money or contracts are received. It is unlawful to advertise, sell or offer to sell physical fitness services when a valid certificate is not on file, and an administrative law judge may assess up to $500 per violation, capped at $5,000 a year, in place of suspension or revocation.
In lieu of the bond, a center may furnish, under penalty of perjury, information that reasonably demonstrates financial responsibility, and the administrator may weigh the financial strength of a related corporation that agrees in writing to satisfy the claims. SCDCA also publishes an irrevocable documentary letter of credit model form naming the Department as beneficiary. The state, its political subdivisions and not-for-profit corporations are exempt from the chapter under Section 44-79-110.
The bond stands behind the center's obligations to members who paid in advance. Members also have a statutory right to cancel before midnight of the third business day after signing. The franchisee's operating entity is the principal, the SCDCA Administrator is the obligee, and the surety pays valid claims up to the bond amount, which the principal then repays.
The surety prices the bond from the penal sum, the owners' personal credit, the business's financial statements and any prior claims. The premium is an annual charge that renews along with the certificate.
The trigger is the contract, not the brand. Section 44-79-80 requires the bond from any center selling prepaid or credit contracts of more than three months or more than $200. Every center, bonded or not, needs a Certificate of Authority.
The administrator sets it from the estimated future cost to service contracts sold, capped at $50,000. SCDCA's application schedule runs from $10,000 for 1 to 99 members to $50,000 for 1,500 or more. Match the bond to the amount assigned to your center.
The Certificate of Authority fee is $50 per outlet, initially and at each annual renewal, and every location must be listed on the application.
Yes. SCDCA publishes an irrevocable documentary letter of credit model form, and the statute also lets a center demonstrate financial responsibility in lieu of the bond. A surety bond avoids tying up bank credit.
Annually. The renewal fee of $50 per outlet is due on or before December 31, and SCDCA's renewal window opens November 1.
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