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Health Club Surety Bond

(Aka: Health Spa, Fitness Center, Gym Surety Bond)

Some states require the Health Club Surety Bond in order to obtain and maintain a license to operate a for-profit health club, health spa or fitness club. The bond is put in place to protect consumers. Typically, health club bonds are required to provide a form of guarantee that club members will not take a loss as a result of a breach of contract or bankruptcy of the health club. In some states, the bond also protects the consumer's right to a refund of fees paid in circumstances outlined in state statutes.

Health club bond amounts vary from state to state. In some states, the bond amount can be dependent on the term of the health club contracts offered. Additional locations may also require either additional surety bonds or increased bond amounts.

How Does a Health Club Surety Bond Work?

A surety bond is an agreement between three parties:

  • Obligee - This is whatever entity creates the obligation to obtain surety bonds for health clubs. Typically, it's whatever state agency has responsibility for regulating the health and safety of fitness facilities, but it varies by state. The obligee sets the required bond amounts and determines under what circumstances people can file a claim on the bond. The oblige works in the interest of the general public.
  • Principal - This is whoever takes out the bond, typically the owner of the health club. As the principal, you are subject to whatever rules and penalties are assigned by the obligee. In exchange for accepting that responsibility, the state grants you a license to operate legally.
  • Surety - This is the company that issues and administers the bond. If a claim is made, the surety company will investigate its merits and pay any valid claims up to the limit of the bond. Then the surety will attempt to collect the same amount it paid out from the principal, the bonded party. The principal has ultimate financial responsibility, but the surety guarantees the claim will be paid in a timely manner.

How Much Does a Health Club Surety Bond Cost?

The answer depends on many factors: the state the health club is in, the number of locations, and the length of membership contracts most commonly. The total can range from as little as $20,000 to above six figures in some instances. Just keep in mind that the amount you pay is a fraction of what the total bond is worth, often only 3-5% of the total.

The amount different health club owners pay is also variable. Larger bonds obviously have larger costs, but riskiness of the principal also matters. Principals with bad credit won't necessarily be denied, but they may pay more. Regardless of what that sum is, it must be paid upfront and again annually to keep the bond renewed. If it lapses, the health club license could be revoked, among other penalties.

Does My Business Need a Bond?

Every state defines what is considered a Health Club and requires licensing. Whether or not your business needs a bond is up to the applicable state agency. Be aware that businesses that may not typically be categorized as "health clubs" may still be required to obtain a bond based on the state definitions. Here are some potential examples:

  • Weightlifting or bodybuilding clubs
  • Athletic trainers with a dedicated facility
  • Tennis and racquetball clubs
  • Self-defense schools
  • Weight-loss coaching facilities

Applying for a Health Club Surety Bond

Processing a Health Club Bond is typically simple and easy. In most cases, minimal documentation is needed. Quotes are usually provided the same day or within 24 hours.

Viking Bond Service provides all the services expected from a leading surety company, along with all the assistance you need to submit an application. We provide the surety bonds you need to meet the state requirements. Plus, they're available to health club entrepreneurs even if they have bad credit or bankruptcy. Our team is here to help at every step, so don't hesitate to reach out with questions.

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