Texas 2017 - 85th Regular

Texas House Bill HB2216 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1	1		85R21431 JG-F
2	2		By: González of El Paso, Laubenberg H.B. No. 2216
3		-	Substitute the following for H.B. No. 2216:
4		-	By: Hernandez C.S.H.B. No. 2216
5	3
6	4
7	5		A BILL TO BE ENTITLED
8	6		AN ACT
9	7		relating to the registration and regulation of health clubs.
10	8		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	9		SECTION 1. The heading to Chapter 702, Occupations Code, is
12	10		amended to read as follows:
13	11		CHAPTER 702. HEALTH CLUBS [SPAS]
14	12		SECTION 2. Section 702.001, Occupations Code, is amended to
15	13		read as follows:
16	14		Sec. 702.001. SHORT TITLE. This chapter may be cited as the
17	15		Health Club [Spa] Act.
18	16		SECTION 3. Section 702.002(a), Occupations Code, is amended
19	17		to read as follows:
20	18		(a) The purpose of this chapter is to protect the public
21	19		against fraud, deceit, imposition, and financial hardship and to
22	20		foster and encourage competition, fair dealing, and prosperity in
23	21		the field of health club [spa] operations and services by
24	22		prohibiting or restricting injurious practices involving:
25	23		(1) health club [spa] contracts; and
26	24		(2) the marketing of health club [spa] services.
27	25		SECTION 4. Sections 702.003, 702.101, 702.102, and 702.103,
28	26		Occupations Code, are amended to read as follows:
29	27		Sec. 702.003. DEFINITIONS. In this chapter:
30	28		(1) "Closed" means a condition in which:
31	29		(A) the facilities of a health club [spa] are no
32	30		longer available to the health club's [spa's] members and
33	31		equivalent facilities located not more than 10 miles from the
34	32		health club [spa] have not been made available to the members;
35	33		(B) a certificate holder sells a registered
36	34		location and the security filed or posted by the certificate holder
37	35		under Subchapter D is:
38	36		(i) canceled;
39	37		(ii) withdrawn; or
40	38		(iii) otherwise unavailable to the members
41	39		of the health club [spa]; or
42	40		(C) a certificate holder sells a registered
43	41		location and the buyer does not adopt or honor the contracts of
44	42		existing members of the health club [spa].
45	43		(2) "Contract" means an agreement between a seller and
46	44		purchaser by which the purchaser becomes a member of a health club
47	45		or is granted access to the facilities of the health club [spa].
48	46		(3) "Facilities" means the equipment, physical
49	47		structures, improvements, including improvements to leasehold
50	48		premises, and other tangible property, including saunas, whirlpool
51	49		baths, gymnasiums, running tracks, swimming pools, shower areas,
52	50		racquetball courts, martial arts equipment, and exercise
53	51		equipment, that are located at a health club [spa] and used to
54	52		conduct the business of the health club [spa].
55	53		(4) "Health club [spa]" means a business that offers
56	54		for sale, or sells, memberships that provide the members
57	55		instruction in or the use of facilities for a physical exercise
58	56		program. The term does not include:
59	57		(A) an organization that is tax exempt under
60	58		Section 501 et seq., Internal Revenue Code (26 U.S.C. Section 501 et
61	59		seq.);
62	60		(B) a private club owned and operated by its
63	61		members;
64	62		(C) an entity operated exclusively to:
65	63		(i) teach dance, yoga, or aerobic exercise;
66	64		or
67	65		(ii) provide physical rehabilitation
68	66		activity related to an individual's injury or disease;
69	67		(D) a person engaged in an activity authorized
70	68		under a license issued by the state;
71	69		(E) an activity conducted or sanctioned by a
72	70		school under the Education Code; [or]
73	71		(F) a hospital or clinic owned or operated by an
74	72		agency of the state or federal government or by a political
75	73		subdivision of this state;
76	74		(G) prepaid personal training services
77	75		consisting of a specified number of sessions; or
78	76		(H) an outdoor physical exercise program held at
79	77		a public facility.
80	78		(5) "Location" means the physical site of the
81	79		facilities of a health club [spa].
82	80		(6) "Member" means a person who is entitled to the
83	81		benefits of membership in a health club [spa].
84	82		(7) "Membership" means the status of a person under a
85	83		contract that entitles the person to use a health club's [spa's]
86	84		services or facilities.
87	85		(8) "Obligor" means a person, other than a surety, who
88	86		is obligated to perform if a certificate holder defaults.
89	87		(9) "Open" means the date each service of a health club
90	88		[spa] that was advertised before the opening, or promised to be made
91	89		available, are available for use by its members.
92	90		(10) "Prepayment" means consideration paid by a
93	91		purchaser for membership in a health club [spa] before the date the
94	92		health club [spa] opens.
95	93		(11) "Purchaser" means a person who purchases, or
96	94		applies to purchase, the right to use a health club's [spa's]
97	95		services or facilities.
98	96		(12) "Registered location" means a health club [spa]
99	97		location for which a health club [spa] operator's certificate of
100	98		registration is issued under this chapter.
101	99		(13) "Seller" means a person who:
102	100		(A) owns or operates a health club [spa]; or
103	101		(B) offers for sale, or sells, the right to use a
104	102		health club's [spa's] services or facilities.
105	103		(14) "Services" means the programs, plans, guidance,
106	104		or instruction that a health club [spa] provides for its members.
107	105		The term includes [diet planning,] exercise instruction and
108	106		programs[,] and instructional classes.
109	107		Sec. 702.101. CERTIFICATE OF REGISTRATION REQUIRED. A
110	108		person may not operate a health club [spa] or offer for sale, or
111	109		sell, a membership in a health club [spa] unless the person holds a
112	110		health club [spa] operator's certificate of registration.
113	111		Sec. 702.102. APPLICATION REQUIREMENTS. (a) An applicant
114	112		for a health club [spa] operator's certificate of registration must
115	113		file with the secretary of state an application stating:
116	114		(1) the applicant's name, address, and telephone
117	115		number;
118	116		(2) the applicant's business trade name;
119	117		(3) for an applicant whose business is incorporated:
120	118		(A) the applicant's business name registered
121	119		with the secretary of state;
122	120		(B) the location of the applicant's registered
123	121		business office; and
124	122		(C) the name and address of each person who
125	123		directly or indirectly owns or controls 10 percent or more of the
126	124		outstanding shares of stock in the applicant's business;
127	125		(4) the date the applicant became the owner and
128	126		operator of the applicant's business;
129	127		(5) the address of the health club [spa]; and
130	128		(6) the type of available or proposed facilities and
131	129		services offered at the health club [spa] location.
132	130		(b) An application for a certificate of registration must be
133	131		accompanied by:
134	132		(1) a sample of each contract used to sell a membership
135	133		in the applicant's health club [spa];
136	134		(2) proof of security filed or posted by the applicant
137	135		under Subchapter D; and
138	136		(3) the required registration fee.
139	137		(c) An applicant must comply with the application
140	138		requirements of this section for each location where the applicant
141	139		operates a health club [spa].
142	140		Sec. 702.103. CERTIFICATE OF REGISTRATION NONTRANSFERABLE;
143	141		APPLICATION BY NEW OWNER. (a) A health club [spa] operator's
144	142		certificate of registration is not transferable.
145	143		(b) A person who obtains ownership of a health club [spa] by
146	144		purchase or other transfer shall file an application for a
147	145		certificate of registration under Section 702.102 not later than
148	146		the fifth day after the date the person obtains ownership.
149	147		SECTION 5. Section 702.104(a), Occupations Code, is amended
150	148		to read as follows:
151	149		(a) A health club [spa] operator's certificate of
152	150		registration expires on the first anniversary of the date of
153	151		issuance.
154	152		SECTION 6. Sections 702.105, 702.107, 702.151, 702.154,
155	153		702.155, 702.158, and 702.202, Occupations Code, are amended to
156	154		read as follows:
157	155		Sec. 702.105. CERTIFICATE POSTING. A certificate holder
158	156		shall post a health club [spa] operator's certificate of
159	157		registration in a conspicuous place at each registered location.
160	158		Sec. 702.107. SALES TAX PERMIT; PROOF OF REGISTRATION
161	159		REQUIRED. (a) A health club [spa] operator shall submit to the
162	160		comptroller a copy of the operator's certificate of registration at
163	161		the time the operator applies for a sales tax permit.
164	162		(b) The comptroller may not issue a sales tax permit to a
165	163		health club [spa] operator who fails to comply with this
166	164		section. The secretary of state shall assist the comptroller in
167	165		determining whether a business is a health club [spa] under this
168	166		chapter.
169	167		Sec. 702.151. SECURITY REQUIRED. (a) Except as provided by
170	168		Subchapter E, the secretary of state may not issue a health club
171	169		[spa] operator's certificate of registration to an applicant unless
172	170		the applicant files a surety bond, or posts other security as
173	171		prescribed by the secretary, in the amount prescribed by the
174	172		secretary under Subsection (b).
175	173		(b) The secretary of state shall prescribe the amount of
176	174		security required for an applicant in the amount determined
177	175		sufficient by the secretary to protect the health club's [spa's]
178	176		total membership. The amount may not be less than $20,000 or more
179	177		than $50,000.
180	178		Sec. 702.154. BENEFICIARY OF SECURITY. The security filed
181	179		or posted by a certificate holder under this subchapter must be
182	180		payable to the state and held for the benefit of:
183	181		(1) the state; and
184	182		(2) each member of the certificate holder's health
185	183		club [spa] who has been administratively adjudicated to have
186	184		suffered actual financial loss as a result of the closing of the
187	185		certificate holder's health club [spa].
188	186		Sec. 702.155. DURATION OF SECURITY. A certificate holder
189	187		shall maintain the security filed or posted under Section 702.151
190	188		in effect until the earlier of:
191	189		(1) the second anniversary of the date the certificate
192	190		holder's health club [spa] closes; or
193	191		(2) the date the secretary of state determines that
194	192		each claim filed against the security has been satisfied or
195	193		foreclosed by law.
196	194		Sec. 702.158. REVIEW OF SECURITY AMOUNT. (a) At least once
197	195		every three years, the secretary of state shall review the amount of
198	196		security a health club [spa] operator is required to post under
199	197		Section 702.151 to determine whether the amount is sufficient to
200	198		protect the health club's [spa's] total membership. The secretary
201	199		may increase the amount required if the secretary determines that
202	200		the increase is necessary to protect that membership but may not
203	201		increase the amount above the maximum amount allowed under Section
204	202		702.151(b).
205	203		(b) The secretary of state may adopt procedures necessary to
206	204		implement this section, including:
207	205		(1) establishing a schedule to review the amount of
208	206		security posted by each health club [spa] operator; and
209	207		(2) requiring each health club [spa] operator to
210	208		submit periodically a written statement of the health club's
211	209		[spa's] total membership.
212	210		Sec. 702.202. QUALIFICATIONS FOR EXEMPTION. A certificate
213	211		holder may apply for an exemption under Section 702.201 if:
214	212		(1) the certificate holder does not require, or
215	213		solicit or offer a plan or program that requires, a health club
216	214		[spa] consumer to:
217	215		(A) execute a membership contract for a term that
218	216		exceeds 31 days;
219	217		(B) execute a note or retail installment
220	218		contract;
221	219		(C) authorize a draw or other recurring debit on
222	220		a financial institution in favor of the certificate holder or the
223	221		certificate holder's assignee;
224	222		(D) pay an initiation fee or other fee, not
225	223		including monthly dues; or
226	224		(E) prepay for a term that exceeds 31 days; or
227	225		(2) the certificate holder submits a sworn statement
228	226		every three years with the secretary of state stating that the
229	227		certificate holder:
230	228		(A) has assets based on net book value that
231	229		exceed $50,000 per registered location;
232	230		(B) has operated under substantially the same
233	231		ownership or management for at least five years; and
234	232		(C) has not been the subject of a complaint
235	233		relating to the closing of a health club [spa] owned by the
236	234		certificate holder or the failure of a health club [spa] owned by
237	235		the certificate holder to open that has been initiated or filed by a
238	236		member of the health club [spa] with a governmental authority in
239	237		this state.
240	238		SECTION 7. Section 702.206(b), Occupations Code, is amended
241	239		to read as follows:
242	240		(b) A person who by purchase or other transfer obtains
243	241		ownership of a health club [spa] for which a certificate of
244	242		exemption has been issued shall, not later than the fifth day after
245	243		the date the person obtains ownership:
246	244		(1) file a surety bond, or post other security, as
247	245		required by Section 702.151; or
248	246		(2) file a new application for an exemption under
249	247		Section 702.201.
250	248		SECTION 8. Sections 702.251 and 702.252, Occupations Code,
251	249		are amended to read as follows:
252	250		Sec. 702.251. FILING OF SECURITY CLAIM. A member may file
253	251		a claim against the security filed or posted under this subchapter
254	252		by providing to the secretary of state a copy of the contract
255	253		between the member and certificate holder who filed or posted the
256	254		security, accompanied by proof of payment made under the contract,
257	255		if the certificate holder's health club [spa]:
258	256		(1) closes and fails to provide alternative facilities
259	257		not more than 10 miles from the location of the health club [spa];
260	258		or
261	259		(2) relocates more than 10 miles from its location
262	260		preceding the relocation.
263	261		Sec. 702.252. COMPUTATION OF CLAIM. (a) Recovery on a
264	262		claim filed under Section 702.251 is limited to the amount of actual
265	263		financial loss suffered by the member as a result of the closing or
266	264		relocating of the certificate holder's health club [spa].
267	265		(b) For purposes of this section, actual financial loss is
268	266		computed by:
269	267		(1) rounding the date of the health club's [spa's]
270	268		closing or relocation and the contract's expiration date to the
271	269		nearest full month;
272	270		(2) subtracting the date of closing or relocation
273	271		determined under Subdivision (1) from the expiration date
274	272		determined under that subdivision, with the result expressed in
275	273		whole months and representing the number of months remaining on a
276	274		contract;
277	275		(3) computing the gross monthly payment by adding all
278	276		payments made under the contract, including any down payment and
279	277		initiation fee, and dividing the resulting amount by the total
280	278		number of months in the term of the contract; and
281	279		(4) multiplying the number of months remaining on the
282	280		contract computed under Subdivision (2) by the gross monthly
283	281		payment computed under Subdivision (3).
284	282		SECTION 9. Sections 702.301(a) and (b), Occupations Code,
285	283		are amended to read as follows:
286	284		(a) A contract:
287	285		(1) must be:
288	286		(A) in writing; and
289	287		(B) signed by the purchaser;
290	288		(2) must state the proposed opening date of the health
291	289		club [spa] that is the subject of the contract, if the health club
292	290		[spa] is not open on the contract date; and
293	291		(3) must include the health club [spa] operator's
294	292		certificate of registration number or an identification number as
295	293		provided by Subsection (b).
296	294		(b) The secretary of state shall adopt procedures for the
297	295		issuance of an identification number that may be used in a contract
298	296		for purposes of Subsection (a) by health clubs [spas] with more than
299	297		one location in this state.
300	298		SECTION 10. Section 702.302(a), Occupations Code, is
301	299		amended to read as follows:
302	300		(a) A health club [spa] shall prepare a comprehensive list
303	301		that includes each membership plan the health club [spa] offers for
304	302		sale. The health club [spa] shall disclose the list to a
305	303		prospective purchaser on request.
306	304		SECTION 11. Section 702.303(c), Occupations Code, is
307	305		amended to read as follows:
308	306		(c) If, after a health club [spa] opens, the health club
309	307		[spa] is rendered unusable for 30 consecutive days or longer
310	308		because of an event beyond the control of the owner or operator of
311	309		the health club [spa], including a natural disaster, the health
312	310		club [spa] shall extend the term of each affected member's contract
313	311		for a period equal to the time that the health club [spa] is
314	312		rendered unusable.
315	313		SECTION 12. Sections 702.304 and 702.305, Occupations Code,
316	314		are amended to read as follows:
317	315		Sec. 702.304. CANCELLATION AND REFUND NOTICE. (a) Except
318	316		as provided by Subsection (b), a contract must state the following
319	317		in at least 10-point type that is boldfaced, capitalized,
320	318		underlined, or otherwise conspicuously distinguished from
321	319		surrounding written material:
322	320		(1) "NOTICE TO PURCHASER: DO NOT SIGN THIS CONTRACT
323	321		UNTIL YOU READ IT OR IF IT CONTAINS BLANK SPACES."
324	322		(2) "IF YOU DECIDE YOU DO NOT WISH TO REMAIN A MEMBER
325	323		OF THIS HEALTH CLUB [SPA], YOU MAY CANCEL THIS CONTRACT BY MAILING
326	324		TO THE HEALTH CLUB [SPA] BY MIDNIGHT OF THE THIRD BUSINESS DAY AFTER
327	325		THE DAY YOU SIGN THIS CONTRACT A NOTICE STATING YOUR DESIRE TO
328	326		CANCEL THIS CONTRACT. THE WRITTEN NOTICE MUST BE MAILED BY
329	327		CERTIFIED MAIL TO THE FOLLOWING ADDRESS:
330	328		(Address of the health club [spa] home office)."
331	329		(3) "IF THE HEALTH CLUB [SPA] GOES OUT OF BUSINESS AND
332	330		DOES NOT PROVIDE FACILITIES WITHIN 10 MILES OF THE FACILITY IN WHICH
333	331		YOU ARE ENROLLED OR IF THE HEALTH CLUB [SPA] MOVES MORE THAN 10
334	332		MILES FROM THE FACILITY IN WHICH YOU ARE ENROLLED, YOU MAY:
335	333		(A) CANCEL THIS CONTRACT BY MAILING BY CERTIFIED
336	334		MAIL A WRITTEN NOTICE STATING YOUR DESIRE TO CANCEL THIS CONTRACT,
337	335		ACCOMPANIED BY PROOF OF PAYMENT ON THE CONTRACT TO THE HEALTH CLUB
338	336		[SPA] AT THE FOLLOWING ADDRESS:
339	337		(Address of the health club [spa] home office); AND
340	338		(B) FILE A CLAIM FOR A REFUND OF YOUR UNUSED
341	339		MEMBERSHIP FEES AGAINST THE BOND OR OTHER SECURITY POSTED BY THE
342	340		HEALTH CLUB [SPA] WITH THE TEXAS SECRETARY OF STATE. TO MAKE A
343	341		CLAIM AGAINST THE SECURITY PROVIDE A COPY OF YOUR CONTRACT TOGETHER
344	342		WITH PROOF OF PAYMENTS MADE ON THE CONTRACT TO THE TEXAS SECRETARY
345	343		OF STATE. THE REQUIRED CLAIM INFORMATION MUST BE RECEIVED BY THE
346	344		SECRETARY OF STATE NOT LATER THAN THE 90TH DAY AFTER THE DATE NOTICE
347	345		OF THE CLOSURE OR RELOCATION IS FIRST POSTED ON THE SECRETARY OF
348	346		STATE'S INTERNET WEBSITE."
349	347		(4) "IF YOU DIE OR BECOME TOTALLY AND PERMANENTLY
350	348		DISABLED AFTER THE DATE THIS CONTRACT TAKES EFFECT, YOU OR YOUR
351	349		ESTATE MAY CANCEL THIS CONTRACT AND RECEIVE A PARTIAL REFUND OF YOUR
352	350		UNUSED MEMBERSHIP FEE BY MAILING A NOTICE TO THE HEALTH CLUB [SPA]
353	351		STATING YOUR DESIRE TO CANCEL THIS CONTRACT. THE HEALTH CLUB [SPA]
354	352		MAY REQUIRE PROOF OF DISABILITY OR DEATH. THE WRITTEN NOTICE MUST
355	353		BE MAILED BY CERTIFIED MAIL TO THE FOLLOWING ADDRESS:
356	354		(Address of the health club [spa] home office)."
357	355		(b) A health club [spa] operator is required to include the
358	356		statement under Subsection (a)(3)(B) in a contract only if the
359	357		operator is required to post security with the secretary of state
360	358		under Subchapter D.
361	359		Sec. 702.305. PREPAYMENT REFUND NOTICE. If a certificate
362	360		holder offers for sale, or sells, memberships in a health club [spa]
363	361		before the date the health club [spa] opens, the contract for the
364	362		health club [spa] must state the following in at least 10-point type
365	363		that is boldfaced, capitalized, underlined, or otherwise
366	364		conspicuously distinguished from surrounding written material:
367	365		"IF THE HEALTH CLUB [SPA] DOES NOT OPEN BEFORE (insert: the
368	366		date that is the 181st day after the date the membership is prepaid)
369	367		OR IF THE NEW CLUB [SPA] DOES NOT REMAIN OPEN FOR THIRTY DAYS, YOU
370	368		ARE ENTITLED TO A FULL REFUND OF THE MONEY YOU PREPAID. HOWEVER, IF
371	369		ANOTHER HEALTH CLUB [SPA], OPERATED BY (insert: the name of the
372	370		health club [spa] registration holder), IS LOCATED WITHIN 10 MILES
373	371		OF (insert: the address of the proposed location of the new club
374	372		[spa]) AND IF YOU ARE AUTHORIZED TO USE THE OTHER FACILITIES, YOU
375	373		ARE ENTITLED TO RECEIVE A FULL REFUND OF YOUR MEMBERSHIP FEES ONLY
376	374		IF THIS LOCATION DOES NOT FULLY OPEN FOR BUSINESS BEFORE (insert:
377	375		the date that is the 361st day after the date the new club [spa]
378	376		first sells memberships) OR IF THE NEW CLUB [SPA] DOES NOT REMAIN
379	377		OPEN FOR 30 DAYS."
380	378		SECTION 13. Sections 702.308(a) and (d), Occupations Code,
381	379		are amended to read as follows:
382	380		(a) A member may cancel a contract and receive a refund of
383	381		unearned payments made under the contract by sending written notice
384	382		of cancellation, accompanied by proof of payment made under the
385	383		contract, by certified mail to the certificate holder's home office
386	384		if the certificate holder:
387	385		(1) closes the health club [spa] and fails to provide
388	386		alternative facilities not more than 10 miles from the location of
389	387		the health club [spa];
390	388		(2) relocates the health club [spa] more than 10 miles
391	389		from its location preceding the relocation; or
392	390		(3) fails to provide advertised services.
393	391		(d) In this section, the unearned payments are computed in
394	392		the same manner as a member's actual financial loss is computed
395	393		under Section 702.252, except that the date a contract is canceled
396	394		is substituted for the date a health club [spa] closes or relocates.
397	395		SECTION 14. Sections 702.309, 702.311, and 702.351,
398	396		Occupations Code, are amended to read as follows:
399	397		Sec. 702.309. PROOF OF PAYMENT. A receipt given to a
400	398		purchaser by a health club [spa] when the purchaser makes a payment
401	399		under a contract constitutes proof of the payment.
402	400		Sec. 702.311. VOID CONTRACT. A contract is void if:
403	401		(1) the contract or an assignment of the contract does
404	402		not comply with this chapter;
405	403		(2) the seller does not hold a certificate of
406	404		registration issued under this chapter at the time of contract; or
407	405		(3) the purchaser enters into the contract in reliance
408	406		on false, fraudulent, or misleading information wilfully provided
409	407		by, or a false, fraudulent, or misleading representation, notice,
410	408		or advertisement wilfully made by, the seller or the health club
411	409		[spa] owner or operator.
412	410		Sec. 702.351. MEMBERSHIP PREPAYMENT. A certificate holder
413	411		may offer for sale, or sell, a membership in a health club [spa]
414	412		before the date the health club [spa] opens.
415	413		SECTION 15. Sections 702.352(a) and (c), Occupations Code,
416	414		are amended to read as follows:
417	415		(a) A certificate holder or an assignee or agent of a
418	416		certificate holder who accepts a prepayment for a membership in the
419	417		certificate holder's health club [spa] shall deposit the prepayment
420	418		in an escrow account established with a financial institution
421	419		insured by the Federal Deposit Insurance Corporation.
422	420		(c) A certificate holder shall maintain an escrow account
423	421		under this section until the 30th day after the date the certificate
424	422		holder's health club [spa] opens.
425	423		SECTION 16. Sections 702.353, 702.355, 702.356, and
426	424		702.401, Occupations Code, are amended to read as follows:
427	425		Sec. 702.353. EXEMPTION FROM ESCROW REQUIREMENT. (a) A
428	426		certificate holder is not required to deposit prepayments in an
429	427		escrow account under Section 702.352 if:
430	428		(1) the certificate holder has operated at least one
431	429		health club [spa] in the state for not less than two years before
432	430		the date the certificate holder first sells a membership in the
433	431		health club [spa] that is the subject of the exemption; and
434	432		(2) except as provided by Subsection (b):
435	433		(A) litigation has not been initiated against the
436	434		certificate holder by a member of a health club [spa] owned or
437	435		operated by the certificate holder relating to the closing of the
438	436		health club [spa] or the failure of the health club [spa] to open;
439	437		and
440	438		(B) a member of a health club [spa] has not filed
441	439		a complaint with a governmental authority in this state against the
442	440		certificate holder, or an owner, officer, or director of a health
443	441		club [spa] owned or operated by the certificate holder, relating to
444	442		the closing of the health club [spa] or the failure of the health
445	443		club [spa] to open.
446	444		(b) The initiation of litigation or filing of a complaint
447	445		against a certificate holder, or an owner, officer, or director of a
448	446		health club [spa] owned or operated by the certificate holder, does
449	447		not preclude the certificate holder from claiming an exemption
450	448		under Subsection (a) if the basis of the litigation or complaint is
451	449		that the certificate holder's health club [spa] closed:
452	450		(1) as a result of a natural disaster and the closing
453	451		did not exceed one month; or
454	452		(2) to relocate the health club [spa] to a location not
455	453		more than 10 miles from its location preceding the relocation and
456	454		the closing did not exceed one month.
457	455		(c) The number of exemptions that a certificate holder may
458	456		claim under Subsection (a) during a two-year period may not exceed
459	457		twice the number of health clubs [spas] operated by the certificate
460	458		holder on the first day of that two-year period.
461	459		Sec. 702.355. REFUND OF ESCROWED PREPAYMENT. (a) Except as
462	460		provided by Subsection (b), a member is entitled to receive a full
463	461		refund of the prepayment made under a contract if the health club
464	462		[spa] that is the subject of the contract does not open before the
465	463		181st day after the date the health club [spa] first sells a
466	464		membership in the health club [spa] or does not remain open for at
467	465		least 30 days unless:
468	466		(1) an alternative health club [spa] operated by the
469	467		seller is located not more than 10 miles from the location of the
470	468		health club [spa] that is the subject of the contract; and
471	469		(2) the member is authorized to use the facilities of
472	470		the alternative health club [spa].
473	471		(b) A member who is authorized to use the facilities of an
474	472		alternative health club [spa] under Subsection (a) is entitled to
475	473		receive a full refund of the prepayment made under the contract if
476	474		the health club [spa] that is the subject of the contract does not
477	475		open before the 361st day after the date the health club [spa] first
478	476		sells a membership in the health club [spa] or does not remain open
479	477		for at least 30 days.
480	478		(c) For purposes of this section, the date a health club
481	479		[spa] opens does not depend on whether the services of the health
482	480		club [spa] that were advertised before the opening, or promised to
483	481		be made available, are included in the contract.
484	482		Sec. 702.356. WITHDRAWAL OF ESCROW FUNDS. A certificate
485	483		holder may withdraw prepayments deposited in an escrow account
486	484		under Section 702.352 if:
487	485		(1) the health club [spa] for which the prepayments
488	486		are made remains open for not less than 30 days;
489	487		(2) the certificate holder files with the secretary of
490	488		state an affidavit certifying that all obligations of the health
491	489		club [spa] for which a lien may be claimed under Chapter 53,
492	490		Property Code, have been paid; and
493	491		(3) no person is eligible to claim a lien under Chapter
494	492		53, Property Code, during the period the certificate holder or an
495	493		assignee or agent of the certificate holder accepts prepayments for
496	494		memberships in the certificate holder's health club [spa].
497	495		Sec. 702.401. WAIVER PROHIBITED. A person, including a
498	496		person who buys a health club [spa] membership from a former member,
499	497		may not waive a provision of this chapter by contract or other
500	498		means. A purported waiver of this chapter is void.
501	499		SECTION 17. Section 702.402(a), Occupations Code, is
502	500		amended to read as follows:
503	501		(a) A seller or certificate holder may not:
504	502		(1) offer a special offer or discount to fewer than all
505	503		prospective members of the health club [spa], except that a seller
506	504		or certificate holder may offer a special group price or discount;
507	505		or
508	506		(2) make a material misrepresentation to a member,
509	507		prospective member, or purchaser regarding:
510	508		(A) the qualifications of the health club [spa]
511	509		staff;
512	510		(B) the availability, quality, or extent of the
513	511		facilities or services of the health club [spa];
514	512		(C) the results obtained through exercise, diet,
515	513		weight control, or physical fitness conditioning programs;
516	514		(D) membership rights; or
517	515		(E) the period during which a special offer or
518	516		discount will be available.
519	517		SECTION 18. Section 702.404, Occupations Code, is amended
520	518		to read as follows:
521	519		Sec. 702.404. INFORMATION REQUIRED IN ADVERTISEMENT. A
522	520		health club [spa] operator may not advertise in any print or
523	521		electronic medium unless the advertisement includes the health club
524	522		[spa] operator's certificate of registration number or an
525	523		identification number issued as provided by Section 702.301(b).
526	524		SECTION 19. Section 702.451(a), Occupations Code, is
527	525		amended to read as follows:
528	526		(a) After notice and opportunity for hearing, the secretary
529	527		of state may deny an application for a certificate of registration,
530	528		or may permanently revoke a health club [spa] operator's
531	529		certificate of registration, on a finding by the secretary that the
532	530		applicant or certificate holder:
533	531		(1) provided false information on an application or
534	532		other document filed with the secretary;
535	533		(2) failed to file or post, or maintain, the security
536	534		for each health club [spa] location as required by Subchapter D; or
537	535		(3) failed to provide the contract disclosure language
538	536		required by Subchapter G.
539	537		SECTION 20. The heading to Section 702.452, Occupations
540	538		Code, is amended to read as follows:
541	539		Sec. 702.452. NOTICE REQUIREMENT BEFORE HEALTH CLUB [SPA]
542	540		CLOSING.
543	541		SECTION 21. Sections 702.452(a), (c), (d), and (e),
544	542		Occupations Code, are amended to read as follows:
545	543		(a) At least 30 days before the date a health club [spa] is
546	544		scheduled to close or relocate, the certificate holder shall
547	545		contemporaneously:
548	546		(1) post, inside and outside each entrance to the
549	547		health club [spa], a notice stating:
550	548		(A) the date the health club [spa] is scheduled
551	549		to close or relocate;
552	550		(B) that a member of the health club [spa] may,
553	551		not later than the 90th day after the date notice of the closure or
554	552		relocation is first posted on the secretary of state's Internet
555	553		website, file with the secretary of state a claim to recover actual
556	554		financial loss suffered by the member as a result of the health club
557	555		[spa] closing; and
558	556		(C) the procedures for perfecting a security
559	557		claim; and
560	558		(2) notify the secretary of state in writing of the
561	559		health club [spa] closing or relocation and the date that the notice
562	560		was first posted.
563	561		(c) After receiving a notice under Subsection (a)(2) or
564	562		otherwise discovering that a health club [spa] is closed, the
565	563		secretary of state shall post on the secretary of state's Internet
566	564		website a notice containing the information specified in Subsection
567	565		(a)(1). The notice must be posted continuously for at least 30
568	566		days.
569	567		(d) The secretary of state shall, not later than the 10th
570	568		day after the date the secretary receives notice or otherwise
571	569		discovers that a health club [spa] is closed, notify the
572	570		appropriate surety company or obligor of the administrative
573	571		proceedings pending under Subsection (a)(1).
574	572		(e) The notice required under Subsection (a) is not required
575	573		in the case of a fire, flood, or act of God that is not within the
576	574		reasonable control of a health club [spa].
577	575		SECTION 22. Section 702.504, Occupations Code, is amended
578	576		to read as follows:
579	577		Sec. 702.504. TEMPORARY CLOSING. For purposes of this
580	578		subchapter, the closing of a health club [spa] is not a violation of
581	579		this chapter if the closing does not exceed one month and:
582	580		(1) is a result of a natural disaster; or
583	581		(2) is to relocate the health club [spa] not more than
584	582		10 miles from its location preceding the relocation.
585	583		SECTION 23. Section 702.556(a), Occupations Code, is
586	584		amended to read as follows:
587	585		(a) A person commits an offense if the person knowingly
588	586		operates, or attempts to operate, a health club [spa] in violation
589	587		of Subchapter C, D, or H.
590	588		SECTION 24. This Act takes effect September 1, 2017.