TX
Texas Senate Bill SB1420

Texas 2017 - 85th Regular

Texas Senate Bill SB1420 Compare Versions

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11 85R11073 JG-F
22 By: Zaffirini S.B. No. 1420
33
44
55 A BILL TO BE ENTITLED
66 AN ACT
77 relating to the registration and regulation of health clubs.
88 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
99 SECTION 1. The heading to Chapter 702, Occupations Code, is
1010 amended to read as follows:
1111 CHAPTER 702. HEALTH CLUBS [SPAS]
1212 SECTION 2. Section 702.001, Occupations Code, is amended to
1313 read as follows:
1414 Sec. 702.001. SHORT TITLE. This chapter may be cited as the
1515 Health Club [Spa] Act.
1616 SECTION 3. Section 702.002(a), Occupations Code, is amended
1717 to read as follows:
1818 (a) The purpose of this chapter is to protect the public
1919 against fraud, deceit, imposition, and financial hardship and to
2020 foster and encourage competition, fair dealing, and prosperity in
2121 the field of health club [spa] operations and services by
2222 prohibiting or restricting injurious practices involving:
2323 (1) health club [spa] contracts; and
2424 (2) the marketing of health club [spa] services.
2525 SECTION 4. Sections 702.003, 702.101, 702.102, and 702.103,
2626 Occupations Code, are amended to read as follows:
2727 Sec. 702.003. DEFINITIONS. In this chapter:
2828 (1) "Closed" means a condition in which:
2929 (A) the facilities of a health club [spa] are no
3030 longer available to the health club's [spa's] members and
3131 equivalent facilities located not more than 10 miles from the
3232 health club [spa] have not been made available to the members;
3333 (B) a certificate holder sells a registered
3434 location and the security filed or posted by the certificate holder
3535 under Subchapter D is:
3636 (i) canceled;
3737 (ii) withdrawn; or
3838 (iii) otherwise unavailable to the members
3939 of the health club [spa]; or
4040 (C) a certificate holder sells a registered
4141 location and the buyer does not adopt or honor the contracts of
4242 existing members of the health club [spa].
4343 (2) "Contract" means an agreement between a seller and
4444 purchaser by which the purchaser becomes a member of a health club
4545 or is granted access to the facilities of the health club [spa].
4646 (3) "Facilities" means the equipment, physical
4747 structures, improvements, including improvements to leasehold
4848 premises, and other tangible property, including saunas, whirlpool
4949 baths, gymnasiums, running tracks, swimming pools, shower areas,
5050 racquetball courts, martial arts equipment, and exercise
5151 equipment, that are located at a health club [spa] and used to
5252 conduct the business of the health club [spa].
5353 (4) "Health club [spa]" means a business that offers
5454 for sale, or sells, memberships that provide the members
5555 instruction in or the use of facilities for a physical exercise
5656 program. The term does not include:
5757 (A) an organization that is tax exempt under
5858 Section 501 et seq., Internal Revenue Code (26 U.S.C. Section 501 et
5959 seq.);
6060 (B) a private club owned and operated by its
6161 members;
6262 (C) an entity operated exclusively to:
6363 (i) teach dance, yoga, or aerobic exercise;
6464 or
6565 (ii) provide physical rehabilitation
6666 activity related to an individual's injury or disease;
6767 (D) a person engaged in an activity authorized
6868 under a license issued by the state;
6969 (E) an activity conducted or sanctioned by a
7070 school under the Education Code; [or]
7171 (F) a hospital or clinic owned or operated by an
7272 agency of the state or federal government or by a political
7373 subdivision of this state; or
7474 (G) a specified number of prepaid personal
7575 training sessions.
7676 (5) "Location" means the physical site of the
7777 facilities of a health club [spa].
7878 (6) "Member" means a person who is entitled to the
7979 benefits of membership in a health club [spa].
8080 (7) "Membership" means the status of a person under a
8181 contract that entitles the person to use a health club's [spa's]
8282 services or facilities.
8383 (8) "Obligor" means a person, other than a surety, who
8484 is obligated to perform if a certificate holder defaults.
8585 (9) "Open" means the date each service of a health club
8686 [spa] that was advertised before the opening, or promised to be made
8787 available, are available for use by its members.
8888 (10) "Prepayment" means consideration paid by a
8989 purchaser for membership in a health club [spa] before the date the
9090 health club [spa] opens.
9191 (11) "Purchaser" means a person who purchases, or
9292 applies to purchase, the right to use a health club's [spa's]
9393 services or facilities.
9494 (12) "Registered location" means a health club [spa]
9595 location for which a health club [spa] operator's certificate of
9696 registration is issued under this chapter.
9797 (13) "Seller" means a person who:
9898 (A) owns or operates a health club [spa]; or
9999 (B) offers for sale, or sells, the right to use a
100100 health club's [spa's] services or facilities.
101101 (14) "Services" means the programs, plans, guidance,
102102 or instruction that a health club [spa] provides for its members.
103103 The term includes [diet planning,] exercise instruction and
104104 programs[,] and instructional classes.
105105 Sec. 702.101. CERTIFICATE OF REGISTRATION REQUIRED. A
106106 person may not operate a health club [spa] or offer for sale, or
107107 sell, a membership in a health club [spa] unless the person holds a
108108 health club [spa] operator's certificate of registration.
109109 Sec. 702.102. APPLICATION REQUIREMENTS. (a) An applicant
110110 for a health club [spa] operator's certificate of registration must
111111 file with the secretary of state an application stating:
112112 (1) the applicant's name, address, and telephone
113113 number;
114114 (2) the applicant's business trade name;
115115 (3) for an applicant whose business is incorporated:
116116 (A) the applicant's business name registered
117117 with the secretary of state;
118118 (B) the location of the applicant's registered
119119 business office; and
120120 (C) the name and address of each person who
121121 directly or indirectly owns or controls 10 percent or more of the
122122 outstanding shares of stock in the applicant's business;
123123 (4) the date the applicant became the owner and
124124 operator of the applicant's business;
125125 (5) the address of the health club [spa]; and
126126 (6) the type of available or proposed facilities and
127127 services offered at the health club [spa] location.
128128 (b) An application for a certificate of registration must be
129129 accompanied by:
130130 (1) a sample of each contract used to sell a membership
131131 in the applicant's health club [spa];
132132 (2) proof of security filed or posted by the applicant
133133 under Subchapter D; and
134134 (3) the required registration fee.
135135 (c) An applicant must comply with the application
136136 requirements of this section for each location where the applicant
137137 operates a health club [spa].
138138 Sec. 702.103. CERTIFICATE OF REGISTRATION NONTRANSFERABLE;
139139 APPLICATION BY NEW OWNER. (a) A health club [spa] operator's
140140 certificate of registration is not transferable.
141141 (b) A person who obtains ownership of a health club [spa] by
142142 purchase or other transfer shall file an application for a
143143 certificate of registration under Section 702.102 not later than
144144 the fifth day after the date the person obtains ownership.
145145 SECTION 5. Section 702.104(a), Occupations Code, is amended
146146 to read as follows:
147147 (a) A health club [spa] operator's certificate of
148148 registration expires on the first anniversary of the date of
149149 issuance.
150150 SECTION 6. Sections 702.105, 702.107, 702.151, 702.154,
151151 702.155, 702.158, and 702.202, Occupations Code, are amended to
152152 read as follows:
153153 Sec. 702.105. CERTIFICATE POSTING. A certificate holder
154154 shall post a health club [spa] operator's certificate of
155155 registration in a conspicuous place at each registered location.
156156 Sec. 702.107. SALES TAX PERMIT; PROOF OF REGISTRATION
157157 REQUIRED. (a) A health club [spa] operator shall submit to the
158158 comptroller a copy of the operator's certificate of registration at
159159 the time the operator applies for a sales tax permit.
160160 (b) The comptroller may not issue a sales tax permit to a
161161 health club [spa] operator who fails to comply with this
162162 section. The secretary of state shall assist the comptroller in
163163 determining whether a business is a health club [spa] under this
164164 chapter.
165165 Sec. 702.151. SECURITY REQUIRED. (a) Except as provided by
166166 Subchapter E, the secretary of state may not issue a health club
167167 [spa] operator's certificate of registration to an applicant unless
168168 the applicant files a surety bond, or posts other security as
169169 prescribed by the secretary, in the amount prescribed by the
170170 secretary under Subsection (b).
171171 (b) The secretary of state shall prescribe the amount of
172172 security required for an applicant in the amount determined
173173 sufficient by the secretary to protect the health club's [spa's]
174174 total membership. The amount may not be less than $20,000 or more
175175 than $50,000.
176176 Sec. 702.154. BENEFICIARY OF SECURITY. The security filed
177177 or posted by a certificate holder under this subchapter must be
178178 payable to the state and held for the benefit of:
179179 (1) the state; and
180180 (2) each member of the certificate holder's health
181181 club [spa] who has been administratively adjudicated to have
182182 suffered actual financial loss as a result of the closing of the
183183 certificate holder's health club [spa].
184184 Sec. 702.155. DURATION OF SECURITY. A certificate holder
185185 shall maintain the security filed or posted under Section 702.151
186186 in effect until the earlier of:
187187 (1) the second anniversary of the date the certificate
188188 holder's health club [spa] closes; or
189189 (2) the date the secretary of state determines that
190190 each claim filed against the security has been satisfied or
191191 foreclosed by law.
192192 Sec. 702.158. REVIEW OF SECURITY AMOUNT. (a) At least once
193193 every three years, the secretary of state shall review the amount of
194194 security a health club [spa] operator is required to post under
195195 Section 702.151 to determine whether the amount is sufficient to
196196 protect the health club's [spa's] total membership. The secretary
197197 may increase the amount required if the secretary determines that
198198 the increase is necessary to protect that membership but may not
199199 increase the amount above the maximum amount allowed under Section
200200 702.151(b).
201201 (b) The secretary of state may adopt procedures necessary to
202202 implement this section, including:
203203 (1) establishing a schedule to review the amount of
204204 security posted by each health club [spa] operator; and
205205 (2) requiring each health club [spa] operator to
206206 submit periodically a written statement of the health club's
207207 [spa's] total membership.
208208 Sec. 702.202. QUALIFICATIONS FOR EXEMPTION. A certificate
209209 holder may apply for an exemption under Section 702.201 if:
210210 (1) the certificate holder does not require, or
211211 solicit or offer a plan or program that requires, a health club
212212 [spa] consumer to:
213213 (A) execute a membership contract for a term that
214214 exceeds 31 days;
215215 (B) execute a note or retail installment
216216 contract;
217217 (C) authorize a draw or other recurring debit on
218218 a financial institution in favor of the certificate holder or the
219219 certificate holder's assignee;
220220 (D) pay an initiation fee or other fee, not
221221 including monthly dues; or
222222 (E) prepay for a term that exceeds 31 days; or
223223 (2) the certificate holder submits a sworn statement
224224 every three years with the secretary of state stating that the
225225 certificate holder:
226226 (A) has assets based on net book value that
227227 exceed $50,000 per registered location;
228228 (B) has operated under substantially the same
229229 ownership or management for at least five years; and
230230 (C) has not been the subject of a complaint
231231 relating to the closing of a health club [spa] owned by the
232232 certificate holder or the failure of a health club [spa] owned by
233233 the certificate holder to open that has been initiated or filed by a
234234 member of the health club [spa] with a governmental authority in
235235 this state.
236236 SECTION 7. Section 702.206(b), Occupations Code, is amended
237237 to read as follows:
238238 (b) A person who by purchase or other transfer obtains
239239 ownership of a health club [spa] for which a certificate of
240240 exemption has been issued shall, not later than the fifth day after
241241 the date the person obtains ownership:
242242 (1) file a surety bond, or post other security, as
243243 required by Section 702.151; or
244244 (2) file a new application for an exemption under
245245 Section 702.201.
246246 SECTION 8. Sections 702.251 and 702.252, Occupations Code,
247247 are amended to read as follows:
248248 Sec. 702.251. FILING OF SECURITY CLAIM. A member may file
249249 a claim against the security filed or posted under this subchapter
250250 by providing to the secretary of state a copy of the contract
251251 between the member and certificate holder who filed or posted the
252252 security, accompanied by proof of payment made under the contract,
253253 if the certificate holder's health club [spa]:
254254 (1) closes and fails to provide alternative facilities
255255 not more than 10 miles from the location of the health club [spa];
256256 or
257257 (2) relocates more than 10 miles from its location
258258 preceding the relocation.
259259 Sec. 702.252. COMPUTATION OF CLAIM. (a) Recovery on a
260260 claim filed under Section 702.251 is limited to the amount of actual
261261 financial loss suffered by the member as a result of the closing or
262262 relocating of the certificate holder's health club [spa].
263263 (b) For purposes of this section, actual financial loss is
264264 computed by:
265265 (1) rounding the date of the health club's [spa's]
266266 closing or relocation and the contract's expiration date to the
267267 nearest full month;
268268 (2) subtracting the date of closing or relocation
269269 determined under Subdivision (1) from the expiration date
270270 determined under that subdivision, with the result expressed in
271271 whole months and representing the number of months remaining on a
272272 contract;
273273 (3) computing the gross monthly payment by adding all
274274 payments made under the contract, including any down payment and
275275 initiation fee, and dividing the resulting amount by the total
276276 number of months in the term of the contract; and
277277 (4) multiplying the number of months remaining on the
278278 contract computed under Subdivision (2) by the gross monthly
279279 payment computed under Subdivision (3).
280280 SECTION 9. Sections 702.301(a) and (b), Occupations Code,
281281 are amended to read as follows:
282282 (a) A contract:
283283 (1) must be:
284284 (A) in writing; and
285285 (B) signed by the purchaser;
286286 (2) must state the proposed opening date of the health
287287 club [spa] that is the subject of the contract, if the health club
288288 [spa] is not open on the contract date; and
289289 (3) must include the health club [spa] operator's
290290 certificate of registration number or an identification number as
291291 provided by Subsection (b).
292292 (b) The secretary of state shall adopt procedures for the
293293 issuance of an identification number that may be used in a contract
294294 for purposes of Subsection (a) by health clubs [spas] with more than
295295 one location in this state.
296296 SECTION 10. Section 702.302(a), Occupations Code, is
297297 amended to read as follows:
298298 (a) A health club [spa] shall prepare a comprehensive list
299299 that includes each membership plan the health club [spa] offers for
300300 sale. The health club [spa] shall disclose the list to a
301301 prospective purchaser on request.
302302 SECTION 11. Section 702.303(c), Occupations Code, is
303303 amended to read as follows:
304304 (c) If, after a health club [spa] opens, the health club
305305 [spa] is rendered unusable for 30 consecutive days or longer
306306 because of an event beyond the control of the owner or operator of
307307 the health club [spa], including a natural disaster, the health
308308 club [spa] shall extend the term of each affected member's contract
309309 for a period equal to the time that the health club [spa] is
310310 rendered unusable.
311311 SECTION 12. Sections 702.304 and 702.305, Occupations Code,
312312 are amended to read as follows:
313313 Sec. 702.304. CANCELLATION AND REFUND NOTICE. (a) Except
314314 as provided by Subsection (b), a contract must state the following
315315 in at least 10-point type that is boldfaced, capitalized,
316316 underlined, or otherwise conspicuously distinguished from
317317 surrounding written material:
318318 (1) "NOTICE TO PURCHASER: DO NOT SIGN THIS CONTRACT
319319 UNTIL YOU READ IT OR IF IT CONTAINS BLANK SPACES."
320320 (2) "IF YOU DECIDE YOU DO NOT WISH TO REMAIN A MEMBER
321321 OF THIS HEALTH CLUB [SPA], YOU MAY CANCEL THIS CONTRACT BY MAILING
322322 TO THE HEALTH CLUB [SPA] BY MIDNIGHT OF THE THIRD BUSINESS DAY AFTER
323323 THE DAY YOU SIGN THIS CONTRACT A NOTICE STATING YOUR DESIRE TO
324324 CANCEL THIS CONTRACT. THE WRITTEN NOTICE MUST BE MAILED BY
325325 CERTIFIED MAIL TO THE FOLLOWING ADDRESS:
326326 (Address of the health club [spa] home office)."
327327 (3) "IF THE HEALTH CLUB [SPA] GOES OUT OF BUSINESS AND
328328 DOES NOT PROVIDE FACILITIES WITHIN 10 MILES OF THE FACILITY IN WHICH
329329 YOU ARE ENROLLED OR IF THE HEALTH CLUB [SPA] MOVES MORE THAN 10
330330 MILES FROM THE FACILITY IN WHICH YOU ARE ENROLLED, YOU MAY:
331331 (A) CANCEL THIS CONTRACT BY MAILING BY CERTIFIED
332332 MAIL A WRITTEN NOTICE STATING YOUR DESIRE TO CANCEL THIS CONTRACT,
333333 ACCOMPANIED BY PROOF OF PAYMENT ON THE CONTRACT TO THE HEALTH CLUB
334334 [SPA] AT THE FOLLOWING ADDRESS:
335335 (Address of the health club [spa] home office); AND
336336 (B) FILE A CLAIM FOR A REFUND OF YOUR UNUSED
337337 MEMBERSHIP FEES AGAINST THE BOND OR OTHER SECURITY POSTED BY THE
338338 HEALTH CLUB [SPA] WITH THE TEXAS SECRETARY OF STATE. TO MAKE A
339339 CLAIM AGAINST THE SECURITY PROVIDE A COPY OF YOUR CONTRACT TOGETHER
340340 WITH PROOF OF PAYMENTS MADE ON THE CONTRACT TO THE TEXAS SECRETARY
341341 OF STATE. THE REQUIRED CLAIM INFORMATION MUST BE RECEIVED BY THE
342342 SECRETARY OF STATE NOT LATER THAN THE 90TH DAY AFTER THE DATE NOTICE
343343 OF THE CLOSURE OR RELOCATION IS FIRST POSTED ON THE SECRETARY OF
344344 STATE'S INTERNET WEBSITE."
345345 (4) "IF YOU DIE OR BECOME TOTALLY AND PERMANENTLY
346346 DISABLED AFTER THE DATE THIS CONTRACT TAKES EFFECT, YOU OR YOUR
347347 ESTATE MAY CANCEL THIS CONTRACT AND RECEIVE A PARTIAL REFUND OF YOUR
348348 UNUSED MEMBERSHIP FEE BY MAILING A NOTICE TO THE HEALTH CLUB [SPA]
349349 STATING YOUR DESIRE TO CANCEL THIS CONTRACT. THE HEALTH CLUB [SPA]
350350 MAY REQUIRE PROOF OF DISABILITY OR DEATH. THE WRITTEN NOTICE MUST
351351 BE MAILED BY CERTIFIED MAIL TO THE FOLLOWING ADDRESS:
352352 (Address of the health club [spa] home office)."
353353 (b) A health club [spa] operator is required to include the
354354 statement under Subsection (a)(3)(B) in a contract only if the
355355 operator is required to post security with the secretary of state
356356 under Subchapter D.
357357 Sec. 702.305. PREPAYMENT REFUND NOTICE. If a certificate
358358 holder offers for sale, or sells, memberships in a health club [spa]
359359 before the date the health club [spa] opens, the contract for the
360360 health club [spa] must state the following in at least 10-point type
361361 that is boldfaced, capitalized, underlined, or otherwise
362362 conspicuously distinguished from surrounding written material:
363363 "IF THE HEALTH CLUB [SPA] DOES NOT OPEN BEFORE (insert: the
364364 date that is the 181st day after the date the membership is prepaid)
365365 OR IF THE NEW CLUB [SPA] DOES NOT REMAIN OPEN FOR THIRTY DAYS, YOU
366366 ARE ENTITLED TO A FULL REFUND OF THE MONEY YOU PREPAID. HOWEVER, IF
367367 ANOTHER HEALTH CLUB [SPA], OPERATED BY (insert: the name of the
368368 health club [spa] registration holder), IS LOCATED WITHIN 10 MILES
369369 OF (insert: the address of the proposed location of the new club
370370 [spa]) AND IF YOU ARE AUTHORIZED TO USE THE OTHER FACILITIES, YOU
371371 ARE ENTITLED TO RECEIVE A FULL REFUND OF YOUR MEMBERSHIP FEES ONLY
372372 IF THIS LOCATION DOES NOT FULLY OPEN FOR BUSINESS BEFORE (insert:
373373 the date that is the 361st day after the date the new club [spa]
374374 first sells memberships) OR IF THE NEW CLUB [SPA] DOES NOT REMAIN
375375 OPEN FOR 30 DAYS."
376376 SECTION 13. Sections 702.308(a) and (d), Occupations Code,
377377 are amended to read as follows:
378378 (a) A member may cancel a contract and receive a refund of
379379 unearned payments made under the contract by sending written notice
380380 of cancellation, accompanied by proof of payment made under the
381381 contract, by certified mail to the certificate holder's home office
382382 if the certificate holder:
383383 (1) closes the health club [spa] and fails to provide
384384 alternative facilities not more than 10 miles from the location of
385385 the health club [spa];
386386 (2) relocates the health club [spa] more than 10 miles
387387 from its location preceding the relocation; or
388388 (3) fails to provide advertised services.
389389 (d) In this section, the unearned payments are computed in
390390 the same manner as a member's actual financial loss is computed
391391 under Section 702.252, except that the date a contract is canceled
392392 is substituted for the date a health club [spa] closes or relocates.
393393 SECTION 14. Sections 702.309, 702.311, and 702.351,
394394 Occupations Code, are amended to read as follows:
395395 Sec. 702.309. PROOF OF PAYMENT. A receipt given to a
396396 purchaser by a health club [spa] when the purchaser makes a payment
397397 under a contract constitutes proof of the payment.
398398 Sec. 702.311. VOID CONTRACT. A contract is void if:
399399 (1) the contract or an assignment of the contract does
400400 not comply with this chapter;
401401 (2) the seller does not hold a certificate of
402402 registration issued under this chapter at the time of contract; or
403403 (3) the purchaser enters into the contract in reliance
404404 on false, fraudulent, or misleading information wilfully provided
405405 by, or a false, fraudulent, or misleading representation, notice,
406406 or advertisement wilfully made by, the seller or the health club
407407 [spa] owner or operator.
408408 Sec. 702.351. MEMBERSHIP PREPAYMENT. A certificate holder
409409 may offer for sale, or sell, a membership in a health club [spa]
410410 before the date the health club [spa] opens.
411411 SECTION 15. Sections 702.352(a) and (c), Occupations Code,
412412 are amended to read as follows:
413413 (a) A certificate holder or an assignee or agent of a
414414 certificate holder who accepts a prepayment for a membership in the
415415 certificate holder's health club [spa] shall deposit the prepayment
416416 in an escrow account established with a financial institution
417417 insured by the Federal Deposit Insurance Corporation.
418418 (c) A certificate holder shall maintain an escrow account
419419 under this section until the 30th day after the date the certificate
420420 holder's health club [spa] opens.
421421 SECTION 16. Sections 702.353, 702.355, 702.356, and
422422 702.401, Occupations Code, are amended to read as follows:
423423 Sec. 702.353. EXEMPTION FROM ESCROW REQUIREMENT. (a) A
424424 certificate holder is not required to deposit prepayments in an
425425 escrow account under Section 702.352 if:
426426 (1) the certificate holder has operated at least one
427427 health club [spa] in the state for not less than two years before
428428 the date the certificate holder first sells a membership in the
429429 health club [spa] that is the subject of the exemption; and
430430 (2) except as provided by Subsection (b):
431431 (A) litigation has not been initiated against the
432432 certificate holder by a member of a health club [spa] owned or
433433 operated by the certificate holder relating to the closing of the
434434 health club [spa] or the failure of the health club [spa] to open;
435435 and
436436 (B) a member of a health club [spa] has not filed
437437 a complaint with a governmental authority in this state against the
438438 certificate holder, or an owner, officer, or director of a health
439439 club [spa] owned or operated by the certificate holder, relating to
440440 the closing of the health club [spa] or the failure of the health
441441 club [spa] to open.
442442 (b) The initiation of litigation or filing of a complaint
443443 against a certificate holder, or an owner, officer, or director of a
444444 health club [spa] owned or operated by the certificate holder, does
445445 not preclude the certificate holder from claiming an exemption
446446 under Subsection (a) if the basis of the litigation or complaint is
447447 that the certificate holder's health club [spa] closed:
448448 (1) as a result of a natural disaster and the closing
449449 did not exceed one month; or
450450 (2) to relocate the health club [spa] to a location not
451451 more than 10 miles from its location preceding the relocation and
452452 the closing did not exceed one month.
453453 (c) The number of exemptions that a certificate holder may
454454 claim under Subsection (a) during a two-year period may not exceed
455455 twice the number of health clubs [spas] operated by the certificate
456456 holder on the first day of that two-year period.
457457 Sec. 702.355. REFUND OF ESCROWED PREPAYMENT. (a) Except as
458458 provided by Subsection (b), a member is entitled to receive a full
459459 refund of the prepayment made under a contract if the health club
460460 [spa] that is the subject of the contract does not open before the
461461 181st day after the date the health club [spa] first sells a
462462 membership in the health club [spa] or does not remain open for at
463463 least 30 days unless:
464464 (1) an alternative health club [spa] operated by the
465465 seller is located not more than 10 miles from the location of the
466466 health club [spa] that is the subject of the contract; and
467467 (2) the member is authorized to use the facilities of
468468 the alternative health club [spa].
469469 (b) A member who is authorized to use the facilities of an
470470 alternative health club [spa] under Subsection (a) is entitled to
471471 receive a full refund of the prepayment made under the contract if
472472 the health club [spa] that is the subject of the contract does not
473473 open before the 361st day after the date the health club [spa] first
474474 sells a membership in the health club [spa] or does not remain open
475475 for at least 30 days.
476476 (c) For purposes of this section, the date a health club
477477 [spa] opens does not depend on whether the services of the health
478478 club [spa] that were advertised before the opening, or promised to
479479 be made available, are included in the contract.
480480 Sec. 702.356. WITHDRAWAL OF ESCROW FUNDS. A certificate
481481 holder may withdraw prepayments deposited in an escrow account
482482 under Section 702.352 if:
483483 (1) the health club [spa] for which the prepayments
484484 are made remains open for not less than 30 days;
485485 (2) the certificate holder files with the secretary of
486486 state an affidavit certifying that all obligations of the health
487487 club [spa] for which a lien may be claimed under Chapter 53,
488488 Property Code, have been paid; and
489489 (3) no person is eligible to claim a lien under Chapter
490490 53, Property Code, during the period the certificate holder or an
491491 assignee or agent of the certificate holder accepts prepayments for
492492 memberships in the certificate holder's health club [spa].
493493 Sec. 702.401. WAIVER PROHIBITED. A person, including a
494494 person who buys a health club [spa] membership from a former member,
495495 may not waive a provision of this chapter by contract or other
496496 means. A purported waiver of this chapter is void.
497497 SECTION 17. Section 702.402(a), Occupations Code, is
498498 amended to read as follows:
499499 (a) A seller or certificate holder may not:
500500 (1) offer a special offer or discount to fewer than all
501501 prospective members of the health club [spa], except that a seller
502502 or certificate holder may offer a special group price or discount;
503503 or
504504 (2) make a material misrepresentation to a member,
505505 prospective member, or purchaser regarding:
506506 (A) the qualifications of the health club [spa]
507507 staff;
508508 (B) the availability, quality, or extent of the
509509 facilities or services of the health club [spa];
510510 (C) the results obtained through exercise, diet,
511511 weight control, or physical fitness conditioning programs;
512512 (D) membership rights; or
513513 (E) the period during which a special offer or
514514 discount will be available.
515515 SECTION 18. Section 702.404, Occupations Code, is amended
516516 to read as follows:
517517 Sec. 702.404. INFORMATION REQUIRED IN ADVERTISEMENT. A
518518 health club [spa] operator may not advertise in any print or
519519 electronic medium unless the advertisement includes the health club
520520 [spa] operator's certificate of registration number or an
521521 identification number issued as provided by Section 702.301(b).
522522 SECTION 19. Section 702.451(a), Occupations Code, is
523523 amended to read as follows:
524524 (a) After notice and opportunity for hearing, the secretary
525525 of state may deny an application for a certificate of registration,
526526 or may permanently revoke a health club [spa] operator's
527527 certificate of registration, on a finding by the secretary that the
528528 applicant or certificate holder:
529529 (1) provided false information on an application or
530530 other document filed with the secretary;
531531 (2) failed to file or post, or maintain, the security
532532 for each health club [spa] location as required by Subchapter D; or
533533 (3) failed to provide the contract disclosure language
534534 required by Subchapter G.
535535 SECTION 20. The heading to Section 702.452, Occupations
536536 Code, is amended to read as follows:
537537 Sec. 702.452. NOTICE REQUIREMENT BEFORE HEALTH CLUB [SPA]
538538 CLOSING.
539539 SECTION 21. Sections 702.452(a), (c), (d), and (e),
540540 Occupations Code, are amended to read as follows:
541541 (a) At least 30 days before the date a health club [spa] is
542542 scheduled to close or relocate, the certificate holder shall
543543 contemporaneously:
544544 (1) post, inside and outside each entrance to the
545545 health club [spa], a notice stating:
546546 (A) the date the health club [spa] is scheduled
547547 to close or relocate;
548548 (B) that a member of the health club [spa] may,
549549 not later than the 90th day after the date notice of the closure or
550550 relocation is first posted on the secretary of state's Internet
551551 website, file with the secretary of state a claim to recover actual
552552 financial loss suffered by the member as a result of the health club
553553 [spa] closing; and
554554 (C) the procedures for perfecting a security
555555 claim; and
556556 (2) notify the secretary of state in writing of the
557557 health club [spa] closing or relocation and the date that the notice
558558 was first posted.
559559 (c) After receiving a notice under Subsection (a)(2) or
560560 otherwise discovering that a health club [spa] is closed, the
561561 secretary of state shall post on the secretary of state's Internet
562562 website a notice containing the information specified in Subsection
563563 (a)(1). The notice must be posted continuously for at least 30
564564 days.
565565 (d) The secretary of state shall, not later than the 10th
566566 day after the date the secretary receives notice or otherwise
567567 discovers that a health club [spa] is closed, notify the
568568 appropriate surety company or obligor of the administrative
569569 proceedings pending under Subsection (a)(1).
570570 (e) The notice required under Subsection (a) is not required
571571 in the case of a fire, flood, or act of God that is not within the
572572 reasonable control of a health club [spa].
573573 SECTION 22. Section 702.504, Occupations Code, is amended
574574 to read as follows:
575575 Sec. 702.504. TEMPORARY CLOSING. For purposes of this
576576 subchapter, the closing of a health club [spa] is not a violation of
577577 this chapter if the closing does not exceed one month and:
578578 (1) is a result of a natural disaster; or
579579 (2) is to relocate the health club [spa] not more than
580580 10 miles from its location preceding the relocation.
581581 SECTION 23. Section 702.556(a), Occupations Code, is
582582 amended to read as follows:
583583 (a) A person commits an offense if the person knowingly
584584 operates, or attempts to operate, a health club [spa] in violation
585585 of Subchapter C, D, or H.
586586 SECTION 24. This Act takes effect September 1, 2017.