TX
Texas Senate Bill SB1846

Texas 2021 - 87th Regular

Texas Senate Bill SB1846 Compare Versions

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11 By: Zaffirini S.B. No. 1846
22
33
44 A BILL TO BE ENTITLED
55 AN ACT
66 relating to the registration and regulation of health clubs.
77 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
88 SECTION 1. The heading to Chapter 702, Occupations Code, is
99 amended to read as follows:
1010 CHAPTER 702. HEALTH CLUBS [SPAS]
1111 SECTION 2. Section 702.001, Occupations Code, is amended to
1212 read as follows:
1313 Sec. 702.001. SHORT TITLE. This chapter may be cited as the
1414 Health Club [Spa] Act.
1515 SECTION 3. Section 702.002(a), Occupations Code, is amended
1616 to read as follows:
1717 (a) The purpose of this chapter is to protect the public
1818 against fraud, deceit, imposition, and financial hardship and to
1919 foster and encourage competition, fair dealing, and prosperity in
2020 the field of health club [spa] operations and services by
2121 prohibiting or restricting injurious practices involving:
2222 (1) health club [spa] contracts; and
2323 (2) the marketing of health club [spa] services.
2424 SECTION 4. Sections 702.003, 702.101, 702.102, and 702.103,
2525 Occupations Code, are amended to read as follows:
2626 Sec. 702.003. DEFINITIONS. In this chapter:
2727 (1) "Closed" means a condition in which:
2828 (A) the facilities of a health club [spa] are no
2929 longer available to the health club's [spa's] members and
3030 equivalent facilities located not more than 10 miles from the
3131 health club [spa] have not been made available to the members;
3232 (B) a certificate holder sells a registered
3333 location and the security filed or posted by the certificate holder
3434 under Subchapter D is:
3535 (i) canceled;
3636 (ii) withdrawn; or
3737 (iii) otherwise unavailable to the members
3838 of the health club [spa]; or
3939 (C) a certificate holder sells a registered
4040 location and the buyer does not adopt or honor the contracts of
4141 existing members of the health club [spa].
4242 (2) "Contract" means an agreement between a seller and
4343 purchaser by which the purchaser becomes a member of a health club
4444 or is granted access to the facilities of the health club [spa].
4545 (3) "Facilities" means the equipment, physical
4646 structures, improvements, including improvements to leasehold
4747 premises, and other tangible property, including saunas, whirlpool
4848 baths, gymnasiums, running tracks, swimming pools, shower areas,
4949 racquetball courts, martial arts equipment, and exercise
5050 equipment, that are located at a health club [spa] and used to
5151 conduct the business of the health club [spa].
5252 (4) "Health club [spa]" means a business that offers
5353 for sale, or sells, memberships that provide the members
5454 instruction in or the use of facilities for a physical exercise
5555 program. The term does not include:
5656 (A) an organization that is tax exempt under
5757 Section 501 et seq., Internal Revenue Code (26 U.S.C. Section 501 et
5858 seq.);
5959 (B) a private club owned and operated by its
6060 members;
6161 (C) an entity operated exclusively to:
6262 (i) teach dance, yoga, or aerobic exercise;
6363 or
6464 (ii) provide physical rehabilitation
6565 activity related to an individual's injury or disease;
6666 (D) a person engaged in an activity authorized
6767 under a license issued by the state;
6868 (E) an activity conducted or sanctioned by a
6969 school under the Education Code; [or]
7070 (F) a hospital or clinic owned or operated by an
7171 agency of the state or federal government or by a political
7272 subdivision of this state;
7373 (G) prepaid personal training services
7474 consisting of a specified number of sessions; or
7575 (H) an outdoor physical exercise program held at
7676 a public facility.
7777 (5) "Location" means the physical site of the
7878 facilities of a health club [spa].
7979 (6) "Member" means a person who is entitled to the
8080 benefits of membership in a health club [spa].
8181 (7) "Membership" means the status of a person under a
8282 contract that entitles the person to use a health club's [spa's]
8383 services or facilities.
8484 (8) "Obligor" means a person, other than a surety, who
8585 is obligated to perform if a certificate holder defaults.
8686 (9) "Open" means the date each service of a health club
8787 [spa] that was advertised before the opening, or promised to be made
8888 available, are available for use by its members.
8989 (10) "Prepayment" means consideration paid by a
9090 purchaser for membership in a health club [spa] before the date the
9191 health club [spa] opens.
9292 (11) "Purchaser" means a person who purchases, or
9393 applies to purchase, the right to use a health club's [spa's]
9494 services or facilities.
9595 (12) "Registered location" means a health club [spa]
9696 location for which a health club [spa] operator's certificate of
9797 registration is issued under this chapter.
9898 (13) "Seller" means a person who:
9999 (A) owns or operates a health club [spa]; or
100100 (B) offers for sale, or sells, the right to use a
101101 health club's [spa's] services or facilities.
102102 (14) "Services" means the programs, plans, guidance,
103103 or instruction that a health club [spa] provides for its members.
104104 The term includes [diet planning,] exercise instruction and
105105 programs[,] and instructional classes.
106106 Sec. 702.101. CERTIFICATE OF REGISTRATION REQUIRED. A
107107 person may not operate a health club [spa] or offer for sale, or
108108 sell, a membership in a health club [spa] unless the person holds a
109109 health club [spa] operator's certificate of registration.
110110 Sec. 702.102. APPLICATION REQUIREMENTS. (a) An applicant
111111 for a health club [spa] operator's certificate of registration must
112112 file with the secretary of state an application stating:
113113 (1) the applicant's name, address, and telephone
114114 number;
115115 (2) the applicant's business trade name;
116116 (3) for an applicant whose business is incorporated:
117117 (A) the applicant's business name registered
118118 with the secretary of state;
119119 (B) the location of the applicant's registered
120120 business office; and
121121 (C) the name and address of each person who
122122 directly or indirectly owns or controls 10 percent or more of the
123123 outstanding shares of stock in the applicant's business;
124124 (4) the date the applicant became the owner and
125125 operator of the applicant's business;
126126 (5) the address of the health club [spa]; and
127127 (6) the type of available or proposed facilities and
128128 services offered at the health club [spa] location.
129129 (b) An application for a certificate of registration must be
130130 accompanied by:
131131 (1) a sample of each contract used to sell a membership
132132 in the applicant's health club [spa];
133133 (2) proof of security filed or posted by the applicant
134134 under Subchapter D; and
135135 (3) the required registration fee.
136136 (c) An applicant must comply with the application
137137 requirements of this section for each location where the applicant
138138 operates a health club [spa].
139139 Sec. 702.103. CERTIFICATE OF REGISTRATION NONTRANSFERABLE;
140140 APPLICATION BY NEW OWNER. (a) A health club [spa] operator's
141141 certificate of registration is not transferable.
142142 (b) A person who obtains ownership of a health club [spa] by
143143 purchase or other transfer shall file an application for a
144144 certificate of registration under Section 702.102 not later than
145145 the fifth day after the date the person obtains ownership.
146146 SECTION 5. Section 702.104(a), Occupations Code, is amended
147147 to read as follows:
148148 (a) A health club [spa] operator's certificate of
149149 registration expires on the first anniversary of the date of
150150 issuance.
151151 SECTION 6. Sections 702.105, 702.107, 702.151, 702.154,
152152 702.155, 702.158, and 702.202, Occupations Code, are amended to
153153 read as follows:
154154 Sec. 702.105. CERTIFICATE POSTING. A certificate holder
155155 shall post a health club [spa] operator's certificate of
156156 registration in a conspicuous place at each registered location.
157157 Sec. 702.107. SALES TAX PERMIT; PROOF OF REGISTRATION
158158 REQUIRED. (a) A health club [spa] operator shall submit to the
159159 comptroller a copy of the operator's certificate of registration at
160160 the time the operator applies for a sales tax permit.
161161 (b) The comptroller may not issue a sales tax permit to a
162162 health club [spa] operator who fails to comply with this
163163 section. The secretary of state shall assist the comptroller in
164164 determining whether a business is a health club [spa] under this
165165 chapter.
166166 Sec. 702.151. SECURITY REQUIRED. (a) Except as provided by
167167 Subchapter E, the secretary of state may not issue a health club
168168 [spa] operator's certificate of registration to an applicant unless
169169 the applicant files a surety bond, or posts other security as
170170 prescribed by the secretary, in the amount prescribed by the
171171 secretary under Subsection (b).
172172 (b) The secretary of state shall prescribe the amount of
173173 security required for an applicant in the amount determined
174174 sufficient by the secretary to protect the health club's [spa's]
175175 total membership. The amount may not be less than $20,000 or more
176176 than $75,000 [$50,000].
177177 Sec. 702.154. BENEFICIARY OF SECURITY. The security filed
178178 or posted by a certificate holder under this subchapter must be
179179 payable to the state and held for the benefit of:
180180 (1) the state; and
181181 (2) each member of the certificate holder's health
182182 club [spa] who has been administratively adjudicated to have
183183 suffered actual financial loss as a result of the closing of the
184184 certificate holder's health club [spa].
185185 Sec. 702.155. DURATION OF SECURITY. A certificate holder
186186 shall maintain the security filed or posted under Section 702.151
187187 in effect until the earlier of:
188188 (1) the second anniversary of the date the certificate
189189 holder's health club [spa] closes; or
190190 (2) the date the secretary of state determines that
191191 each claim filed against the security has been satisfied or
192192 foreclosed by law.
193193 Sec. 702.158. REVIEW OF SECURITY AMOUNT. (a) At least once
194194 every three years, the secretary of state shall review the amount of
195195 security a health club [spa] operator is required to post under
196196 Section 702.151 to determine whether the amount is sufficient to
197197 protect the health club's [spa's] total membership. The secretary
198198 may increase the amount required if the secretary determines that
199199 the increase is necessary to protect that membership but may not
200200 increase the amount above the maximum amount allowed under Section
201201 702.151(b).
202202 (b) The secretary of state may adopt procedures necessary to
203203 implement this section, including:
204204 (1) establishing a schedule to review the amount of
205205 security posted by each health club [spa] operator; and
206206 (2) requiring each health club [spa] operator to
207207 submit periodically a written statement of the health club's
208208 [spa's] total membership.
209209 Sec. 702.202. QUALIFICATIONS FOR EXEMPTION. A certificate
210210 holder may apply for an exemption under Section 702.201 if:
211211 (1) the certificate holder does not require, or
212212 solicit or offer a plan or program that requires, a health club
213213 [spa] consumer to:
214214 (A) execute a membership contract for a term that
215215 exceeds 31 days;
216216 (B) execute a note or retail installment
217217 contract;
218218 (C) authorize a draw or other recurring debit on
219219 a financial institution in favor of the certificate holder or the
220220 certificate holder's assignee;
221221 (D) pay an initiation fee or other fee, not
222222 including monthly dues; or
223223 (E) prepay for a term that exceeds 31 days; or
224224 (2) the certificate holder submits a sworn statement
225225 every three years with the secretary of state stating that the
226226 certificate holder:
227227 (A) has assets based on net book value that
228228 exceed $75,000 [$50,000] per registered location;
229229 (B) has operated under substantially the same
230230 ownership or management for at least five years; and
231231 (C) has not been the subject of a complaint
232232 relating to the closing of a health club [spa] owned by the
233233 certificate holder or the failure of a health club [spa] owned by
234234 the certificate holder to open that has been initiated or filed by a
235235 member of the health club [spa] with a governmental authority in
236236 this state.
237237 SECTION 7. Section 702.206(b), Occupations Code, is amended
238238 to read as follows:
239239 (b) A person who by purchase or other transfer obtains
240240 ownership of a health club [spa] for which a certificate of
241241 exemption has been issued shall, not later than the fifth day after
242242 the date the person obtains ownership:
243243 (1) file a surety bond, or post other security, as
244244 required by Section 702.151; or
245245 (2) file a new application for an exemption under
246246 Section 702.201.
247247 SECTION 8. Sections 702.251 and 702.252, Occupations Code,
248248 are amended to read as follows:
249249 Sec. 702.251. FILING OF SECURITY CLAIM. A member may file
250250 a claim against the security filed or posted under this subchapter
251251 by providing to the secretary of state a copy of the contract
252252 between the member and certificate holder who filed or posted the
253253 security, accompanied by proof of payment made under the contract,
254254 if the certificate holder's health club [spa]:
255255 (1) closes and fails to provide alternative facilities
256256 not more than 10 miles from the location of the health club [spa];
257257 or
258258 (2) relocates more than 10 miles from its location
259259 preceding the relocation.
260260 Sec. 702.252. COMPUTATION OF CLAIM. (a) Recovery on a
261261 claim filed under Section 702.251 is limited to the amount of actual
262262 financial loss suffered by the member as a result of the closing or
263263 relocating of the certificate holder's health club [spa].
264264 (b) For purposes of this section, actual financial loss is
265265 computed by:
266266 (1) rounding the date of the health club's [spa's]
267267 closing or relocation and the contract's expiration date to the
268268 nearest full month;
269269 (2) subtracting the date of closing or relocation
270270 determined under Subdivision (1) from the expiration date
271271 determined under that subdivision, with the result expressed in
272272 whole months and representing the number of months remaining on a
273273 contract;
274274 (3) computing the gross monthly payment by adding all
275275 payments made under the contract, including any down payment and
276276 initiation fee, and dividing the resulting amount by the total
277277 number of months in the term of the contract; and
278278 (4) multiplying the number of months remaining on the
279279 contract computed under Subdivision (2) by the gross monthly
280280 payment computed under Subdivision (3).
281281 SECTION 9. Sections 702.301(a) and (b), Occupations Code,
282282 are amended to read as follows:
283283 (a) A contract:
284284 (1) must be:
285285 (A) in writing; and
286286 (B) signed by the purchaser;
287287 (2) must state the proposed opening date of the health
288288 club [spa] that is the subject of the contract, if the health club
289289 [spa] is not open on the contract date; and
290290 (3) must include the health club [spa] operator's
291291 certificate of registration number or an identification number as
292292 provided by Subsection (b).
293293 (b) The secretary of state shall adopt procedures for the
294294 issuance of an identification number that may be used in a contract
295295 for purposes of Subsection (a) by health clubs [spas] with more than
296296 one location in this state.
297297 SECTION 10. Section 702.302(a), Occupations Code, is
298298 amended to read as follows:
299299 (a) A health club [spa] shall prepare a comprehensive list
300300 that includes each membership plan the health club [spa] offers for
301301 sale. The health club [spa] shall disclose the list to a
302302 prospective purchaser on request.
303303 SECTION 11. Section 702.303(c), Occupations Code, is
304304 amended to read as follows:
305305 (c) If, after a health club [spa] opens, the health club
306306 [spa] is rendered unusable for 30 consecutive days or longer
307307 because of an event beyond the control of the owner or operator of
308308 the health club [spa], including a natural disaster, the health
309309 club [spa] shall extend the term of each affected member's contract
310310 for a period equal to the time that the health club [spa] is
311311 rendered unusable.
312312 SECTION 12. Sections 702.304 and 702.305, Occupations Code,
313313 are amended to read as follows:
314314 Sec. 702.304. CANCELLATION AND REFUND NOTICE. (a) Except
315315 as provided by Subsection (b), a contract must state the following
316316 in at least 10-point type that is boldfaced, capitalized,
317317 underlined, or otherwise conspicuously distinguished from
318318 surrounding written material:
319319 (1) "NOTICE TO PURCHASER: DO NOT SIGN THIS CONTRACT
320320 UNTIL YOU READ IT OR IF IT CONTAINS BLANK SPACES."
321321 (2) "IF YOU DECIDE YOU DO NOT WISH TO REMAIN A MEMBER
322322 OF THIS HEALTH CLUB [SPA], YOU MAY CANCEL THIS CONTRACT BY MAILING
323323 TO THE HEALTH CLUB [SPA] BY MIDNIGHT OF THE THIRD BUSINESS DAY AFTER
324324 THE DAY YOU SIGN THIS CONTRACT A NOTICE STATING YOUR DESIRE TO
325325 CANCEL THIS CONTRACT. THE WRITTEN NOTICE MUST BE MAILED BY
326326 CERTIFIED MAIL TO THE FOLLOWING ADDRESS:
327327 (Address of the health club [spa] home office)."
328328 (3) "IF THE HEALTH CLUB [SPA] GOES OUT OF BUSINESS AND
329329 DOES NOT PROVIDE FACILITIES WITHIN 10 MILES OF THE FACILITY IN WHICH
330330 YOU ARE ENROLLED OR IF THE HEALTH CLUB [SPA] MOVES MORE THAN 10
331331 MILES FROM THE FACILITY IN WHICH YOU ARE ENROLLED, YOU MAY:
332332 (A) CANCEL THIS CONTRACT BY MAILING BY CERTIFIED
333333 MAIL A WRITTEN NOTICE STATING YOUR DESIRE TO CANCEL THIS CONTRACT,
334334 ACCOMPANIED BY PROOF OF PAYMENT ON THE CONTRACT TO THE HEALTH CLUB
335335 [SPA] AT THE FOLLOWING ADDRESS:
336336 (Address of the health club [spa] home office); AND
337337 (B) FILE A CLAIM FOR A REFUND OF YOUR UNUSED
338338 MEMBERSHIP FEES AGAINST THE BOND OR OTHER SECURITY POSTED BY THE
339339 HEALTH CLUB [SPA] WITH THE TEXAS SECRETARY OF STATE. TO MAKE A
340340 CLAIM AGAINST THE SECURITY PROVIDE A COPY OF YOUR CONTRACT TOGETHER
341341 WITH PROOF OF PAYMENTS MADE ON THE CONTRACT TO THE TEXAS SECRETARY
342342 OF STATE. THE REQUIRED CLAIM INFORMATION MUST BE RECEIVED BY THE
343343 SECRETARY OF STATE NOT LATER THAN THE 90TH DAY AFTER THE DATE NOTICE
344344 OF THE CLOSURE OR RELOCATION IS FIRST POSTED ON THE SECRETARY OF
345345 STATE'S INTERNET WEBSITE."
346346 (4) "IF YOU DIE OR BECOME TOTALLY AND PERMANENTLY
347347 DISABLED AFTER THE DATE THIS CONTRACT TAKES EFFECT, YOU OR YOUR
348348 ESTATE MAY CANCEL THIS CONTRACT AND RECEIVE A PARTIAL REFUND OF YOUR
349349 UNUSED MEMBERSHIP FEE BY MAILING A NOTICE TO THE HEALTH CLUB [SPA]
350350 STATING YOUR DESIRE TO CANCEL THIS CONTRACT. THE HEALTH CLUB [SPA]
351351 MAY REQUIRE PROOF OF DISABILITY OR DEATH. THE WRITTEN NOTICE MUST
352352 BE MAILED BY CERTIFIED MAIL TO THE FOLLOWING ADDRESS:
353353 (Address of the health club [spa] home office)."
354354 (b) A health club [spa] operator is required to include the
355355 statement under Subsection (a)(3)(B) in a contract only if the
356356 operator is required to post security with the secretary of state
357357 under Subchapter D.
358358 Sec. 702.305. PREPAYMENT REFUND NOTICE. If a certificate
359359 holder offers for sale, or sells, memberships in a health club [spa]
360360 before the date the health club [spa] opens, the contract for the
361361 health club [spa] must state the following in at least 10-point type
362362 that is boldfaced, capitalized, underlined, or otherwise
363363 conspicuously distinguished from surrounding written material:
364364 "IF THE HEALTH CLUB [SPA] DOES NOT OPEN BEFORE (insert: the
365365 date that is the 181st day after the date the membership is prepaid)
366366 OR IF THE NEW CLUB [SPA] DOES NOT REMAIN OPEN FOR THIRTY DAYS, YOU
367367 ARE ENTITLED TO A FULL REFUND OF THE MONEY YOU PREPAID. HOWEVER, IF
368368 ANOTHER HEALTH CLUB [SPA], OPERATED BY (insert: the name of the
369369 health club [spa] registration holder), IS LOCATED WITHIN 10 MILES
370370 OF (insert: the address of the proposed location of the new club
371371 [spa]) AND IF YOU ARE AUTHORIZED TO USE THE OTHER FACILITIES, YOU
372372 ARE ENTITLED TO RECEIVE A FULL REFUND OF YOUR MEMBERSHIP FEES ONLY
373373 IF THIS LOCATION DOES NOT FULLY OPEN FOR BUSINESS BEFORE (insert:
374374 the date that is the 361st day after the date the new club [spa]
375375 first sells memberships) OR IF THE NEW CLUB [SPA] DOES NOT REMAIN
376376 OPEN FOR 30 DAYS."
377377 SECTION 13. Sections 702.308(a) and (d), Occupations Code,
378378 are amended to read as follows:
379379 (a) A member may cancel a contract and receive a refund of
380380 unearned payments made under the contract by sending written notice
381381 of cancellation, accompanied by proof of payment made under the
382382 contract, by certified mail to the certificate holder's home office
383383 if the certificate holder:
384384 (1) closes the health club [spa] and fails to provide
385385 alternative facilities not more than 10 miles from the location of
386386 the health club [spa];
387387 (2) relocates the health club [spa] more than 10 miles
388388 from its location preceding the relocation; or
389389 (3) fails to provide advertised services.
390390 (d) In this section, the unearned payments are computed in
391391 the same manner as a member's actual financial loss is computed
392392 under Section 702.252, except that the date a contract is canceled
393393 is substituted for the date a health club [spa] closes or relocates.
394394 SECTION 14. Sections 702.309, 702.311, and 702.351,
395395 Occupations Code, are amended to read as follows:
396396 Sec. 702.309. PROOF OF PAYMENT. A receipt given to a
397397 purchaser by a health club [spa] when the purchaser makes a payment
398398 under a contract constitutes proof of the payment.
399399 Sec. 702.311. VOID CONTRACT. A contract is void if:
400400 (1) the contract or an assignment of the contract does
401401 not comply with this chapter;
402402 (2) the seller does not hold a certificate of
403403 registration issued under this chapter at the time of contract; or
404404 (3) the purchaser enters into the contract in reliance
405405 on false, fraudulent, or misleading information wilfully provided
406406 by, or a false, fraudulent, or misleading representation, notice,
407407 or advertisement wilfully made by, the seller or the health club
408408 [spa] owner or operator.
409409 Sec. 702.351. MEMBERSHIP PREPAYMENT. A certificate holder
410410 may offer for sale, or sell, a membership in a health club [spa]
411411 before the date the health club [spa] opens.
412412 SECTION 15. Sections 702.352(a) and (c), Occupations Code,
413413 are amended to read as follows:
414414 (a) A certificate holder or an assignee or agent of a
415415 certificate holder who accepts a prepayment for a membership in the
416416 certificate holder's health club [spa] shall deposit the prepayment
417417 in an escrow account established with a financial institution
418418 insured by the Federal Deposit Insurance Corporation.
419419 (c) A certificate holder shall maintain an escrow account
420420 under this section until the 30th day after the date the certificate
421421 holder's health club [spa] opens.
422422 SECTION 16. Sections 702.353, 702.355, 702.356, and
423423 702.401, Occupations Code, are amended to read as follows:
424424 Sec. 702.353. EXEMPTION FROM ESCROW REQUIREMENT. (a) A
425425 certificate holder is not required to deposit prepayments in an
426426 escrow account under Section 702.352 if:
427427 (1) the certificate holder has operated at least one
428428 health club [spa] in the state for not less than two years before
429429 the date the certificate holder first sells a membership in the
430430 health club [spa] that is the subject of the exemption; and
431431 (2) except as provided by Subsection (b):
432432 (A) litigation has not been initiated against the
433433 certificate holder by a member of a health club [spa] owned or
434434 operated by the certificate holder relating to the closing of the
435435 health club [spa] or the failure of the health club [spa] to open;
436436 and
437437 (B) a member of a health club [spa] has not filed
438438 a complaint with a governmental authority in this state against the
439439 certificate holder, or an owner, officer, or director of a health
440440 club [spa] owned or operated by the certificate holder, relating to
441441 the closing of the health club [spa] or the failure of the health
442442 club [spa] to open.
443443 (b) The initiation of litigation or filing of a complaint
444444 against a certificate holder, or an owner, officer, or director of a
445445 health club [spa] owned or operated by the certificate holder, does
446446 not preclude the certificate holder from claiming an exemption
447447 under Subsection (a) if the basis of the litigation or complaint is
448448 that the certificate holder's health club [spa] closed:
449449 (1) as a result of a natural disaster and the closing
450450 did not exceed one month; or
451451 (2) to relocate the health club [spa] to a location not
452452 more than 10 miles from its location preceding the relocation and
453453 the closing did not exceed one month.
454454 (c) The number of exemptions that a certificate holder may
455455 claim under Subsection (a) during a two-year period may not exceed
456456 twice the number of health clubs [spas] operated by the certificate
457457 holder on the first day of that two-year period.
458458 Sec. 702.355. REFUND OF ESCROWED PREPAYMENT. (a) Except as
459459 provided by Subsection (b), a member is entitled to receive a full
460460 refund of the prepayment made under a contract if the health club
461461 [spa] that is the subject of the contract does not open before the
462462 181st day after the date the health club [spa] first sells a
463463 membership in the health club [spa] or does not remain open for at
464464 least 30 days unless:
465465 (1) an alternative health club [spa] operated by the
466466 seller is located not more than 10 miles from the location of the
467467 health club [spa] that is the subject of the contract; and
468468 (2) the member is authorized to use the facilities of
469469 the alternative health club [spa].
470470 (b) A member who is authorized to use the facilities of an
471471 alternative health club [spa] under Subsection (a) is entitled to
472472 receive a full refund of the prepayment made under the contract if
473473 the health club [spa] that is the subject of the contract does not
474474 open before the 361st day after the date the health club [spa] first
475475 sells a membership in the health club [spa] or does not remain open
476476 for at least 30 days.
477477 (c) For purposes of this section, the date a health club
478478 [spa] opens does not depend on whether the services of the health
479479 club [spa] that were advertised before the opening, or promised to
480480 be made available, are included in the contract.
481481 Sec. 702.356. WITHDRAWAL OF ESCROW FUNDS. A certificate
482482 holder may withdraw prepayments deposited in an escrow account
483483 under Section 702.352 if:
484484 (1) the health club [spa] for which the prepayments
485485 are made remains open for not less than 30 days;
486486 (2) the certificate holder files with the secretary of
487487 state an affidavit certifying that all obligations of the health
488488 club [spa] for which a lien may be claimed under Chapter 53,
489489 Property Code, have been paid; and
490490 (3) no person is eligible to claim a lien under Chapter
491491 53, Property Code, during the period the certificate holder or an
492492 assignee or agent of the certificate holder accepts prepayments for
493493 memberships in the certificate holder's health club [spa].
494494 Sec. 702.401. WAIVER PROHIBITED. A person, including a
495495 person who buys a health club [spa] membership from a former member,
496496 may not waive a provision of this chapter by contract or other
497497 means. A purported waiver of this chapter is void.
498498 SECTION 17. Section 702.402(a), Occupations Code, is
499499 amended to read as follows:
500500 (a) A seller or certificate holder may not:
501501 (1) offer a special offer or discount to fewer than all
502502 prospective members of the health club [spa], except that a seller
503503 or certificate holder may offer a special group price or discount;
504504 or
505505 (2) make a material misrepresentation to a member,
506506 prospective member, or purchaser regarding:
507507 (A) the qualifications of the health club [spa]
508508 staff;
509509 (B) the availability, quality, or extent of the
510510 facilities or services of the health club [spa];
511511 (C) the results obtained through exercise, diet,
512512 weight control, or physical fitness conditioning programs;
513513 (D) membership rights; or
514514 (E) the period during which a special offer or
515515 discount will be available.
516516 SECTION 18. Section 702.404, Occupations Code, is amended
517517 to read as follows:
518518 Sec. 702.404. INFORMATION REQUIRED IN ADVERTISEMENT. A
519519 health club [spa] operator may not advertise in any print or
520520 electronic medium unless the advertisement includes the health club
521521 [spa] operator's certificate of registration number or an
522522 identification number issued as provided by Section 702.301(b).
523523 SECTION 19. Section 702.451(a), Occupations Code, is
524524 amended to read as follows:
525525 (a) After notice and opportunity for hearing, the secretary
526526 of state may deny an application for a certificate of registration,
527527 or may permanently revoke a health club [spa] operator's
528528 certificate of registration, on a finding by the secretary that the
529529 applicant or certificate holder:
530530 (1) provided false information on an application or
531531 other document filed with the secretary;
532532 (2) failed to file or post, or maintain, the security
533533 for each health club [spa] location as required by Subchapter D; or
534534 (3) failed to provide the contract disclosure language
535535 required by Subchapter G.
536536 SECTION 20. The heading to Section 702.452, Occupations
537537 Code, is amended to read as follows:
538538 Sec. 702.452. NOTICE REQUIREMENT BEFORE HEALTH CLUB [SPA]
539539 CLOSING.
540540 SECTION 21. Sections 702.452(a), (c), (d), and (e),
541541 Occupations Code, are amended to read as follows:
542542 (a) At least 30 days before the date a health club [spa] is
543543 scheduled to close or relocate, the certificate holder shall
544544 contemporaneously:
545545 (1) post, inside and outside each entrance to the
546546 health club [spa], a notice stating:
547547 (A) the date the health club [spa] is scheduled
548548 to close or relocate;
549549 (B) that a member of the health club [spa] may,
550550 not later than the 90th day after the date notice of the closure or
551551 relocation is first posted on the secretary of state's Internet
552552 website, file with the secretary of state a claim to recover actual
553553 financial loss suffered by the member as a result of the health club
554554 [spa] closing; and
555555 (C) the procedures for perfecting a security
556556 claim; and
557557 (2) notify the secretary of state in writing of the
558558 health club [spa] closing or relocation and the date that the notice
559559 was first posted.
560560 (c) After receiving a notice under Subsection (a)(2) or
561561 otherwise discovering that a health club [spa] is closed, the
562562 secretary of state shall post on the secretary of state's Internet
563563 website a notice containing the information specified in Subsection
564564 (a)(1). The notice must be posted continuously for at least 30
565565 days.
566566 (d) The secretary of state shall, not later than the 10th
567567 day after the date the secretary receives notice or otherwise
568568 discovers that a health club [spa] is closed, notify the
569569 appropriate surety company or obligor of the administrative
570570 proceedings pending under Subsection (a)(1).
571571 (e) The notice required under Subsection (a) is not required
572572 in the case of a fire, flood, or act of God that is not within the
573573 reasonable control of a health club [spa].
574574 SECTION 22. Section 702.504, Occupations Code, is amended
575575 to read as follows:
576576 Sec. 702.504. TEMPORARY CLOSING. For purposes of this
577577 subchapter, the closing of a health club [spa] is not a violation of
578578 this chapter if:
579579 (a) the closing does not exceed one month and:
580580 (1) is a result of a natural disaster; or
581581 (2) is to relocate the health club [spa] not more than
582582 10 miles from its location preceding the relocation; or
583583 (b) the closing is pursuant to a federal, state or local
584584 order of a government official requiring the temporary closure of
585585 the health club.
586586 SECTION 23. Section 702.556(a), Occupations Code, is
587587 amended to read as follows:
588588 (a) A person commits an offense if the person knowingly
589589 operates, or attempts to operate, a health club [spa] in violation
590590 of Subchapter C, D, or H.
591591 SECTION 24. Sections 606.001(3), (4), (5), and (8),
592592 Business & Commerce Code, are amended to read as follows:
593593 (3) "Health club [spa]" has the meaning assigned by
594594 Section 702.003, Occupations Code.
595595 (4) "Health club [spa] services" has the meaning
596596 assigned to the term "services" by Section 702.003, Occupations
597597 Code.
598598 (5) "Health club [spa] services provider" means a
599599 person providing health club [spa] services.
600600 (8) "Service provider" means a cable service provider,
601601 a health club [spa] services provider, an Internet service
602602 provider, a telecommunications provider, or a video service
603603 provider.
604604 SECTION 25. Section 606.002(a), Business & Commerce Code,
605605 is amended to read as follows:
606606 (a) This section applies only to the following services:
607607 (1) cable service;
608608 (2) health club [spa] services;
609609 (3) services providing connectivity to the Internet or
610610 another wide area network;
611611 (4) telecommunications services; and
612612 (5) video service.
613613 SECTION 26. This Act takes effect September 1, 2021.