Frequently Asked Questions for Health Spas
In Texas, health spas are governed by Chapter 702 of the Occupations Code and the secretary of state’s administrative rules found in 1 Texas Administrative Code Chapter 102, as well as any other applicable state or federal law.
What is a health spa?
A business that offers for sale, or sells, memberships that provide the members instruction in or the use of facilities for a physical exercise program.
“Health spa” does not include:
- A tax exempt organization under § 501 et. seq. of the Internal Revenue Code;
- A private club owned and operated by its members;
- An entity operated exclusively to teach dance or aerobics;
- An entity operated exclusively to provide physical rehabilitation activity related to an individual’s injury or disease;
- A person engaged in an activity authorized under a state license; or
- An activity conducted or sanctioned by a school under the Education Code.
Tex. Occ. Code § 702.003.
FAQs for Health Spa Operators
- Are health spas required to register with the secretary of state?
- What is the cost of obtaining a health spa certificate of registration from the secretary of state?
- How much security must I provide?
- What types of security are acceptable?
- How much does it cost to obtain a bond?
- How do I get a certificate of deposit in favor of the secretary of state?
- What are the exemptions to the security requirement?
- Are there any special requirements for a health spa that accepts prepayments?
- Are there any exemptions to the escrow account requirement for health spas that accept prepayments?
FAQs for Health Spa Consumers
- What can I do to check up on a health spa and make sure it’s registered and bonded before I sign a contract?
- Can the secretary of state take action against a health spa?
- What if a health spa is not registered?
- How do I file against a health spa that has closed?
- May I file a claim against a health spa that has closed my location but has offered enrollment at another location?
- My question wasn’t answered here. Who do I call?
FAQs for Health Spa Operators
- Are health spas required to register with the secretary of state?
Yes. Section 702.101 of the Occupations Code provides that “[a] person may not operate a health spa or offer for sale, or sell, a membership in a health spa unless the person holds a health spa operator’s certificate of registration.” See Form 3001. A registration must be accompanied by sample contracts, proof of security, and the registration fee. Each registration is effective for one year and may be renewed.
- What is the cost of obtaining a health spa certificate of registration from the secretary of state?
The fee for an original certificate of registration or renewal is $100. In addition, a health spa that is not exempt from the security requirements must accompany an application for certificate of registration with proof of security.
- How much security must I provide?
Security must be provided for each of the health spa's locations. The amount of the security deposit for a location is determined by the location's total membership:
Total amount paid for prepaid memberships at health spa location Amount of Security $0–$20,000$20,000$20,001–$25,000$25,000$25,001–$30,000$30,000$30,001–$35,000$35,000$35,001–$40,000$40,000$40,001–$45,000$45,000Over $45,000$50,000 - What types of security are acceptable?
A health spa may satisfy the security requirement by obtaining a surety bond or a certificate of deposit in favor of the secretary of state.See Forms 3002, 3004.
- How much does it cost to obtain a bond?
The surety bonding company determines the cost of a surety bond. Contact the surety company to obtain the cost of the bond.
- How do I get a certificate of deposit in favor of the secretary of state?
Obtain a certificate of deposit from a bank and assign it to the secretary of state. See Form 3004.
- What are the exemptions to the security requirement?
There are two exemptions to the security requirement, both set forth in § 702.202 of the Occupations Code.
First, a certificate holder may apply for an exemption if the certificate holder does not require, solicit or offer a plan or program that requires a health spa consumer to:- execute a membership contract for a term that exceeds 31 days;
- execute a note or a retail installment contract;
- authorize a draw or other recurring debit on a financial institution in favor of the certificate holder or the certificate holder’s assignee;
- pay an initiation fee or other fee, not including monthly dues; or
- prepay for a term that exceeds 31 days.
Second, a certificate holder may apply for an exemption if the certificate holder submits a sworn statement every three years with the secretary of state stating that the certificate holder:
- has assets based on net book value that exceed $50,000 per registered location;
- has operated under substantially the same ownership or management for at least five years; and
- has not been the subject of a complaint relating to the closing of a health spa owned by the certificate holder or the failure of a health spa owned by the certificate holder to open that has been initiated or filed by a member of the health spa with a governmental authority in this state.
A health spa certificate holder may apply for an exemption from the security requirement by submitting Form 3006.
- Are there any special requirements for a health spa that accepts prepayments?
Yes. Section 702.352 of the Occupations Code requires an escrow account to be established if a health spa accepts prepayment for memberships before the health spa opens. The escrow account must be established with a financial institution insured by the Federal Deposit Insurance Corporation not later than the 14th day after the first prepayment is accepted. In addition, the following items must be filed with the secretary of state not later than the 14th day after the date the first prepayment is accepted:
- A notarized statement identifying the financial institution holding the escrow account and the name in which the escrow account is held; and
- A signed statement on a form approved by the secretary of state authorizing the secretary of state to direct inquiries to the financial institution regarding the escrow account.
See Form 3005.
The escrow account must be maintained until the 30th day after the date the health spa opens.
- Are there any exemptions to the escrow account requirement for health spas that accept prepayments?
Yes. Section 702.353 of the Occupations Code provides an exception for certain established health spas.
FAQs for Health Spa Consumers
- What can I do to check up on a health spa and make sure it’s registered and bonded before I sign a contract?
You may search the list of registered health spas on the SOS web site to find out whether the health spa is registered and has posted security. If the health spa is not exempt from the security requirements and has posted a security bond or cash, the search results will display the surety or bank.
Also, the Federal Trade Commission suggests that you contact the Better Business Bureau and the Consumer Protection Division of the Office of the Attorney General prior to joining a health spa. Additional suggestions from the FTC.
- Can the secretary of state take action against a health spa?
No. The secretary of state is a filing officer for health spa registrations and security and does not have authority to regulate the business practices of a health spa. Although the secretary assists consumers by accepting claims for unused amounts on prepaid contracts, the office cannot resolve disputes about health spa services or facilities, investigate the business practices of a health spa, or determine whether a member is entitled to a refund.
A health spa member may take private legal action against a health spa for failing to comply with its contractual obligations. In addition, the member may file a complaint with the attorney general if the member feels that the health spa has violated chapter 702 of the Occupations Code by engaging in a false, misleading, or deceptive act or practice.
- What if a health spa is not registered?
Operating an unregistered health spa is a violation of the Health Spa Act and may also be a criminal offense. The attorney general or a district or county attorney may investigate an alleged violation of the Act. If you notify the secretary of state, this office will notify the health spa of the registration requirement and, if necessary, refer the matter to the attorney general for investigation.
- How do I file against a health spa that has closed?
If you are a member of a health spa that closed and you had time remaining on a prepaid membership contract, you may file a claim with the secretary of state for the value of the balance of your contract. To perfect a claim, send a copy of the membership contract and documentation indicating the amount paid by certified mail to:
Office of the Secretary of State
Statutory Documents Section
P. O. Box 13193
Austin, Texas 78711-3193Claims must be received not later than 90 days from the date the notice of closure is first posted on the secretary of state website. Claims received after the deadline are barred by law. The deadline for filing claims is included in the closure notices posted by the secretary of state.
- May I file a claim against a health spa that has closed my location but has offered enrollment at another location?
Maybe. A claim may be filed when a health spa is closed. If the facilities are no longer available to the health spa’s members or the certificate holder sells the health spa and the new buyer does not adopt or honor the existing contract the health spa is closed. A health spa is not considered closed, however, if “equivalent facilities” located not more than 10 miles from the health spa are made available to the members.
Facilities are “equivalent” if they have substantially similar hours of operation, physical structures, improvements, square footage, exercise equipment, and access to instructors, trainers, and classes.
- My question wasn’t answered here. Who do I call?
For additional information please call (512) 475-0775.
