                                 CODE OF VIRGINIA

BOND OR LETTER OF CREDIT REQUIRED; EXCEPTION (§ 59.1-306)

A. Every health club, before it enters into a health club contract and accepts
any moneys in excess of the prorated monthly fee for the month when the contract
is initially executed plus one month&#8217;s fees or accepts any initiation fee
in excess of $125, shall file and maintain with the Commissioner, in form and
substance satisfactory to him, a bond with corporate surety, from a company
authorized to transact business in the Commonwealth or a letter of credit from a
bank insured by the Federal Deposit Insurance Corporation in the amounts
indicated below:
			For purposes of calculating the number of applicable unexpired health club
contracts when determining the required amount of bond or letter of credit,
health club contracts entered into on or after January 1, 2005, with a term that
exceeds 13 months shall be counted as multiple health club contracts, such that
the number of applicable contracts counted with respect thereto shall equal the
total of the number of full years and any partial year in its term. However,
this paragraph shall not apply (i) to health club contracts that are payable
only on a monthly basis and for which the initiation fee is no more than $250 or
(ii) if the number of the health club&#8217;s contracts in effect with a term
that exceeds 13 months is less than 10 percent of the total of its health club
contracts.
			The number of applicable unexpired contracts shall be separately calculated
for each facility.
			A health club shall file a separate bond or letter of credit with respect to
each separate facility, even though the separate facilities are owned or
operated by the same health club.
			However, no health club shall be required to file with the Commissioner bonds
or letters of credit in excess of $300,000. If the $300,000 limit is applicable,
then the bonds or letters of credit filed by the health club shall apply to all
facilities owned or operated by the same health club.

B. A health club may sell health club contracts of up to 36 months&#8217;
duration for a facility for which a health club has not filed a bond or letter
of credit so long as the amount of payment actually charged, due or received
under the health club contracts each month by the health club or any holder
thereunder does not exceed the monthly fee calculated pursuant to the definition
thereof in &#xA7; 59.1-296, with the exception that the payment actually charged
may include a maximum initiation fee of $125 for health club contracts of 13
months or more in duration.

HISTORY: 1984, c. 738; 1985, c. 585; 1990, cc. 392, 433; 1992, c. 117; 2004, c.
988; 2010, c. 439; 2014, c. 459.