What are health club and spa bonds?
Health club and spa bonds protect members of health-related facilities from losing prepaid money if the facility shuts down suddenly. For example, individuals who make advance payments for their gym memberships are protected if their gym suddenly goes out of business. Rather than losing their money, they may be reimbursed or refunded the portion of the membership they didn’t get to use.
This license and permit surety bond ensures that health clubs and spas follow applicable laws and regulations for their industries. Facilities must maintain this bond to earn and sustain a business license in many states.
Health club and spa bonds may go by other names, based on your industry and where you live:
- Health studio bond
- Health spa bond
- Fitness center bond
- Health club special deposit bond
- Prepaid entertainment bond
- Gym bond
Get Your Health Club or Spa Bond:
- Health club and spa bonds protect members of health-related facilities from losing prepaid money if the facility shuts down suddenly.
- If you run (or want to run) a health-related business that offers prepaid memberships for customers, you may need to post a surety bond.
- The types of memberships you offer, your credit score, and your related business experience can play a role in your bond cost.
- To avoid a claim against your health club or spa bond, make sure you refund members the money you owe them when applicable.
What exactly is a health club?
If you run (or want to run) a health-related business that offers prepaid memberships for customers, you may need to post a surety bond. “Health clubs” may include the following types of organizations:
- Fitness centers
- Athletic training facilities
- Sports clubs (like tennis or racquetball)
- Weight loss coaching organizations
- Self-defense schools
- Bodybuilding and weightlifting clubs
- Health spas
Basically, if you have a facility that empowers physical conditioning or exercise and offers prepaid memberships, you may need a surety bond to obtain and maintain your license. Check with your state to learn the specific requirements regarding your type of business.
How do health club and spa bonds work?
Health club and spa bonds are legal agreements between three parties:
- An obligee (state agency) that requires the bond
- A principal (health club or spa) that must post the bond
- A surety (financial institution) that underwrites and issues the bond
If your health club goes out of business and you cannot reimburse members for unused funds upfront, your club members can file a claim against your bond to receive any fees they prepaid and didn’t use. Ultimately, your club will owe the surety for any amount covered by the bond, plus interest and additional costs.
Bond amounts and costs can vary from state to state. If you have more than one location, you may need to post multiple bonds, as well. The types of memberships you offer, your credit score, and your related business experience can also play a role in the final cost.
Required bond amounts often range from $25,000 – $50,000 but could be more or less, depending on where you live. You will pay a small percentage of this amount. The better your credit score, the smaller percentage you’re likely to pay.
To avoid a claim against your health club or spa bond, make sure you refund members the money you owe them. Storing unused funds in an escrow account or trust will help you to repay on time and help prevent future claims.
Get a Health Club or Spa Bond in Your State
We can help you find the right surety bond for your health club or spa. ZipBonds offers the fastest and most secure option for getting bonded. Our all-digital platform is intuitive and straightforward. Apply online or call us at 888-435-4191 to speak with an agent directly.
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.