Bill Text: TX SB1011 | 2019-2020 | 86th Legislature | Introduced

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Bill Title: Relating to the registration and regulation of health clubs.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2019-03-07 - Referred to Business & Commerce [SB1011 Detail]

Download: Texas-2019-SB1011-Introduced.html

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86R2926 JG-D
By: Zaffirini S.B. No. 1011

A BILL TO BE ENTITLED
AN ACT
relating to the registration and regulation of health clubs.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Chapter 702, Occupations Code, is
amended to read as follows:
CHAPTER 702. HEALTH CLUBS [SPAS]
SECTION 2. Section 702.001, Occupations Code, is amended to
read as follows:
Sec. 702.001. SHORT TITLE. This chapter may be cited as the
Health Club [Spa] Act.
SECTION 3. Section 702.002(a), Occupations Code, is amended
to read as follows:
(a) The purpose of this chapter is to protect the public
against fraud, deceit, imposition, and financial hardship and to
foster and encourage competition, fair dealing, and prosperity in
the field of health club [spa] operations and services by
prohibiting or restricting injurious practices involving:
(1) health club [spa] contracts; and
(2) the marketing of health club [spa] services.
SECTION 4. Sections 702.003, 702.101, 702.102, and 702.103,
Occupations Code, are amended to read as follows:
Sec. 702.003. DEFINITIONS. In this chapter:
(1) "Closed" means a condition in which:
(A) the facilities of a health club [spa] are no
longer available to the health club's [spa's] members and
equivalent facilities located not more than 10 miles from the
health club [spa] have not been made available to the members;
(B) a certificate holder sells a registered
location and the security filed or posted by the certificate holder
under Subchapter D is:
(i) canceled;
(ii) withdrawn; or
(iii) otherwise unavailable to the members
of the health club [spa]; or
(C) a certificate holder sells a registered
location and the buyer does not adopt or honor the contracts of
existing members of the health club [spa].
(2) "Contract" means an agreement between a seller and
purchaser by which the purchaser becomes a member of a health club
or is granted access to the facilities of the health club [spa].
(3) "Facilities" means the equipment, physical
structures, improvements, including improvements to leasehold
premises, and other tangible property, including saunas, whirlpool
baths, gymnasiums, running tracks, swimming pools, shower areas,
racquetball courts, martial arts equipment, and exercise
equipment, that are located at a health club [spa] and used to
conduct the business of the health club [spa].
(4) "Health club [spa]" means 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. The term does not include:
(A) an organization that is tax exempt under
Section 501 et seq., Internal Revenue Code (26 U.S.C. Section 501 et
seq.);
(B) a private club owned and operated by its
members;
(C) an entity operated exclusively to:
(i) teach dance, yoga, or aerobic exercise;
or
(ii) provide physical rehabilitation
activity related to an individual's injury or disease;
(D) a person engaged in an activity authorized
under a license issued by the state;
(E) an activity conducted or sanctioned by a
school under the Education Code; [or]
(F) a hospital or clinic owned or operated by an
agency of the state or federal government or by a political
subdivision of this state;
(G) prepaid personal training services
consisting of a specified number of sessions; or
(H) an outdoor physical exercise program held at
a public facility.
(5) "Location" means the physical site of the
facilities of a health club [spa].
(6) "Member" means a person who is entitled to the
benefits of membership in a health club [spa].
(7) "Membership" means the status of a person under a
contract that entitles the person to use a health club's [spa's]
services or facilities.
(8) "Obligor" means a person, other than a surety, who
is obligated to perform if a certificate holder defaults.
(9) "Open" means the date each service of a health club
[spa] that was advertised before the opening, or promised to be made
available, are available for use by its members.
(10) "Prepayment" means consideration paid by a
purchaser for membership in a health club [spa] before the date the
health club [spa] opens.
(11) "Purchaser" means a person who purchases, or
applies to purchase, the right to use a health club's [spa's]
services or facilities.
(12) "Registered location" means a health club [spa]
location for which a health club [spa] operator's certificate of
registration is issued under this chapter.
(13) "Seller" means a person who:
(A) owns or operates a health club [spa]; or
(B) offers for sale, or sells, the right to use a
health club's [spa's] services or facilities.
(14) "Services" means the programs, plans, guidance,
or instruction that a health club [spa] provides for its members.
The term includes [diet planning,] exercise instruction and
programs[,] and instructional classes.
Sec. 702.101. CERTIFICATE OF REGISTRATION REQUIRED. A
person may not operate a health club [spa] or offer for sale, or
sell, a membership in a health club [spa] unless the person holds a
health club [spa] operator's certificate of registration.
Sec. 702.102. APPLICATION REQUIREMENTS. (a) An applicant
for a health club [spa] operator's certificate of registration must
file with the secretary of state an application stating:
(1) the applicant's name, address, and telephone
number;
(2) the applicant's business trade name;
(3) for an applicant whose business is incorporated:
(A) the applicant's business name registered
with the secretary of state;
(B) the location of the applicant's registered
business office; and
(C) the name and address of each person who
directly or indirectly owns or controls 10 percent or more of the
outstanding shares of stock in the applicant's business;
(4) the date the applicant became the owner and
operator of the applicant's business;
(5) the address of the health club [spa]; and
(6) the type of available or proposed facilities and
services offered at the health club [spa] location.
(b) An application for a certificate of registration must be
accompanied by:
(1) a sample of each contract used to sell a membership
in the applicant's health club [spa];
(2) proof of security filed or posted by the applicant
under Subchapter D; and
(3) the required registration fee.
(c) An applicant must comply with the application
requirements of this section for each location where the applicant
operates a health club [spa].
Sec. 702.103. CERTIFICATE OF REGISTRATION NONTRANSFERABLE;
APPLICATION BY NEW OWNER. (a) A health club [spa] operator's
certificate of registration is not transferable.
(b) A person who obtains ownership of a health club [spa] by
purchase or other transfer shall file an application for a
certificate of registration under Section 702.102 not later than
the fifth day after the date the person obtains ownership.
SECTION 5. Section 702.104(a), Occupations Code, is amended
to read as follows:
(a) A health club [spa] operator's certificate of
registration expires on the first anniversary of the date of
issuance.
SECTION 6. Sections 702.105, 702.107, 702.151, 702.154,
702.155, 702.158, and 702.202, Occupations Code, are amended to
read as follows:
Sec. 702.105. CERTIFICATE POSTING. A certificate holder
shall post a health club [spa] operator's certificate of
registration in a conspicuous place at each registered location.
Sec. 702.107. SALES TAX PERMIT; PROOF OF REGISTRATION
REQUIRED. (a) A health club [spa] operator shall submit to the
comptroller a copy of the operator's certificate of registration at
the time the operator applies for a sales tax permit.
(b) The comptroller may not issue a sales tax permit to a
health club [spa] operator who fails to comply with this
section. The secretary of state shall assist the comptroller in
determining whether a business is a health club [spa] under this
chapter.
Sec. 702.151. SECURITY REQUIRED. (a) Except as provided by
Subchapter E, the secretary of state may not issue a health club
[spa] operator's certificate of registration to an applicant unless
the applicant files a surety bond, or posts other security as
prescribed by the secretary, in the amount prescribed by the
secretary under Subsection (b).
(b) The secretary of state shall prescribe the amount of
security required for an applicant in the amount determined
sufficient by the secretary to protect the health club's [spa's]
total membership. The amount may not be less than $20,000 or more
than $75,000 [$50,000].
Sec. 702.154. BENEFICIARY OF SECURITY. The security filed
or posted by a certificate holder under this subchapter must be
payable to the state and held for the benefit of:
(1) the state; and
(2) each member of the certificate holder's health
club [spa] who has been administratively adjudicated to have
suffered actual financial loss as a result of the closing of the
certificate holder's health club [spa].
Sec. 702.155. DURATION OF SECURITY. A certificate holder
shall maintain the security filed or posted under Section 702.151
in effect until the earlier of:
(1) the second anniversary of the date the certificate
holder's health club [spa] closes; or
(2) the date the secretary of state determines that
each claim filed against the security has been satisfied or
foreclosed by law.
Sec. 702.158. REVIEW OF SECURITY AMOUNT. (a) At least once
every three years, the secretary of state shall review the amount of
security a health club [spa] operator is required to post under
Section 702.151 to determine whether the amount is sufficient to
protect the health club's [spa's] total membership. The secretary
may increase the amount required if the secretary determines that
the increase is necessary to protect that membership but may not
increase the amount above the maximum amount allowed under Section
702.151(b).
(b) The secretary of state may adopt procedures necessary to
implement this section, including:
(1) establishing a schedule to review the amount of
security posted by each health club [spa] operator; and
(2) requiring each health club [spa] operator to
submit periodically a written statement of the health club's
[spa's] total membership.
Sec. 702.202. QUALIFICATIONS FOR EXEMPTION. A certificate
holder may apply for an exemption under Section 702.201 if:
(1) the certificate holder does not require, or
solicit or offer a plan or program that requires, a health club
[spa] consumer to:
(A) execute a membership contract for a term that
exceeds 31 days;
(B) execute a note or retail installment
contract;
(C) authorize a draw or other recurring debit on
a financial institution in favor of the certificate holder or the
certificate holder's assignee;
(D) pay an initiation fee or other fee, not
including monthly dues; or
(E) prepay for a term that exceeds 31 days; or
(2) the certificate holder submits a sworn statement
every three years with the secretary of state stating that the
certificate holder:
(A) has assets based on net book value that
exceed $75,000 [$50,000] per registered location;
(B) has operated under substantially the same
ownership or management for at least five years; and
(C) has not been the subject of a complaint
relating to the closing of a health club [spa] owned by the
certificate holder or the failure of a health club [spa] owned by
the certificate holder to open that has been initiated or filed by a
member of the health club [spa] with a governmental authority in
this state.
SECTION 7. Section 702.206(b), Occupations Code, is amended
to read as follows:
(b) A person who by purchase or other transfer obtains
ownership of a health club [spa] for which a certificate of
exemption has been issued shall, not later than the fifth day after
the date the person obtains ownership:
(1) file a surety bond, or post other security, as
required by Section 702.151; or
(2) file a new application for an exemption under
Section 702.201.
SECTION 8. Sections 702.251 and 702.252, Occupations Code,
are amended to read as follows:
Sec. 702.251. FILING OF SECURITY CLAIM. A member may file
a claim against the security filed or posted under this subchapter
by providing to the secretary of state a copy of the contract
between the member and certificate holder who filed or posted the
security, accompanied by proof of payment made under the contract,
if the certificate holder's health club [spa]:
(1) closes and fails to provide alternative facilities
not more than 10 miles from the location of the health club [spa];
or
(2) relocates more than 10 miles from its location
preceding the relocation.
Sec. 702.252. COMPUTATION OF CLAIM. (a) Recovery on a
claim filed under Section 702.251 is limited to the amount of actual
financial loss suffered by the member as a result of the closing or
relocating of the certificate holder's health club [spa].
(b) For purposes of this section, actual financial loss is
computed by:
(1) rounding the date of the health club's [spa's]
closing or relocation and the contract's expiration date to the
nearest full month;
(2) subtracting the date of closing or relocation
determined under Subdivision (1) from the expiration date
determined under that subdivision, with the result expressed in
whole months and representing the number of months remaining on a
contract;
(3) computing the gross monthly payment by adding all
payments made under the contract, including any down payment and
initiation fee, and dividing the resulting amount by the total
number of months in the term of the contract; and
(4) multiplying the number of months remaining on the
contract computed under Subdivision (2) by the gross monthly
payment computed under Subdivision (3).
SECTION 9. Sections 702.301(a) and (b), Occupations Code,
are amended to read as follows:
(a) A contract:
(1) must be:
(A) in writing; and
(B) signed by the purchaser;
(2) must state the proposed opening date of the health
club [spa] that is the subject of the contract, if the health club
[spa] is not open on the contract date; and
(3) must include the health club [spa] operator's
certificate of registration number or an identification number as
provided by Subsection (b).
(b) The secretary of state shall adopt procedures for the
issuance of an identification number that may be used in a contract
for purposes of Subsection (a) by health clubs [spas] with more than
one location in this state.
SECTION 10. Section 702.302(a), Occupations Code, is
amended to read as follows:
(a) A health club [spa] shall prepare a comprehensive list
that includes each membership plan the health club [spa] offers for
sale. The health club [spa] shall disclose the list to a
prospective purchaser on request.
SECTION 11. Section 702.303(c), Occupations Code, is
amended to read as follows:
(c) If, after a health club [spa] opens, the health club
[spa] is rendered unusable for 30 consecutive days or longer
because of an event beyond the control of the owner or operator of
the health club [spa], including a natural disaster, the health
club [spa] shall extend the term of each affected member's contract
for a period equal to the time that the health club [spa] is
rendered unusable.
SECTION 12. Sections 702.304 and 702.305, Occupations Code,
are amended to read as follows:
Sec. 702.304. CANCELLATION AND REFUND NOTICE. (a) Except
as provided by Subsection (b), a contract must state the following
in at least 10-point type that is boldfaced, capitalized,
underlined, or otherwise conspicuously distinguished from
surrounding written material:
(1) "NOTICE TO PURCHASER: DO NOT SIGN THIS CONTRACT
UNTIL YOU READ IT OR IF IT CONTAINS BLANK SPACES."
(2) "IF YOU DECIDE YOU DO NOT WISH TO REMAIN A MEMBER
OF THIS HEALTH CLUB [SPA], YOU MAY CANCEL THIS CONTRACT BY MAILING
TO THE HEALTH CLUB [SPA] BY MIDNIGHT OF THE THIRD BUSINESS DAY AFTER
THE DAY YOU SIGN THIS CONTRACT A NOTICE STATING YOUR DESIRE TO
CANCEL THIS CONTRACT. THE WRITTEN NOTICE MUST BE MAILED BY
CERTIFIED MAIL TO THE FOLLOWING ADDRESS:
(Address of the health club [spa] home office)."
(3) "IF THE HEALTH CLUB [SPA] GOES OUT OF BUSINESS AND
DOES NOT PROVIDE FACILITIES WITHIN 10 MILES OF THE FACILITY IN WHICH
YOU ARE ENROLLED OR IF THE HEALTH CLUB [SPA] MOVES MORE THAN 10
MILES FROM THE FACILITY IN WHICH YOU ARE ENROLLED, YOU MAY:
(A) CANCEL THIS CONTRACT BY MAILING BY CERTIFIED
MAIL A WRITTEN NOTICE STATING YOUR DESIRE TO CANCEL THIS CONTRACT,
ACCOMPANIED BY PROOF OF PAYMENT ON THE CONTRACT TO THE HEALTH CLUB
[SPA] AT THE FOLLOWING ADDRESS:
(Address of the health club [spa] home office); AND
(B) FILE A CLAIM FOR A REFUND OF YOUR UNUSED
MEMBERSHIP FEES AGAINST THE BOND OR OTHER SECURITY POSTED BY THE
HEALTH CLUB [SPA] WITH THE TEXAS SECRETARY OF STATE. TO MAKE A
CLAIM AGAINST THE SECURITY PROVIDE A COPY OF YOUR CONTRACT TOGETHER
WITH PROOF OF PAYMENTS MADE ON THE CONTRACT TO THE TEXAS SECRETARY
OF STATE. THE REQUIRED CLAIM INFORMATION MUST BE RECEIVED BY THE
SECRETARY OF STATE NOT LATER THAN THE 90TH DAY AFTER THE DATE NOTICE
OF THE CLOSURE OR RELOCATION IS FIRST POSTED ON THE SECRETARY OF
STATE'S INTERNET WEBSITE."
(4) "IF YOU DIE OR BECOME TOTALLY AND PERMANENTLY
DISABLED AFTER THE DATE THIS CONTRACT TAKES EFFECT, YOU OR YOUR
ESTATE MAY CANCEL THIS CONTRACT AND RECEIVE A PARTIAL REFUND OF YOUR
UNUSED MEMBERSHIP FEE BY MAILING A NOTICE TO THE HEALTH CLUB [SPA]
STATING YOUR DESIRE TO CANCEL THIS CONTRACT. THE HEALTH CLUB [SPA]
MAY REQUIRE PROOF OF DISABILITY OR DEATH. THE WRITTEN NOTICE MUST
BE MAILED BY CERTIFIED MAIL TO THE FOLLOWING ADDRESS:
(Address of the health club [spa] home office)."
(b) A health club [spa] operator is required to include the
statement under Subsection (a)(3)(B) in a contract only if the
operator is required to post security with the secretary of state
under Subchapter D.
Sec. 702.305. PREPAYMENT REFUND NOTICE. If a certificate
holder offers for sale, or sells, memberships in a health club [spa]
before the date the health club [spa] opens, the contract for the
health club [spa] must state the following in at least 10-point type
that is boldfaced, capitalized, underlined, or otherwise
conspicuously distinguished from surrounding written material:
"IF THE HEALTH CLUB [SPA] DOES NOT OPEN BEFORE (insert: the
date that is the 181st day after the date the membership is prepaid)
OR IF THE NEW CLUB [SPA] DOES NOT REMAIN OPEN FOR THIRTY DAYS, YOU
ARE ENTITLED TO A FULL REFUND OF THE MONEY YOU PREPAID. HOWEVER, IF
ANOTHER HEALTH CLUB [SPA], OPERATED BY (insert: the name of the
health club [spa] registration holder), IS LOCATED WITHIN 10 MILES
OF (insert: the address of the proposed location of the new club
[spa]) AND IF YOU ARE AUTHORIZED TO USE THE OTHER FACILITIES, YOU
ARE ENTITLED TO RECEIVE A FULL REFUND OF YOUR MEMBERSHIP FEES ONLY
IF THIS LOCATION DOES NOT FULLY OPEN FOR BUSINESS BEFORE (insert:
the date that is the 361st day after the date the new club [spa]
first sells memberships) OR IF THE NEW CLUB [SPA] DOES NOT REMAIN
OPEN FOR 30 DAYS."
SECTION 13. Sections 702.308(a) and (d), Occupations Code,
are amended to read as follows:
(a) A member may cancel a contract and receive a refund of
unearned payments made under the contract by sending written notice
of cancellation, accompanied by proof of payment made under the
contract, by certified mail to the certificate holder's home office
if the certificate holder:
(1) closes the health club [spa] and fails to provide
alternative facilities not more than 10 miles from the location of
the health club [spa];
(2) relocates the health club [spa] more than 10 miles
from its location preceding the relocation; or
(3) fails to provide advertised services.
(d) In this section, the unearned payments are computed in
the same manner as a member's actual financial loss is computed
under Section 702.252, except that the date a contract is canceled
is substituted for the date a health club [spa] closes or relocates.
SECTION 14. Sections 702.309, 702.311, and 702.351,
Occupations Code, are amended to read as follows:
Sec. 702.309. PROOF OF PAYMENT. A receipt given to a
purchaser by a health club [spa] when the purchaser makes a payment
under a contract constitutes proof of the payment.
Sec. 702.311. VOID CONTRACT. A contract is void if:
(1) the contract or an assignment of the contract does
not comply with this chapter;
(2) the seller does not hold a certificate of
registration issued under this chapter at the time of contract; or
(3) the purchaser enters into the contract in reliance
on false, fraudulent, or misleading information wilfully provided
by, or a false, fraudulent, or misleading representation, notice,
or advertisement wilfully made by, the seller or the health club
[spa] owner or operator.
Sec. 702.351. MEMBERSHIP PREPAYMENT. A certificate holder
may offer for sale, or sell, a membership in a health club [spa]
before the date the health club [spa] opens.
SECTION 15. Sections 702.352(a) and (c), Occupations Code,
are amended to read as follows:
(a) A certificate holder or an assignee or agent of a
certificate holder who accepts a prepayment for a membership in the
certificate holder's health club [spa] shall deposit the prepayment
in an escrow account established with a financial institution
insured by the Federal Deposit Insurance Corporation.
(c) A certificate holder shall maintain an escrow account
under this section until the 30th day after the date the certificate
holder's health club [spa] opens.
SECTION 16. Sections 702.353, 702.355, 702.356, and
702.401, Occupations Code, are amended to read as follows:
Sec. 702.353. EXEMPTION FROM ESCROW REQUIREMENT. (a) A
certificate holder is not required to deposit prepayments in an
escrow account under Section 702.352 if:
(1) the certificate holder has operated at least one
health club [spa] in the state for not less than two years before
the date the certificate holder first sells a membership in the
health club [spa] that is the subject of the exemption; and
(2) except as provided by Subsection (b):
(A) litigation has not been initiated against the
certificate holder by a member of a health club [spa] owned or
operated by the certificate holder relating to the closing of the
health club [spa] or the failure of the health club [spa] to open;
and
(B) a member of a health club [spa] has not filed
a complaint with a governmental authority in this state against the
certificate holder, or an owner, officer, or director of a health
club [spa] owned or operated by the certificate holder, relating to
the closing of the health club [spa] or the failure of the health
club [spa] to open.
(b) The initiation of litigation or filing of a complaint
against a certificate holder, or an owner, officer, or director of a
health club [spa] owned or operated by the certificate holder, does
not preclude the certificate holder from claiming an exemption
under Subsection (a) if the basis of the litigation or complaint is
that the certificate holder's health club [spa] closed:
(1) as a result of a natural disaster and the closing
did not exceed one month; or
(2) to relocate the health club [spa] to a location not
more than 10 miles from its location preceding the relocation and
the closing did not exceed one month.
(c) The number of exemptions that a certificate holder may
claim under Subsection (a) during a two-year period may not exceed
twice the number of health clubs [spas] operated by the certificate
holder on the first day of that two-year period.
Sec. 702.355. REFUND OF ESCROWED PREPAYMENT. (a) Except as
provided by Subsection (b), a member is entitled to receive a full
refund of the prepayment made under a contract if the health club
[spa] that is the subject of the contract does not open before the
181st day after the date the health club [spa] first sells a
membership in the health club [spa] or does not remain open for at
least 30 days unless:
(1) an alternative health club [spa] operated by the
seller is located not more than 10 miles from the location of the
health club [spa] that is the subject of the contract; and
(2) the member is authorized to use the facilities of
the alternative health club [spa].
(b) A member who is authorized to use the facilities of an
alternative health club [spa] under Subsection (a) is entitled to
receive a full refund of the prepayment made under the contract if
the health club [spa] that is the subject of the contract does not
open before the 361st day after the date the health club [spa] first
sells a membership in the health club [spa] or does not remain open
for at least 30 days.
(c) For purposes of this section, the date a health club
[spa] opens does not depend on whether the services of the health
club [spa] that were advertised before the opening, or promised to
be made available, are included in the contract.
Sec. 702.356. WITHDRAWAL OF ESCROW FUNDS. A certificate
holder may withdraw prepayments deposited in an escrow account
under Section 702.352 if:
(1) the health club [spa] for which the prepayments
are made remains open for not less than 30 days;
(2) the certificate holder files with the secretary of
state an affidavit certifying that all obligations of the health
club [spa] for which a lien may be claimed under Chapter 53,
Property Code, have been paid; and
(3) no person is eligible to claim a lien under Chapter
53, Property Code, during the period the certificate holder or an
assignee or agent of the certificate holder accepts prepayments for
memberships in the certificate holder's health club [spa].
Sec. 702.401. WAIVER PROHIBITED. A person, including a
person who buys a health club [spa] membership from a former member,
may not waive a provision of this chapter by contract or other
means. A purported waiver of this chapter is void.
SECTION 17. Section 702.402(a), Occupations Code, is
amended to read as follows:
(a) A seller or certificate holder may not:
(1) offer a special offer or discount to fewer than all
prospective members of the health club [spa], except that a seller
or certificate holder may offer a special group price or discount;
or
(2) make a material misrepresentation to a member,
prospective member, or purchaser regarding:
(A) the qualifications of the health club [spa]
staff;
(B) the availability, quality, or extent of the
facilities or services of the health club [spa];
(C) the results obtained through exercise, diet,
weight control, or physical fitness conditioning programs;
(D) membership rights; or
(E) the period during which a special offer or
discount will be available.
SECTION 18. Section 702.404, Occupations Code, is amended
to read as follows:
Sec. 702.404. INFORMATION REQUIRED IN ADVERTISEMENT. A
health club [spa] operator may not advertise in any print or
electronic medium unless the advertisement includes the health club
[spa] operator's certificate of registration number or an
identification number issued as provided by Section 702.301(b).
SECTION 19. Section 702.451(a), Occupations Code, is
amended to read as follows:
(a) After notice and opportunity for hearing, the secretary
of state may deny an application for a certificate of registration,
or may permanently revoke a health club [spa] operator's
certificate of registration, on a finding by the secretary that the
applicant or certificate holder:
(1) provided false information on an application or
other document filed with the secretary;
(2) failed to file or post, or maintain, the security
for each health club [spa] location as required by Subchapter D; or
(3) failed to provide the contract disclosure language
required by Subchapter G.
SECTION 20. The heading to Section 702.452, Occupations
Code, is amended to read as follows:
Sec. 702.452. NOTICE REQUIREMENT BEFORE HEALTH CLUB [SPA]
CLOSING.
SECTION 21. Sections 702.452(a), (c), (d), and (e),
Occupations Code, are amended to read as follows:
(a) At least 30 days before the date a health club [spa] is
scheduled to close or relocate, the certificate holder shall
contemporaneously:
(1) post, inside and outside each entrance to the
health club [spa], a notice stating:
(A) the date the health club [spa] is scheduled
to close or relocate;
(B) that a member of the health club [spa] may,
not later than the 90th day after the date notice of the closure or
relocation is first posted on the secretary of state's Internet
website, file with the secretary of state a claim to recover actual
financial loss suffered by the member as a result of the health club
[spa] closing; and
(C) the procedures for perfecting a security
claim; and
(2) notify the secretary of state in writing of the
health club [spa] closing or relocation and the date that the notice
was first posted.
(c) After receiving a notice under Subsection (a)(2) or
otherwise discovering that a health club [spa] is closed, the
secretary of state shall post on the secretary of state's Internet
website a notice containing the information specified in Subsection
(a)(1). The notice must be posted continuously for at least 30
days.
(d) The secretary of state shall, not later than the 10th
day after the date the secretary receives notice or otherwise
discovers that a health club [spa] is closed, notify the
appropriate surety company or obligor of the administrative
proceedings pending under Subsection (a)(1).
(e) The notice required under Subsection (a) is not required
in the case of a fire, flood, or act of God that is not within the
reasonable control of a health club [spa].
SECTION 22. Section 702.504, Occupations Code, is amended
to read as follows:
Sec. 702.504. TEMPORARY CLOSING. For purposes of this
subchapter, the closing of a health club [spa] is not a violation of
this chapter if the closing does not exceed one month and:
(1) is a result of a natural disaster; or
(2) is to relocate the health club [spa] not more than
10 miles from its location preceding the relocation.
SECTION 23. Section 702.556(a), Occupations Code, is
amended to read as follows:
(a) A person commits an offense if the person knowingly
operates, or attempts to operate, a health club [spa] in violation
of Subchapter C, D, or H.
SECTION 24. This Act takes effect September 1, 2019.