By: Zaffirini S.B. No. 1846
 
 
 
   
 
 
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                           (ii)  withdrawn; or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:
         (a)  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; or
         (b)  the closing is pursuant to a federal, state or local
  order of a government official requiring the temporary closure of
  the health club.
         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.  Sections 606.001(3), (4), (5), and (8),
  Business & Commerce Code, are amended to read as follows:
               (3)  "Health club [spa]" has the meaning assigned by
  Section 702.003, Occupations Code.
               (4)  "Health club [spa] services" has the meaning
  assigned to the term "services" by Section 702.003, Occupations
  Code.
               (5)  "Health club [spa] services provider" means a
  person providing health club [spa] services.
               (8)  "Service provider" means a cable service provider,
  a health club [spa] services provider, an Internet service
  provider, a telecommunications provider, or a video service
  provider.
         SECTION 25.  Section 606.002(a), Business & Commerce Code,
  is amended to read as follows:
         (a)  This section applies only to the following services:
               (1)  cable service;
               (2)  health club [spa] services;
               (3)  services providing connectivity to the Internet or
  another wide area network;
               (4)  telecommunications services; and
               (5)  video service.
         SECTION 26.  This Act takes effect September 1, 2021.