CHAPTER 702. HEALTH SPAS
OCCUPATIONS CODE
TITLE 3. HEALTH PROFESSIONS
SUBTITLE M. REGULATION OF OTHER HEALTH PROFESSIONS
CHAPTER 702. HEALTH SPAS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 702.001. SHORT TITLE. This chapter may be cited as the
Health Spa Act.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.002. PURPOSE AND CONSTRUCTION. (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
spa operations and services by prohibiting or restricting
injurious practices involving:
(1) health spa contracts; and
(2) the marketing of health spa services.
(b) This chapter shall be liberally construed and applied to
promote its purpose and to provide efficient and economical
procedures to protect the public.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.003. DEFINITIONS. In this chapter:
(1) "Closed" means a condition in which:
(A) the facilities of a health spa are no longer available to
the health spa's members and equivalent facilities located not
more than 10 miles from the health 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(ii) withdrawn; or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 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 spa.
(2) "Contract" means an agreement between a seller and purchaser
by which the purchaser becomes a member of a health 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 spa and used to conduct
the business of the health spa.
(4) "Health 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 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; or
(E) an activity conducted or sanctioned by a school under the
Education Code.
(5) "Location" means the physical site of the facilities of a
health spa.
(6) "Member" means a person who is entitled to the benefits of
membership in a health spa.
(7) "Membership" means the status of a person under a contract
that entitles the person to use a health 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 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 spa before the date the health spa opens.
(11) "Purchaser" means a person who purchases, or applies to
purchase, the right to use a health spa's services or facilities.
(12) "Registered location" means a health spa location for which
a health spa operator's certificate of registration is issued
under this chapter.
(13) "Seller" means a person who:
(A) owns or operates a health spa; or
(B) offers for sale, or sells, the right to use a health spa's
services or facilities.
(14) "Services" means the programs, plans, guidance, or
instruction that a health spa provides for its members. The term
includes diet planning, exercise instruction and programs, and
instructional classes.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
SUBCHAPTER B. POWERS AND DUTIES OF SECRETARY OF STATE
Sec. 702.051. ADMINISTRATIVE AND RULEMAKING AUTHORITY. (a) The
secretary of state shall administer this chapter.
(b) In administering this chapter, the secretary of state shall:
(1) adopt rules;
(2) issue administrative orders; and
(3) take action necessary to ensure compliance with this
chapter.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.052. RULES RELATING TO SECURITY CLAIMS AND PROCEEDS.
The secretary of state shall adopt rules necessary to:
(1) determine the disposition of a security claim filed under
Section 702.251; and
(2) ensure the prompt and fair distribution of security
proceeds.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.053. REGISTRATION AND RENEWAL FEES. The secretary of
state may charge each applicant for a certificate of
registration, or renewal of a certificate, a reasonable fee not
to exceed $100 to cover the cost of issuance or renewal.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
SUBCHAPTER C. CERTIFICATE OF REGISTRATION
Sec. 702.101. CERTIFICATE OF REGISTRATION REQUIRED. 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.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.102. APPLICATION REQUIREMENTS. (a) An applicant for a
health 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 spa; and
(6) the type of available or proposed facilities and services
offered at the health 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 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 spa.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.103. CERTIFICATE OF REGISTRATION NONTRANSFERABLE;
APPLICATION BY NEW OWNER. (a) A health spa operator's
certificate of registration is not transferable.
(b) A person who obtains ownership of a health 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.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.104. TERM; RENEWAL. (a) A health spa operator's
certificate of registration expires on the first anniversary of
the date of issuance.
(b) A certificate of registration may be renewed as provided by
the secretary of state.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.105. CERTIFICATE POSTING. A certificate holder shall
post a health spa operator's certificate of registration in a
conspicuous place at each registered location.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.106. CHANGE OF INFORMATION. If the information
provided in an application for a certificate of registration
changes, the certificate holder shall amend the application not
later than the 90th day after the date the change occurs.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.107. SALES TAX PERMIT; PROOF OF REGISTRATION REQUIRED.
(a) A health 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
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 spa under this chapter.
Added by Acts 2005, 79th Leg., Ch.
908, Sec. 1, eff. September 1, 2005.
SUBCHAPTER D. SECURITY REQUIREMENTS
Sec. 702.151. SECURITY REQUIRED. (a) Except as provided by
Subchapter E, the secretary of state may not issue a health 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 spa's total
membership. The amount may not be less than $20,000 or more than
$50,000.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Amended by:
Acts 2005, 79th Leg., Ch.
908, Sec. 2, eff. September 1, 2005.
Sec. 702.152. SURETY BOND REQUIREMENTS. If a surety bond is
filed under Section 702.151, the bond must:
(1) remain in effect until canceled by the surety company;
(2) be issued by a company authorized to do business in this
state; and
(3) conform to the requirements of the Insurance Code.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.153. REQUIREMENTS FOR SECURITY OTHER THAN SURETY BOND.
An applicant who posts under Section 702.151 security other than
a surety bond is:
(1) not required to post other security annually if the
applicant maintains security in the amount of $20,000; and
(2) entitled to receive the interest that accumulates on the
other security posted.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
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 spa who has
been administratively adjudicated to have suffered actual
financial loss as a result of the closing of the certificate
holder's health spa.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.155. DURATION OF SECURITY. A certificate holder shall
maintain the security filed or posted under Section 702.151 in
effect until the later of:
(1) the second anniversary of the date the certificate holder's
health 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.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.156. CANCELLATION OF SECURITY. (a) A surety or
obligor of security filed or posted under this subchapter shall
provide to the secretary of state, not later than the 60th day
before the date the security is canceled, written notice of the
cancellation.
(b) If the security filed or posted under this subchapter by a
certificate holder is canceled, the secretary of state shall:
(1) suspend the certificate holder's certificate of registration
on the date of cancellation; and
(2) maintain other security on file with the secretary until the
later of:
(A) the second anniversary of the date the certificate holder's
health spa closes; or
(B) the date the secretary determines that each claim filed
against the security has been satisfied or foreclosed by law.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.157. LIMIT ON LIABILITY OF SURETY OR OBLIGOR. (a) The
limit of a surety's or obligor's liability stated in the security
filed or posted under this subchapter may not be cumulative from
year to year or period to period, regardless of the number of:
(1) years that the security continues in force; or
(2) premiums paid or payable.
(b) The liability of a surety or obligor is exclusively
conditioned on a final administrative order issued by the
secretary of state.
(c) Security filed or posted under this subchapter is subject to
a claim only as provided by this subchapter.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
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 spa operator is required to post under
Section 702.151 to determine whether the amount is sufficient to
protect the health 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 spa operator; and
(2) requiring each health spa operator to submit periodically a
written statement of the health spa's total membership.
Added by Acts 2005, 79th Leg., Ch.
908, Sec. 3, eff. September 1, 2005.
SUBCHAPTER E. EXEMPTION FROM SECURITY REQUIREMENTS
Sec. 702.201. APPLICATION FOR EXEMPTION. A certificate holder
may apply for an exemption from the security requirements of
Subchapter D by filing with the secretary of state a sworn
application for the exemption on a form prescribed by the
secretary of state.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
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 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 $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 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.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Amended by:
Acts 2005, 79th Leg., Ch.
908, Sec. 4, eff. September 1, 2005.
Sec. 702.205. ISSUANCE OF EXEMPTION. (a) On approval of an
application for an exemption under Section 702.201, the secretary
of state shall issue a certificate of exemption.
(b) A certificate holder to whom a certificate of exemption is
issued is not required to file a surety bond or post other
security under Subchapter D.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.206. NONTRANSFERABILITY OF EXEMPTION. (a) A
certificate of exemption is not transferable.
(b) A person who by purchase or other transfer obtains ownership
of a health 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.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.207. DENIAL AND REVOCATION OF EXEMPTION. After notice
and hearing, the secretary of state may deny an application for
an exemption or permanently revoke a certificate holder's
certificate of exemption if the secretary finds that the
applicant or certificate holder:
(1) provided false information on the application for an
exemption; or
(2) is no longer eligible for an exemption.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
SUBCHAPTER F. CLAIM ON SECURITY
Sec. 702.251. FILING OF SECURITY CLAIM. A member may file a
claim against the security filed or posted under this subchapter
by sending to the secretary of state by certified mail 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 spa:
(1) closes and fails to provide alternative facilities not more
than 10 miles from the location of the health spa; or
(2) relocates more than 10 miles from its location preceding the
relocation.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
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 spa.
(b) For purposes of this section, actual financial loss is
computed by:
(1) rounding the date of the health 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).
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.253. ADJUDICATION ON PRO RATA BASIS. If the total
amount of actual financial losses computed under Section 702.252
for all claims filed under Section 702.251 exceeds the amount of
available security, the secretary of state shall reduce the
amount of each recovery under Section 702.252 on a pro rata basis
and shall compute the amount of each recovery by:
(1) dividing the amount of available security by the total
amount of actual financial losses computed under Section 702.252
for all claims; and
(2) multiplying the results computed under Subdivision (1) by
the amount of the recovery.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 756, Sec. 1, eff. Sept. 1,
2001.
Sec. 702.254. CLAIM BARRED. The secretary of state may not
consider a claim filed under Section 702.251 if the claim is
received later than the 90th day after the date notice is first
posted under Section 702.452.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 756, Sec. 2, eff. Sept. 1,
2001.
SUBCHAPTER G. CONTRACT REQUIREMENTS
Sec. 702.301. GENERAL REQUIREMENTS. (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 spa that
is the subject of the contract, if the health spa is not open on
the contract date; and
(3) must include the health 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 spas with more
than one location in this state.
(c) A contract under Subsection (a) constitutes the entire
agreement between the seller and purchaser.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Amended by:
Acts 2005, 79th Leg., Ch.
908, Sec. 5, eff. September 1, 2005.
Sec. 702.302. DISCLOSURE REQUIREMENTS. (a) A health spa shall
prepare a comprehensive list that includes each membership plan
the health spa offers for sale. The health spa shall disclose the
list to a prospective purchaser on request.
(b) A certificate holder who is not exempt under Section 702.202
from the security requirements of Subchapter D must deliver to a
purchaser a complete copy of the contract, accompanied by a
written receipt for any payment made by the purchaser under the
contract before entering into the contract with the purchaser.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.303. CONTRACT TERM. (a) Except as provided by
Subsection (b), the term of a contract may not exceed three
years.
(b) A contract that is financed through a retail installment
contract or note may not require the purchaser to make payments
or finance the contract for more than five years after the
contract date.
(c) If, after a health spa opens, the health 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 spa,
including a natural disaster, the health spa shall extend the
term of each affected member's contract for a period equal to the
time that the health spa is rendered unusable.
(d) If the term of a contract overlaps the term of another
contract between the same seller and purchaser, the contracts are
considered to be one contract.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.304. CANCELLATION AND REFUND NOTICE. (a) Except as
provided by Subsection (b), a contract must state 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 SPA, YOU MAY CANCEL THIS CONTRACT BY MAILING TO THE HEALTH
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 spa home office)."
(3) "IF THE HEALTH 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 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 SPA AT THE
FOLLOWING ADDRESS:
(Address of the health 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 SPA WITH
THE TEXAS SECRETARY OF STATE. TO MAKE A CLAIM AGAINST THE
SECURITY SEND A COPY OF YOUR CONTRACT TOGETHER WITH PROOF OF
PAYMENTS MADE ON THE CONTRACT TO THE TEXAS SECRETARY OF STATE.
THE WRITTEN NOTICE MUST BE MAILED BY CERTIFIED MAIL TO THE
FOLLOWING ADDRESS:
OFFICE OF THE SECRETARY OF STATE
STATUTORY DOCUMENTS SECTION
P.O. BOX 12887
AUSTIN, TEXAS 78711-2887."
(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 SPA STATING YOUR
DESIRE TO CANCEL THIS CONTRACT. THE HEALTH 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 spa home office)."
(b) A health 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.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Amended by:
Acts 2005, 79th Leg., Ch.
908, Sec. 6, eff. September 1, 2005.
Sec. 702.305. PREPAYMENT REFUND NOTICE. If a certificate holder
offers for sale, or sells, memberships in a health spa before the
date the health spa opens, the contract for the health spa must
state in at least 10-point type that is boldfaced, capitalized,
underlined, or otherwise conspicuously distinguished from
surrounding written material:
"IF THE HEALTH SPA DOES NOT OPEN BEFORE (insert: the date that is
the 181st day after the date the membership is prepaid) OR IF THE
NEW SPA DOES NOT REMAIN OPEN FOR THIRTY DAYS, YOU ARE ENTITLED TO
A FULL REFUND OF THE MONEY YOU PREPAID. HOWEVER, IF ANOTHER
HEALTH SPA, OPERATED BY (insert: the name of the health spa
registration holder), IS LOCATED WITHIN 10 MILES OF (insert: the
address of the proposed location of the new 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 spa first sells
memberships) OR IF THE NEW SPA DOES NOT REMAIN OPEN FOR 30 DAYS."
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.306. FINANCE CHARGE NOTICE. A contract that contains a
finance charge as defined by the Truth in Lending Act (15 U.S.C.
Section 1601 et seq.) or Regulation Z (12 C.F.R. Part 226) must
state in at least 10-point type that is boldfaced, capitalized,
underlined, or otherwise conspicuously distinguished from
surrounding written material:
"ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL
CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE
SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR WITH THE
PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT
EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER."
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.307. CANCELLATION OF CONTRACT FOR FULL REFUND. (a) A
member may cancel a contract and receive a full refund of the
payments made under the contract by sending, not later than
midnight of the third business day after the contract date,
written notice of cancellation, accompanied by proof of payment
made under the contract, by certified mail to the certificate
holder's home office.
(b) A certificate holder who receives notice under Subsection
(a) shall refund the payments made under the contract not later
than the 30th day after the date notice is received.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.308. CANCELLATION OF CONTRACT FOR PARTIAL REFUND. (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 spa and fails to provide alternative
facilities not more than 10 miles from the location of the health
spa;
(2) relocates the health spa more than 10 miles from its
location preceding the relocation; or
(3) fails to provide advertised services.
(b) A member who dies or becomes totally and permanently
disabled after the date a contract is entered into, or the
member's estate, may cancel the contract and receive a refund of
the unearned payments made under the contract by sending written
notice of cancellation by certified mail to the certificate
holder's home office. The certificate holder may require the
member, or the member's estate, to provide reasonable proof of
the member's death or disability.
(c) A certificate holder who receives notice under Subsection
(a) or (b) shall refund the unearned payments made under the
contract to the member, or the member's estate, as appropriate,
not later that the 30th day after the date notice is received.
(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 spa closes or relocates.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.309. PROOF OF PAYMENT. A receipt given to a purchaser
by a health spa when the purchaser makes a payment under a
contract constitutes proof of the payment.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.310. EFFECT OF CONTRACT ON THIRD-PARTY RIGHTS. A
contract may not require the purchaser to execute a note or
series of notes if separate negotiation of the notes cuts off as
to third parties a right of action or defense that the purchaser
may assert against the seller.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
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 spa
owner or operator.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
SUBCHAPTER H. PREPAYMENTS AND ESCROW
Sec. 702.351. MEMBERSHIP PREPAYMENT. A certificate holder may
offer for sale, or sell, a membership in a health spa before the
date the health spa opens.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.352. ESCROW DEPOSIT REQUIRED. (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 spa shall deposit the prepayment in an escrow account
established with a financial institution insured by the Federal
Deposit Insurance Corporation.
(b) A person required to make a deposit under Subsection (a)
shall:
(1) not later than the 14th day after the date the person first
accepts a prepayment:
(A) deposit the prepayments received; and
(B) submit to the secretary of state:
(i) a notarized statement that identifies the financial
institution and the name in which the escrow account is held; and
(ii) a signed statement on a form approved by the secretary of
state that authorizes the secretary to direct inquiries to the
financial institution regarding the escrow account; and
(2) after the first deposit is made under this section, deposit
subsequent prepayments not less frequently than biweekly.
(c) A certificate holder shall maintain an escrow account under
this section until the 30th day after the date the certificate
holder's health spa opens.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
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 spa
in the state for not less than two years before the date the
certificate holder first sells a membership in the health 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 spa owned or operated by the
certificate holder relating to the closing of the health spa or
the failure of the health spa to open; and
(B) a member of a health 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 spa owned
or operated by the certificate holder, relating to the closing of
the health spa or the failure of the health 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 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 spa closed:
(1) as a result of a natural disaster and the closing did not
exceed one month; or
(2) to relocate the health 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 spas operated by the certificate
holder on the first day of that two-year period.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.354. DUTY OF FINANCIAL INSTITUTION. A financial
institution in which an escrow account is established under
Section 702.352 shall hold each prepayment in the account as
escrow agent for the benefit of the member who made the
prepayments.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
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
spa that is the subject of the contract does not open before the
181st day after the date the health spa first sells a membership
in the health spa or does not remain open for at least 30 days
unless:
(1) an alternative health spa operated by the seller is located
not more than 10 miles from the location of the health spa that
is the subject of the contract; and
(2) the member is authorized to use the facilities of the
alternative health spa.
(b) A member who is authorized to use the facilities of an
alternative health spa under Subsection (a) is entitled to
receive a full refund of the prepayment made under the contract
if the health spa that is the subject of the contract does not
open before the 361st day after the date the health spa first
sells a membership in the health spa or does not remain open for
at least 30 days.
(c) For purposes of this section, the date a health spa opens
does not depend on whether the services of the health spa that
were advertised before the opening, or promised to be made
available, are included in the contract.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
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 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 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 spa.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
SUBCHAPTER I. PROHIBITED PRACTICES
Sec. 702.401. WAIVER PROHIBITED. A person, including a person
who buys a health 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.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.402. PROHIBITED ACTS. (a) A seller or certificate
holder may not:
(1) offer a special offer or discount to fewer than all
prospective members of the health 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 spa staff;
(B) the availability, quality, or extent of the facilities or
services of the health 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.
(b) A certificate holder may not:
(1) fail or refuse to:
(A) file or amend an application for registration as required by
Subchapter C;
(B) file or post, or maintain, the security required by
Subchapter D; or
(C) deposit prepayments in an escrow account as required by
Subchapter H;
(2) advertise that the certificate holder is bonded by the
state; or
(3) sell a membership plan that is not included in the list
required by Section 702.302(a).
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.403. APPLICATION OF DECEPTIVE TRADE PRACTICES ACT. (a)
A person who violates this chapter commits a false, misleading,
or deceptive act or practice within the meaning of Section 17.46,
Business & Commerce Code.
(b) A public or private right or remedy under Chapter 17,
Business & Commerce Code, may be used to enforce this
chapter.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.404. INFORMATION REQUIRED IN ADVERTISEMENT. A health
spa operator may not advertise in any print or electronic medium
unless the advertisement includes the health spa operator's
certificate of registration number or an identification number
issued as provided by Section 702.301(b).
Added by Acts 2005, 79th Leg., Ch.
908, Sec. 7, eff. September 1, 2005.
SUBCHAPTER J. ADMINISTRATIVE ENFORCEMENT AND DISCIPLINARY ACTIONS
Sec. 702.451. DISCIPLINARY ACTIONS. After notice and hearing,
the secretary of state may deny an application for a certificate
of registration, or permanently revoke or suspend for a definite
period a health 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 spa location as required by Subchapter D; or
(3) failed to provide the contract disclosure language required
by Subchapter G.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.452. NOTICE REQUIREMENT BEFORE HEALTH SPA CLOSING. (a)
At least 30 days before the date a health spa is scheduled to
close or relocate, the certificate holder shall
contemporaneously:
(1) post, inside and outside each entrance to the health spa, a
notice stating:
(A) the date the health spa is scheduled to close or relocate;
(B) that a member of the health spa may, not later than the 90th
day after the date the health spa closes or relocates, file with
the secretary of state a claim to recover actual financial loss
suffered by the member as a result of the health spa closing;
and
(C) the procedures for perfecting a security claim; and
(2) notify the secretary of state in writing of the health spa
closing or relocation and the date that the notice was first
posted.
(b) The notice posted under Subsection (a)(1) must be:
(1) at least 8-1/2 by 11 inches in size; and
(2) posted continuously for at least 30 days.
(c) If the certificate holder fails to post the notice required
by Subsection (a)(1) within the time specified, the secretary of
state, not later than the 30th day after the date the secretary
discovers that a health spa is closed, shall post the notice
required under Subsection (a)(1).
(d) After receiving a notice under Subsection (a)(2) or
otherwise discovering that a health 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.
(e) The secretary of state shall, not later than the 10th day
after the date the secretary receives notice or otherwise
discovers that a health spa is closed, notify the appropriate
surety company or obligor of the administrative proceedings
pending under Subsection (a)(1).
(f) 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 spa.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Amended by Acts 2001, 77th Leg., ch. 756, Sec. 3, eff. Sept. 1,
2001.
Amended by:
Acts 2005, 79th Leg., Ch.
908, Sec. 8, eff. September 1, 2005.
Acts 2005, 79th Leg., Ch.
908, Sec. 9, eff. September 1, 2005.
SUBCHAPTER K. CIVIL REMEDY
Sec. 702.501. FILING OF SUIT; VENUE. (a) A member may file
suit against a seller if:
(1) the seller violates this chapter; and
(2) the seller's violation causes injury to the member.
(b) Venue for a suit filed under Subsection (a) is in a court
located in:
(1) Travis County; or
(2) the county in which:
(A) the seller resides;
(B) the seller's principal place of business is located;
(C) the seller is doing business;
(D) the member resides; or
(E) the transaction that is the subject of the suit occurred.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.502. STATUTE OF LIMITATIONS. A member must file a suit
under Section 702.501 not later than the later of:
(1) the first anniversary of the date the attorney general or
district or county attorney concludes a suit filed under Section
702.552; or
(2) the second anniversary of the date the seller's violation of
this chapter is discovered.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.503. RECOVERY. In a suit filed under Section 702.501,
a court may award:
(1) actual damages;
(2) equitable relief;
(3) punitive damages; or
(4) reasonable attorney's fees and court costs to the prevailing
party.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.504. TEMPORARY CLOSING. For purposes of this
subchapter, the closing of a health 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 spa not more than 10 miles from
its location preceding the relocation.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
SUBCHAPTER L. ENFORCEMENT AND PENALTIES
Sec. 702.551. INVESTIGATIVE AND ENFORCEMENT AUTHORITY. (a) The
attorney general or a district or county attorney may:
(1) investigate an alleged violation of this chapter; and
(2) enforce any penalty or remedy authorized by this chapter.
(b) The attorney general, a district or county attorney, or the
secretary of state may recover reasonable expenses, including
court costs, attorney's fees, investigative costs, witness fees,
and deposition expenses, incurred in obtaining an injunction or
recovering a civil penalty under this subchapter.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.552. SUIT FOR ENFORCEMENT. (a) The attorney general
or a district or county attorney may file suit against a person
who violates, or threatens to violate, this chapter to:
(1) obtain an injunction to enjoin the person from violating
this chapter; or
(2) recover a civil penalty under Section 702.553.
(b) Venue for a suit filed under this section is in a district
court located in:
(1) Travis County; or
(2) the county in which the defendant resides.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.553. AMOUNT OF CIVIL PENALTY. (a) Except as provided
by Subsection (b) and Section 702.554, a person who violates this
chapter is subject to a civil penalty in an amount not to exceed
$1,000 for a single violation.
(b) If more than one civil penalty is assessed against the same
person, the total amount of civil penalties assessed may not
exceed $25,000.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.554. VIOLATION OF INJUNCTION. (a) The attorney
general or a district or county attorney may file suit to recover
a civil penalty against a person who violates an injunction
issued under this subchapter in an amount not to exceed $25,000
for a single violation. If more than one civil penalty is
assessed against the same person, the total amount of civil
penalties assessed under this section may not exceed $50,000.
(b) Venue for a suit filed under this section is in the district
court that issued the injunction that is the subject of the civil
penalty.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.555. DEPOSIT IN COUNTY FUND. A civil penalty collected
under this subchapter by a district or county attorney shall be
deposited to the credit of the general fund of the county.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.556. CRIMINAL OFFENSE: VIOLATION OF CHAPTER. (a) A
person commits an offense if the person knowingly operates, or
attempts to operate, a health spa in violation of Subchapter C,
D, or H.
(b) An offense under this section is a Class A misdemeanor.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.557. CRIMINAL OFFENSE: INTERFERENCE WITH INVESTIGATION.
(a) A person commits an offense if with actual notice that the
attorney general, or a district or county attorney, has
initiated, or plans to initiate, an investigation under this
chapter the person intentionally conceals, alters, destroys, or
falsifies a document or record that is relevant or material to
the investigation.
(b) An offense under this section is a Class A misdemeanor.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.
Sec. 702.558. CRIMINAL OFFENSE: NONCOMPLIANCE WITH SUBPOENA OR
INVESTIGATIVE DEMAND. (a) A person commits an offense if, after
receiving a subpoena or civil investigative demand issued under
Section 17.61, Business & Commerce Code, the person
intentionally falsifies or withholds relevant material, including
a document or record, that is not privileged.
(b) An offense under this section is a misdemeanor punishable by
a fine not to exceed $2,000.
Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999.