Tennessee § 47-18-314 - Compliance exemption — Requirements.

§ 47-18-314. Compliance exemption — Requirements.

It is an offense to accept a down payment for a health club agreement in excess of thirty percent (30%) of the total cost of the agreement unless, as of January 1 of the year in which the health club agreement was entered into: The health club has a net worth in excess of two hundred fifty thousand dollars ($250,000) per location where health club services or facilities are provided; and The health club has operated under substantially the same ownership and control for at least five (5) years. For the purpose of calculating net worth as provided in subsection (a), the following are excluded: Assets that represent prepayment for future services; and Accounts receivable due from health club members for future services. Any health club claiming the exemption pursuant to subsection (a) shall maintain written documentation establishing proof that the requirements of subsection (a) have been met as of January 1 of each year the exemption is claimed. Such proof shall be retained for a minimum of five (5) years from the end of the year in which the exemption is claimed. This documentation shall be made available for examination upon request of any law enforcement agency or the attorney general. A refusal to provide such documentation shall constitute a violation of this part. Acts 1989, ch. 460, § 12; 2015, ch. 339, § 18; 2016, ch. 858, § 12; 2019, ch. 459, § 16. Compiler's Notes. For codification of Acts 1989, ch. 460, see the Session Law Disposition Tables in Volume 13. Acts 2019, ch. 459, § 55 provided that the division of consumer affairs in the department of commerce and insurance shall coordinate with the attorney general and reporter to transfer all documents, information, systems, and other material deemed relevant to the operation of the division of consumer affairs of the office of the attorney general and reporter. Amendments. The 2015 amendment substituted “commissioner” for “division” through the section; substituted “the certificate” for “such certificate” in (b); deleted “all of” preceding “this part” at the end of (d); substituted “fee in an amount as set by the commissioner; provided, however, that if no amount has been set by rule, then the fee shall be” for “fee of” in (g)(1); substituted “this state” for “Tennessee” at the end of (g)(2); substituted “prepayment” for “pre-payment” in (i)(1); and, in (j), substituted “this part that prohibit” for “this part which prohibit” near the beginning and substituted “shall be valid only” for “shall only be valid” near the end. The 2016 amendment rewrote the section, which read: “ (a) It is unlawful to accept a down payment for a health club agreement in excess of thirty percent (30%) of the total cost of the agreement without a valid certificate of exemption.“(b) Each holder of a certificate of exemption shall display the certificate in a conspicuous place at each location where health club services or facilities are provided.“(c) Certificates of exemption shall be valid for one (1) year from the date of issuance.“(d) Application for renewal of a certificate of exemption shall be submitted before the expiration date on forms furnished by the commissioner, and shall contain a sworn certification by the holder that the requirements for exemption continue to be met, and that the holder is in full compliance with this part.“(e) In the event a holder of a certificate of exemption ceases to meet the requirements for exemption, then the certificate of exemption shall be invalid.“(f) Within ten (10) days after any change in the information contained in the original application or the application for renewal, each holder of a certificate of exemption shall notify the commissioner of the change by registered or certified mail.“(g) An application for exemption shall be submitted on forms furnished by the commissioner and shall be accompanied by:“(1) A nonrefundable application fee in an amount as set by the commissioner; provided, however, that if no amount has been set by rule, then the fee shall be fifty dollars ($50.00); and“(2) A current personal or corporate financial statement prepared by a public accountant who holds a valid permit to practice in this state.“(h) A certificate of exemption shall be granted; provided, that the application provides proof satisfactory to the commissioner that the following criteria are met:“(1) The applicant has a net worth in excess of two hundred fifty thousand dollars ($250,000) per location where health club services or facilities are provided; and“(2) The applicant has operated under substantially the same ownership and control for at least five (5) years.“(i) For the purpose of calculating net worth as provided in subsection (h), the following are excluded:“(1) Assets which represent prepayment for future services; and“(2) Accounts receivable due from health club members for future services.“(j) Any health club which had applied for and obtained an exemption from the bond requirement under prior law shall be exempt from the provisions of this part that prohibit acceptance of a down payment for a health club agreement in an amount in excess of thirty percent (30%) of the total cost of the agreement. The exemption established by this subsection (j) shall be valid only as long as the health club operates under the same or substantially the same ownership and control that existed when the exemption was granted under prior law.” The 2019 amendment substituted “the attorney general” for “the division of consumer affairs within the department of commerce and insurance” in the next to last sentence of (c). Effective Dates. Acts 2015, ch. 339, § 31. July 1, 2015; May 4, 2015, for the purpose of rulemaking. Acts 2016, ch. 858, § 19. July 1, 2016. Acts 2019, ch. 459, § 56. September 30, 2019. Cross-References. Certified mail in lieu of registered mail, § 1-3-111 . Collateral References. Construction and applicability of state statutes governing health club membership contracts or fees. 48 A.L.R.6th 223.