47-18-321 - Surety bond Applicability Filing of audited financial statement. - Tennessee Statutes

47-18-321. Surety bond Applicability Filing of audited financial statement.

(a)  In order to provide a degree of protection to members of health clubs, each health club shall post a bond of twenty-five thousand dollars ($25,000) with the department of commerce and insurance for each location conducting business in this state. The bond may be made through deposit of cash, a certificate of deposit, securities or with a bond issued by a corporate surety acceptable to the commissioner.

(b)  The bond shall be maintained for two (2) years following the date on which the health club location ceases to conduct business in this state.

(c)  In an action brought by the attorney general and reporter pursuant to part 1 of this chapter, the attorney general and reporter shall have the right to request that the total amount of the bond posted by the health club be awarded to the state for consumer restitution.

(d)  This section shall not apply to any health club or health club operator that has, for at least seven (7) consecutive years, operated under substantially the same ownership and control and maintained a satisfactory registration with the division.

(e)  (1)  In lieu of the surety bond required in this section, a health club may file with the department of commerce and insurance a current audited financial statement prepared by a certified public accountant licensed in this state that demonstrates to the department that either the health club or its operator has a financial net worth of at least ten million dollars ($10,000,000) available to satisfy any claims imposed by the division.

     (2)  Any health club that files an audited financial statement in lieu of posting the surety bond required by this section shall annually file an updated audited financial statement that complies with subdivision (e)(1). Within thirty (30) calendar days of receiving information that would render the health club ineligible for exemption from the surety bond requirement under this subsection (e), either the health club or its operator must notify the division of the change in its financial status and post the required surety bond with the department.

(f)  Any health club subject to this section and registered with the division on June 5, 2008, shall post a surety bond or file an audited financial statement on or before July 1, 2010.

[Acts 2008, ch. 1107, § 1; 2009, ch. 229, § 1.]