Section 2171 - Financial security required(a) Filing of financial security.--Before entering into a health club contract for health club services, a health club shall file and maintain with the director, in form and substance satisfactory to him, a bond with corporate surety from a company authorized to transact business in this Commonwealth or an irrevocable letter of credit from a bank insured by the Federal Deposit Insurance Corporation (FDIC) in the amounts indicated below: (1) Health club contracts for no more than 12 months--$50,000 bond or letter of credit.(2) Any health club contract for more than 12 months but no more than 24 months--$100,000 bond or letter of credit.(3) Any health club contract for more than 24 months--$200,000 bond or letter of credit. However, any health club that certifies in writing with the director that it will sell and maintain health club contracts for no more than 24 months and with no more than the number of persons indicated below shall, for so long as it abides by this certification, be required to file with the director such financial security only in the amounts indicated below:
300 persons--$50,000 bond or letter of credit
150 persons--$25,000 bond or letter of credit
(b) Duration.--The financial security shall be filed and maintained regardless of whether the health club facilities are as yet completed and open to members and shall not be canceled or terminated except with the consent of the director.(c) Number.--Each separate location where health club services are offered shall be considered a separate health club and shall file separate financial security with respect thereto, even though the separate locations are owned by the same person.(d) Purpose.--The financial security shall be for the exclusive purpose of providing buyer refunds and shall not be deemed an asset of the health club for bankruptcy or any other purpose. The buyer's claim to any money under this section shall be prior to that of any creditor of the health club.(e) Certification of compliance.--All health clubs shall certify to the director on or before June 1 of each year that the appropriate financial security remains in effect.1989, Dec. 21, P.L. 672, No. 87. § 11, effective in 180 days.