Did Tennessee's Health Club Bond Act apply to a CrossFit, yoga, or barre studio that sold prepaid packages of group classes?

Plain-English summary

The Tennessee Department of Commerce & Insurance asked the AG whether a business that exclusively or primarily offered regular, scheduled group exercise classes (think CrossFit boxes, yoga studios, barre studios, spin studios) for prepaid packages of visits or memberships fell under the Health Club Bond Act, Tenn. Code Ann. §§ 47-18-301 to -319.

The AG said yes, across three sub-questions.

Is the business a "health club"? Yes. The statutory definition reaches any "enterprise, however styled," that offers facilities or services for the development or preservation of physical fitness through exercise on a regular, fulltime basis, pursuant to a health club agreement (§ 47-18-301(4)(A)). A scheduled-class studio offering exercise instruction routinely fits all four elements. The three statutory exceptions (organizations primarily teaching martial arts; weight-loss services without physical exercise; nonprofit clubs and nonprofit-hospital clubs) do not generally apply to a group exercise studio.

Is a prepaid package a "health club agreement"? Yes. The Act defines that term broadly as "an agreement whereby a buyer purchases, or is obligated to purchase, any right to use health club facilities or services" for personal use (§ 47-18-301(5)(A)). The structure of the payment, per session, per class, per week, month, or year, set visits or unlimited, does not matter. The customer is buying or obligating to buy the right to use the business's services.

Does the "personal training services" exception save the business from the Act? No. Tennessee Code Ann. § 47-18-301(5)(B)(i) carves out personal training agreements, but the AG read "personal training services" to mean one-on-one instruction in a private setting. Group instruction, even if the trainer occasionally tailors a movement for an individual class member, is not personal training. Reading the exception broadly would swallow the rule (most gyms include some individualized attention), defeating the Act's remedial purpose, which is to protect consumers when a health club takes prepayments and then fails to open or stays in business.

Result: a CrossFit-style studio with prepaid memberships was a "health club" required to comply with the Act's bond and disclosure regime.

Currency note

This opinion was issued in 2015. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: What did "compliance with the Act" mean in practice?
A: The Health Club Bond Act sets up registration, disclosure, contract-form, and bonding requirements for businesses that take prepayments for future services. The point is to ensure a remedy for consumers if the gym closes after collecting membership fees. The opinion did not detail the specific compliance obligations but signaled that the Department of Commerce & Insurance treated the studio as subject to those obligations.

Q: What if the studio also offered one-on-one sessions?
A: The opinion focused on businesses primarily or exclusively offering group classes. A studio with a meaningful one-on-one training component would have a different mix; the AG left room for case-by-case analysis ("There may, of course, be specific facts . . . that could change the analysis so that services provided by the entity would in fact be 'personal training services'").

Q: Did the martial-arts exception apply to a kickboxing-fitness studio?
A: That depends on what the studio "primarily" offered. The exception in § 47-18-301(4)(B)(i) covers "an organization primarily operated for the purpose of teaching a particular form of martial arts such as judo or karate." A studio teaching martial arts (judo, karate, BJJ, mixed martial arts in earnest) likely fit; a "kickboxing fitness" studio whose main product is cardio-style workouts probably did not, and would likely fall under the general health club rules.

Q: Did the Act apply to a nonprofit YMCA or hospital-run wellness center?
A: No. Tenn. Code Ann. § 47-18-301(4)(B)(iii) excluded tax-exempt nonprofit health clubs and clubs operated as part of a nonprofit hospital. The opinion assumed those exceptions did not apply to the typical for-profit group exercise studio.

Background and statutory framework

The Tennessee Consumer Protection Act of 1977 (Tenn. Code Ann. §§ 47-18-101 to -5542) is "deemed remedial legislation" and must be "construed to effectuate" its protective purposes (§ 47-18-115). The Health Club Bond Act, codified within the Consumer Protection Act, addresses a particular abuse pattern: a fitness business takes prepayment for months or years of access, then closes or fails to open, stranding members without recourse. The Tennessee Supreme Court in S. Fitness & Health and intermediate appellate decisions in Floyd v. Club Sys. recognized this remedial purpose.

To work, the Act has to reach the businesses where consumers are at risk. Group-class studios with prepaid packages present exactly the same pattern as a traditional gym with annual memberships, so the AG's broad reading aligns the statute with its remedial purpose.

Citations and references

Statutes:

• Tenn. Code Ann. §§ 47-18-301 to -319 (Health Club Bond Act)
• Tenn. Code Ann. § 47-18-301(4)(A) (definition of "health club")
• Tenn. Code Ann. § 47-18-301(4)(B)(i)-(iii) (exceptions: martial arts, weight-loss without exercise, nonprofit)
• Tenn. Code Ann. § 47-18-301(5)(A) (definition of "health club agreement")
• Tenn. Code Ann. § 47-18-301(5)(B)(i) ("personal training services" exception)
• Tenn. Code Ann. § 47-18-115 (remedial-construction directive)

Cases:

• Fayne v. Vincent, 301 S.W.3d 162 (Tenn. 2009) (consumer protection purpose)
• Floyd v. Club Sys. of Tenn., 1999 WL 820610 (Tenn. Ct. App. July 20, 1999) (financial responsibility to members)
• State v. S. Fitness & Health, Inc., 743 S.W.2d 160 (Tenn. 1987) (rationale for health club regulation)
• Harris v. Haynes, 445 S.W.3d 143 (Tenn. 2014) (statutory construction)
• Johnson v. Hopkins, 432 S.W.3d 840 (Tenn. 2013) (every word given effect)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2015/op15-74.pdf

Original opinion text

STATE OF TENNESSEE
OFFICE OF THE ATTORNEY GENERAL
November 6, 2015

Opinion No. 15-74

Applicability of the Health Club Bond Act to Group Exercise Classes

Question 1

Is a business that exclusively or primarily offers regular, frequently scheduled, specialized group instructional workout classes a "health club" as defined in Tenn. Code Ann. § 47-18-301(4)(A)?

Opinion 1

Yes. As a general matter, a business that exclusively or primarily offers regular, frequently scheduled, specialized group instructional workout classes pursuant to a health club agreement would meet the statutory definition of a "health club," unless it otherwise falls under one of the statutory exceptions.

Question 2

If the business takes payment from its customers for the use of its services or facilities per session, per class, or per week(s), month(s), or year(s) for either a set number of visits or for unlimited visits, is there a "health club agreement" as defined in Tenn. Code Ann. § 47-18-301(5)(A)?

Opinion 2

Yes. The definition of "health club agreement" broadly applies to any agreement to purchase, or obligation to purchase, any right to use health club facilities or services, regardless of how the payment or visit package is structured.

Question 3

Are such agreements exempt from the Health Club Bond Act (Tenn. Code Ann. § 47-18-301 to -319) as "agreement[s] for personal training services," Tenn. Code Ann. § 47-18-301(5)(B)(i), because the group services offered by the business may include some specialized instructional components?

Opinion 3

No. Providing some specialized instruction to individual members of a group working out together in an exercise class likely does not constitute "personal training services" within the meaning of Tenn. Code Ann. § 47-18-301(5)(B)(i).

ANALYSIS

Tennessee's Health Club Bond Act ("Act"), like the Tennessee Consumer Protection Act of which it is part, is intended to protect consumers from unfair and deceptive business practices. See Fayne v. Vincent, 301 S.W.3d 162, 172 (Tenn. 2009). The Health Club Bond Act is specifically designed to make health clubs financially responsible to the health club members with whom they contract. Floyd v. Club Sys. of Tenn., No. 01-A-01-9807-CV-00399, 1999 WL 820610, at 4 (Tenn. Ct. App. July 20, 1999). This specific regulation of health clubs was deemed necessary because "significant consumer loss results when a health club sells memberships, and then fails to open, or fails to continue in business." State v. S. Fitness & Health, Inc.*, 743 S.W.2d 160, 163 (Tenn. 1987).

You have asked, in effect, whether a business that exclusively or primarily offers regular, frequently scheduled, specialized group instructional workout classes and that takes payment per session, per class, or per week(s), month(s), or year(s) for either a set number of visits or for unlimited visits is a "health club" regulated by the Act, or whether it falls within the "personal training services" exception and is therefore not subject to the Act.

Generally, a statute is construed to carry out the legislative intent without broadening or restricting the statute beyond what was intended. Harris v. Haynes, 445 S.W.3d 143, 146 (Tenn. 2014). When the meaning of the statutory language is clear, that plain meaning is applied without complicating the task. Id. Words are given their natural and ordinary meaning in the context in which they appear and in light of the statute's general purpose. Id. Every word in a statute is presumed to have meaning and must be given effect. Johnson v. Hopkins, 432 S.W.3d 840, 848 (Tenn. 2013). Specifically, as part of the Consumer Protection Act, the Health Club Bond Act is "deemed remedial legislation necessary for the protection of the consumers of the state of Tennessee and elsewhere," and so "shall be construed to effectuate [its remedial] . . . purposes and intent." Tenn. Code Ann. § 47-18-115.

The Act defines "health club" as: (1) any enterprise, however styled; (2) that offers services or facilities for the development or preservation of physical fitness through exercise, weight control, or athletics; (3) on a regular, fulltime basis; and (4) pursuant to a health club agreement. Tenn. Code Ann. § 47-18-301(4)(A). There are three exceptions to this definition: (1) an "organization primarily operated for the purpose of teaching a particular form of martial arts such as judo or karate" is not a health club; (2) "weight loss or control services which do not provide physical exercise services, facilities, or equipment" are not health clubs; and (3) tax-exempt nonprofit health clubs or health clubs operated as part of a nonprofit hospital are not "health clubs" within the meaning of the Act. Tenn. Code Ann. § 47-18-301(4)(B)(i)-(iii). We assume for purposes of this opinion that none of these exceptions applies to the kind of business that is the subject of your inquiry.

A "health club agreement" is defined as "an agreement whereby a buyer purchases, or is obligated to purchase, any right to use health club facilities or services; and such services or facilities are for personal, family, employee, or household use." Tenn. Code Ann. § 47-18-301(5)(A). But an agreement for "personal training services" is not a "health club agreement." Tenn. Code Ann. § 47-18-301(5)(B)(i).

A business that primarily or exclusively offers regular, frequently scheduled, specialized group instructional workout classes and that arranges with its customers for payment per session, per class, or per week(s), month(s), or year(s) for either a set number of visits or for unlimited visits meets the Act's definition of a "health club." See Tenn. Code Ann. § 47-18-301(4)(A). Such a business is an enterprise that, on a regular, fulltime basis, offers services or facilities for the development or preservation of physical fitness through exercise or athletics and does so pursuant to a "health club agreement."

Any agreement or obligation to buy the use of the services or facilities of such a business would appear to fit the Act's broad definition of a "health club agreement" regardless of how the payment/visit package is structured. Whether the business takes payment per session, per class, or per week(s), month(s), or year(s) for either a set number of visits or for unlimited visits, it is offering its services or facilities pursuant to a "health club agreement" because the customer is buying or is obligated to buy the right to use the services or facilities of a business that otherwise meets the definition of a "health club."

An agreement for "personal training services" is not, on the other hand, a "health club agreement" and would not be subject to the Act. Tenn. Code Ann. § 47-18-301(5)(B)(i). You have asked, therefore, whether specialized group instructional workout classes might constitute "personal training services" since a member of a group or class may from time to time get some individualized instruction or assistance. If such group workout classes were to qualify as "personal training," there would, by definition, be no "health club agreement," and the business referred to in your inquiry would be excluded from the definition of "health club" for lack of the requisite "health club agreement."

As commonly and customarily understood, "personal training services" are distinct from, and do not include, group instruction. The term "personal training services" is not defined in the Act, but the normal, customary understanding of the term encompasses physical conditioning services provided to one individual on a customized basis in a private setting. See New Oxford American Dictionary 1307, 1836 (3rd ed. 2010) (defining "personal" as "of, affecting, or belonging to a particular person rather than anyone else," and defining "training" as "the action of undertaking a course of exercise and diet in preparation for a sporting event").

Thus, in the context of the Act, "personal training" refers to the supervision of an individual in physical exercise in a private, one-on-one setting, as opposed to the supervision of individuals in a group setting. That the supervisor of an exercise group may occasionally provide targeted instruction or assistance to a particular member of the group is not in and of itself enough to convert what is group activity to personal, private, individual training. Moreover, if "personal training services" were read to exclude group services from the Act simply because a health club member might occasionally interact individually with a trainer at the health club, the Act would be rendered generally inapplicable and meaningless. The exception so broadly construed would swallow the rule, a result that would defeat rather than carry out the legislative intent of the Act and would undermine rather than effectuate the Act's remedial purposes. Accordingly, the group instructional classes do not constitute personal training services, and the "personal training services" exception to the definition of "health club agreement" would not apply to exclude from the Act the type of business entity you have described.

In sum, reading the plain language of the Health Club Bond Act in context and construing it liberally in light of its remedial purpose, as a general matter, a business that exclusively or primarily offers regular, frequently scheduled, specialized group instructional workout classes pursuant to a health club agreement would meet the statutory definition of a "health club" and would be subject to the Act.

HERBERT H. SLATERY III
Attorney General and Reporter

ANDRÉE SOPHIA BLUMSTEIN
Solicitor General

Requested by:
Benjamin Glover
Assistant General Counsel
Tennessee Department of Commerce & Insurance
500 James Robertson Parkway
Davy Crockett Tower
Nashville, Tennessee 37243