A Tennessee health club bond is a $25,000 surety bond a health club must post for each location it operates in the state. Under Tenn. Code Ann. 47-18-318, the bond amount is set by the commissioner of commerce and insurance, and if no amount has been set by rule, the bond is $25,000 for each location doing business in Tennessee. The amount is flat per location. It is not tiered by the number of members or prepaid contracts. The bond protects members: anyone who enters a health club agreement that the operator does not fulfill can make a claim against it, and the attorney general can request that the full bond be awarded to the state for consumer restitution. A club with a financial net worth of at least $10 million can file an audited financial statement instead of posting the bond.
| Item | Detail |
|---|---|
| Who requires it | The Tennessee Department of Commerce and Insurance, under the Tennessee Consumer Protection Act (Health Clubs) |
| Who must post it | Each health club, for each location conducting business in Tennessee, as part of registration |
| Governing law | Tenn. Code Ann. 47-18-318 (surety bond), within the Health Clubs part, Tenn. Code Ann. 47-18-301 through 47-18-319 |
| Official form | The State of Tennessee Department of Commerce and Insurance health club bond form [VERIFY against tn.gov/commerce: confirm the exact current form name or number and where operators obtain it. The form reviewed for this draft was a copy hosted off the state site.] |
| Bond amount | $25,000 per location (the statutory default). The commissioner may set a different amount by rule. [VERIFY against tn.gov/commerce: confirm no rule currently sets an amount other than $25,000 per location.] |
| Premium basis | [CLIENT FLAG: insert All n One premium structure, e.g. percentage of the $25,000 bond amount by credit tier] |
| Coverage term | Held continuously while you operate, plus a two-year tail: the bond must be maintained for two years after a location ceases to conduct business in Tennessee. The certificate of registration is separately valid for one year and is renewed annually. |
| Obligee | The State of Tennessee, Department of Commerce and Insurance [VERIFY against the official bond form on tn.gov/commerce: confirm the exact obligee wording and which division now administers filings.] |
How much is the bond, and what if I have more than one location?
The amount is straightforward: $25,000 per location. Tenn. Code Ann. 47-18-318 says the commissioner of commerce and insurance sets the required bond amount, and if the commissioner has not promulgated a rule setting the level, the bond is $25,000 for each location doing business in Tennessee. There is no membership-size schedule. A larger club and a smaller club at the same location post the same $25,000. If you run more than one location, you post $25,000 for each one.
| Situation | Required bond |
|---|---|
| One health club location (open and operating) | $25,000 |
| Each additional location | $25,000 per location |
| Net worth of at least $10 million | No surety bond required if you file a current audited financial statement instead (see below) |
There is one separate case with a different number. If a club wants to sign members or take payment before its facility is fully operational (a pre-opening or pre-sale situation), Tenn. Code Ann. 47-18-305 requires a $25,000 bond in favor of the state, and the commissioner may require more than $25,000, up to $200,000, if the club’s financial condition is not strong enough to protect prospective buyers. That $200,000 ceiling applies only to the pre-opening bond. It does not change the $25,000 amount for a normal, fully operational location. [VERIFY against tn.gov/commerce and Tenn. Code Ann. 47-18-305: confirm the pre-opening bond amount, the $200,000 discretionary ceiling, and when it applies.]
What does the bond cover?
The bond protects health club members, not the state’s tax collection. Under Tenn. Code Ann. 47-18-318, any person who enters a health club agreement that the operator does not fulfill can make a claim against the bond. In an enforcement action, the attorney general and reporter can request that the total amount of the bond be awarded to the state for consumer restitution.
Key points about coverage:
- It protects consumers (club members) who paid for memberships or services the club did not deliver, for example when a club takes prepaid dues or fees and then closes or fails to open.
- The bond is a backstop, not a substitute for honoring your contracts. It pays members if you do not.
- Total payouts cannot exceed the bond amount. In the pre-opening context, the statute states the surety’s liability may not exceed the total bond regardless of how many claims are filed. The same ceiling logic applies to the $25,000 operating bond.
- The bond stays in force after you close. It must be maintained for two years following the date a location ceases to conduct business in Tennessee, so members with unresolved claims still have something to claim against.
How much does the bond cost?
You do not pay the full $25,000. You pay a premium, which is a small percentage of the bond amount and is set mainly by your credit.
[CLIENT FLAG: insert All n One Insurance pricing for the Tennessee health club bond, e.g. premium rate range by credit tier and one worked example such as “a $25,000 bond for $X per year.” Do not publish a premium number until All n One provides it.]
Because the required bond is a fixed $25,000 per location, the premium is predictable and scales with the number of locations you bond rather than with your membership count. [CLIENT FLAG: confirm whether All n One quotes this bond on a flat annual fee or as a percentage of the bond amount, and whether multi-location clubs are quoted per location.]
Can I skip the bond? The $10 million net worth alternative and other exemptions
Tennessee law gives a few ways out of posting the surety bond.
- $10 million net worth. Under Tenn. Code Ann. 47-18-318(e), instead of posting the bond, 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 Tennessee, showing that the health club or its operator has a financial net worth of at least $10 million available to satisfy claims. A club that uses this route must file an updated audited statement every year, and if it stops qualifying it has 30 days to notify the department and post the bond.
- Seven years of established operation. Under Tenn. Code Ann. 47-18-318(d), the bond requirement does not apply to a health club or operator that has operated for at least seven consecutive years under substantially the same ownership and control and has maintained a satisfactory registration with the Department of Commerce and Insurance.
These are the exemptions from the bond itself. Note that a separate provision, Tenn. Code Ann. 47-18-314, limits down payments to 30 percent of the total agreement cost unless the club holds a certificate of exemption, which requires a net worth over $250,000 per location and five years of substantially the same ownership. That certificate is about down payments, not the surety bond. [VERIFY against tn.gov/commerce and the current Health Clubs part: confirm the exemption thresholds, the annual audited-statement filing, and that the seven-year exemption still reads this way.]
What counts as a health club?
Tennessee regulates for-profit health clubs under the Health Clubs part of the Consumer Protection Act (Tenn. Code Ann. 47-18-301 and following). A health club generally means a business that offers facilities or services for physical fitness, exercise, or weight control, and a health club agreement is the membership contract a buyer signs. [VERIFY against Tenn. Code Ann. 47-18-301: confirm the exact statutory definitions of “health club,” “operator,” and “health club agreement,” including any exclusions, before publishing. The definitions were not read verbatim for this draft.]
How do I get bonded and register my Tennessee health club?
- Confirm you must register. For-profit health clubs operating in Tennessee register with the Department of Commerce and Insurance and hold a current certificate of registration for each location.
- Check whether an exemption fits. If your club or operator has a net worth of at least $10 million, you can file an audited financial statement instead of a bond. If you have operated for at least seven consecutive years under substantially the same ownership with satisfactory registration, the bond requirement may not apply.
- Get a surety bond quote. Apply with All n One Insurance for the $25,000 bond (one per location). Approval and premium depend mainly on your credit.
- Receive and sign your bond. All n One issues the bond, made with a corporate surety authorized in Tennessee, in favor of the State of Tennessee, Department of Commerce and Insurance. [VERIFY against the official bond form on tn.gov/commerce: confirm the exact obligee wording and form.]
- File your registration application. Submit the application on the department’s form for each location, with the required fee and copies of your membership and health club agreements, plus a current financial statement prepared by a certified public accountant. [VERIFY against tn.gov/commerce: confirm the current application form, the per-location registration fee (the statutory default is $250 per location if no rule sets another amount), and where to file, including which division now administers health club registration.]
- Renew every year. A certificate of registration is valid for one year from issuance and must be renewed before it expires. Keep your bond in force the entire time you operate, and for two years after you close a location.
Frequently asked questions
Who has to post a Tennessee health club bond?
Each for-profit health club, for each location it operates in Tennessee, as part of registering with the Department of Commerce and Insurance. A club can avoid the bond by qualifying for the $10 million net worth alternative or the seven-year established-operation exemption.
How much is the bond?
$25,000 per location. Under Tenn. Code Ann. 47-18-318, that is the amount when the commissioner has not set a different level by rule. The amount does not change with the size of your membership.
Is the amount based on how many members I have?
No. Tennessee uses a flat $25,000 per location. Unlike some other states, it does not scale the bond by member count or by the number of prepaid contracts.
Can I avoid the bond if my company is financially strong?
Yes. Under Tenn. Code Ann. 47-18-318(e), a club with a financial net worth of at least $10 million can file a current audited financial statement, prepared by a Tennessee-licensed CPA, instead of the bond. You must refile an updated audited statement each year, and post a bond within 30 days if you no longer qualify.
What if I have not opened yet but want to pre-sell memberships?
A separate rule, Tenn. Code Ann. 47-18-305, lets a club take payment before its facility is fully operational only if it posts a $25,000 bond in favor of the state, and the commissioner may require up to $200,000 if the club’s finances are not strong enough. That is the pre-opening bond, which is different from the $25,000 bond for a fully operating location.
What does the bond protect?
Your members. If your club takes payment for memberships or services and does not deliver, a member who signed a health club agreement can claim against the bond, and the attorney general can request the full bond for consumer restitution.
How long do I have to keep the bond?
For as long as you operate, plus a two-year tail. The bond must be maintained for two years after a location stops doing business in Tennessee, so late claims are still covered. Your certificate of registration is separately renewed every year.
How much will the bond cost me?
[CLIENT FLAG: insert All n One premium guidance, e.g. a percentage-of-bond-amount range by credit tier and a worked example for a $25,000 bond. Do not publish a premium figure until All n One provides it.]
