IC 24-5-7-1 Definitions
Sec. 1. As used in this chapter:
"Business day" means a day other than Sunday or a legal holiday.
"Buyer" means a purchaser of services under a contract for health
spa services.
"Contract" means a contract for health spa services entered into
after August 31, 1983. The term includes all financial agreements
provided or arranged by the health spa or the health spa's affiliates.
"Health spa" means any business entity, other than an entity that
is exempt from taxation under Section 501 of the Internal Revenue
Code, offering health spa services to the public.
"Health spa services" means instruction, training, or assistance in
physical culture, bodybuilding, exercising, reducing, figure
development, or any other health spa service, for the use of the
facilities of a health spa, figure salon, weight loss clinic, gymnasium,
or other facility used for the delivery of health spa services, or for
membership in any group, club, association, or organization formed
to deliver health spa services.
"Seller" means a seller of services under a contract for health spa
services. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.13.
IC 24-5-7-2 Contracts; requisites
Sec. 2. Every contract for health spa services shall be in writing
and a copy shall be furnished to the buyer at the time the contract is
formed. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.14.
IC 24-5-7-3 Contracts; term; limitations
Sec. 3. (a) No contract for health spa services may require
payments or financing by the buyer over a period in excess of
thirty-six (36) months from the date that the contract is entered into.
The term of a contract may not be measured by or be for the life of
the buyer.
(b) The term of a contract may not exceed three (3) years from the
date that the contract is entered into. A buyer may renew a contract
for additional periods, but the contract price for the renewal of a
contract must be at least twenty-four dollars ($24) per year. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.15.
IC 24-5-7-4 Contracts; time for performance; voidability
Sec. 4. (a) A contract for health spa services to be rendered at an
existing health spa facility must provide that the performance of the
agreed upon services is to begin within forty-five (45) days from the
date that the contract is entered into.
(b) A contract for health spa services at a planned spa facility or
spa facility under construction is voidable at the option of the buyer
if the health spa facilities and the agreed upon services are not
available within twelve (12) months from the date the contract is
entered into. As added by P.L.249-1983, SEC.1.
IC 24-5-7-5 Contracts; cancellation; notice; refunds
Sec. 5. (a) A copy of the buyer's cancellation rights under this
chapter shall be furnished in writing to the buyer at the time the
contract is formed.
(b) In at least 10 point boldface type, every contract for health spa
services must provide that the contract may be cancelled before
midnight of the third full business day after the buyer signs the
contract.
(c) A buyer may cancel the contract by written notice, in any
form, delivered in person or mailed by certified or registered mail to
the seller at the address specified in the contract. The notice must be
accompanied by the membership cards previously delivered to the
buyer.
(d) All money paid under a contract shall be refunded within
thirty (30) days of receipt of the notice of cancellation. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.16.
IC 24-5-7-6 Contracts; cancellation provisions; contingencies
Sec. 6. (a) In at least ten (10) point boldface type, every health spa
services contract that has not been cancelled under section 5 of this
chapter must provide that the buyer or the buyer's estate may cancel
the contract if any of the following occur:
(1) The buyer dies.
(2) The buyer becomes totally physically disabled for the
duration of the contract.
(3) The health spa facility operated by the seller is moved to a
location that is more than five (5) miles from the original
facility. However, if a health spa facility is closed at any site
and a facility with similar health spa services is operated less
than five (5) miles away from the closed facility, then the
buyer's contract may be transferred to the operating facility, if
the operator of the facility to which the contract is to be
transferred accepts the transfer.
(4) The services are no longer available as provided in the
contract because of the seller's permanent discontinuance of
operation.
(b) This section does not restrict the seller from offering or
providing in a contract additional or broader reasons for cancellation. As added by P.L.249-1983, SEC.1. Amended by P.L.12-1986, SEC.8.
IC 24-5-7-7 Contracts; cancellation provisions; evidence of disability or death
Sec. 7. The health spa may require and verify reasonable evidence
of total physical disability or death. In the case of total physical
disability, the health spa may also require that the buyer submit to a
physical examination by a doctor agreeable to the buyer and the
health spa. The cost of the examination shall be borne by the health
spa. As added by P.L.249-1983, SEC.1.
IC 24-5-7-8 Contracts cancelled; refunds; proration, cancellation of loan
agreements
Sec. 8. (a) All money paid pursuant to a contract for health spa
services that is cancelled under this chapter shall be refunded within
thirty (30) days of receipt of a notice of cancellation. However, in a
cancellation under section 6 of this chapter, the seller may retain the
portion of the total price representing the services used or completed
plus reimbursement for the expenses incurred in an amount not to
exceed twenty-five percent (25%) of the total contract price. In no
instance may the seller demand more than the full contract price from
the buyer.
(b) If the buyer has executed any credit or loan agreement to pay
for all or part of the cancelled health spa services, that agreement
shall also be cancelled and returned within thirty (30) days. Notice
of the duty described by this subsection must be included in each
health spa services contract, in at least ten (10) point boldface type. As added by P.L.249-1983, SEC.1. Amended by P.L.12-1986, SEC.9.
IC 24-5-7-9 Compliance with other provisions of law
Sec. 9. The provisions of this chapter are not exclusive and do not
relieve the parties from compliance with other applicable provisions
of law. As added by P.L.249-1983, SEC.1.
IC 24-5-7-10 Contracts; voidability for noncompliance; cure by seller; actions
Sec. 10. (a) A contract for health spa services that does not
comply with this chapter is voidable at the option of the buyer.
(b) The seller may cure noncompliance with this chapter, and no
legal action may be brought by the buyer for relief under this chapter
unless, following receipt of written notice of such noncompliance,
the seller:
(1) fails within thirty (30) days of receipt of the notice of
noncompliance to notify all buyers with whom the seller has
contracted since August 31, 1983, of the noncompliance; or
(2) fails to make all contracts for health spa services which the
seller has entered into after August 31, 1983, comply with this
chapter. As added by P.L.249-1983, SEC.1.
IC 24-5-7-11 Contracts; voidability for false information or advertisement
Sec. 11. Any contract for health spa services entered into in
reliance upon any willfully or fraudulently disseminated false or
misleading information, representation, notice, or advertisement of
the seller is void and unenforceable. As added by P.L.249-1983, SEC.1.
IC 24-5-7-12 Waiver of chapter provisions void
Sec. 12. Any waiver by the buyer of part or all of this chapter is
contrary to public policy and is void and unenforceable. As added by P.L.249-1983, SEC.1.
IC 24-5-7-13 Surety bonds; contracts for services to be rendered at planned
facilities
Sec. 13. A health spa that sells contracts for health spa services to
be rendered at a planned health spa facility or a health spa facility
under construction shall file with the secretary of state a bond issued
by a surety company admitted to do business in Indiana in the
amount of twenty-five thousand dollars ($25,000) or such greater
amount as the secretary of state may specify by rule. The health spa
is relieved from the obligation to maintain such a bond upon
commencing health spa service. As added by P.L.249-1983, SEC.1.
IC 24-5-7-14 Surety bonds; requisites; cancellation; notices; new bond
Sec. 14. (a) The state of Indiana shall be the obligee under the
bond.
(b) The bond shall be:
(1) executed by the health spa as principal and by a corporate
surety licensed to do business in Indiana as surety;
(2) in such form and shall contain such terms and conditions as
the secretary of state prescribes;
(3) conditioned upon the faithful performance of all obligations
of a health spa to construct or commence operations at its
planned facility; and
(4) effective from the date of filing with the secretary of state
and shall continue in full force and effect until cancelled.
(c) The total and aggregate liability of the surety on a bond is
limited to the amount specified in the bond.
(d) A health spa may not cancel a bond prior to the
commencement of health spa services without the prior written
approval of the secretary of state and without the secretary's approval
of a substitute bond so as to provide continuous bonding of the health
spa's activities prior to the commencement of health spa services.
(e) The surety on a bond may cancel a bond filed under this
chapter only after the expiration of ninety (90) days from the date the
surety, by registered or certified mail, return receipt requested, mails
to the secretary of state and to the principal on the bond a notice of
intent to cancel.
(f) Not later than thirty (30) days prior to the date upon which a
bond cancellation becomes effective, the health spa shall give written
notice to the secretary of state that a new bond has been obtained so
as to provide continuous bond coverage of the health spa's activities
prior to the commencement of health spa services. As added by P.L.249-1983, SEC.1.
IC 24-5-7-15 Surety bonds claims against bonds; hearing and determination;
distribution of bond proceeds
Sec. 15. (a) If any health spa fails, or is alleged to have failed, to
meet its obligations prior to the commencement of health spa
services, the secretary of state shall hold a hearing and determine
whether there has been such a failure, determine those persons who,
as buyers, have sustained financial losses recoverable under the bond
and, if appropriate, distribute the bond proceeds to the persons
sustaining losses, to the extent of their losses.
(b) Actions upon the bond and the right to payment under the
bond extend solely to the secretary of state. However, if the secretary
of state has not initiated an action upon the bond by scheduling and
holding a hearing within thirty (30) days of a written request to do
so, any claimant may initiate an action in the circuit court of Marion
County, Indiana, to require the secretary of state to take action.
(c) If, upon a hearing, the secretary of state determines that the
claims of persons who have sustained financial losses recoverable
under the seller's bond exceed the amount of the bond proceeds, the
proceeds shall be prorated among those persons according to the
ratio that each person's loss bears to the total amount of all proven
losses.
(d) The determination of the secretary of state as to liability under
the bond and the amount distributed under the bond is binding upon
the principal and surety of the bond.
(e) All hearings held under this section shall be held in
accordance with IC 4-21.5-3.
(f) The existence of the bond and the bond recovery procedure in
no way affect or alter any other right or remedy which a person may
have under applicable law. As added by P.L.249-1983, SEC.1. Amended by P.L.7-1987,
SEC.109. IC 24-5-7-16 Purchase of facility; assumption of membership contract liability;
preservation of actions or defenses
Sec. 16. (a) A purchaser of a health spa facility that offers health
spa services to the public assumes all membership contract liability
from the previous seller.
(b) Any right of action or defense arising out of a health spa
services contract that the buyer has against the seller is preserved
against an assignee of or successor to the contract. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.17.
IC 24-5-7-16.5 Refunds; options; repair and maintenance
Sec. 16.5. (a) Except as provided in subsection (d), if any of a
health spa's facilities or services described in the contract are no
longer provided before full receipt of the services and use of
facilities for which the buyer contracted, the buyer is entitled to a
refund based on the total consideration proportional to the elapsed
time portion of the contract at the time of the unavailability, or may
exercise the option provided by subsection (b).
(b) A buyer has the option, instead of the proportional refund
provided in subsection (a), to choose to complete the unused portion
of the contract, including renewal periods, at another location that is
owned, controlled, affiliated with, or operated by the seller. A
modification of the contract must be made in writing.
(c) This section does not restrict a health spa's ability to:
(1) make improvements to the facilities or services; or
(2) replace a facility or service with a superior facility or
service.
(d) If a health spa ceases to provide services or access to facilities
in order to perform regular maintenance or to repair equipment, a
buyer may not exercise the rights provided in subsection (a) or (b)
until the health spa has failed to provide services or access to
facilities for a continuous period of thirty (30) days. However, if a
health spa that has ceased to provide services or access to facilities
in order to perform regular maintenance or repair equipment is
unable to resume providing services or access to facilities within
thirty (30) days due to circumstances beyond the control of the
operator of the health spa, a buyer may not exercise the rights
provided in subsection (a) or (b) until the health spa has failed to
provide services or access to facilities for a continuous period of
sixty (60) days. As added by P.L.24-1989, SEC.18.
IC 24-5-7-17 Violations by buyer or seller; actions; penalties
Sec. 17. A purchaser of a health spa facility or a seller who
violates this chapter commits a deceptive act that is actionable by the
attorney general or by a buyer under IC 24-5-0.5, and is subject to the
penalties set forth in that chapter. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.19.
IC 24-5-7-18 Enforcement powers
Sec. 18. The secretary of state shall have all powers necessary to
accomplish the responsibilities assigned to him in this chapter
including but not limited to the authority to compel the production of
financial statements and such other information as the secretary of
state may deem necessary. As added by P.L.249-1983, SEC.1.
IC 24-5-7-1 Definitions
Sec. 1. As used in this chapter:
"Business day" means a day other than Sunday or a legal holiday.
"Buyer" means a purchaser of services under a contract for health
spa services.
"Contract" means a contract for health spa services entered into
after August 31, 1983. The term includes all financial agreements
provided or arranged by the health spa or the health spa's affiliates.
"Health spa" means any business entity, other than an entity that
is exempt from taxation under Section 501 of the Internal Revenue
Code, offering health spa services to the public.
"Health spa services" means instruction, training, or assistance in
physical culture, bodybuilding, exercising, reducing, figure
development, or any other health spa service, for the use of the
facilities of a health spa, figure salon, weight loss clinic, gymnasium,
or other facility used for the delivery of health spa services, or for
membership in any group, club, association, or organization formed
to deliver health spa services.
"Seller" means a seller of services under a contract for health spa
services. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.13.
IC 24-5-7-2 Contracts; requisites
Sec. 2. Every contract for health spa services shall be in writing
and a copy shall be furnished to the buyer at the time the contract is
formed. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.14.
IC 24-5-7-3 Contracts; term; limitations
Sec. 3. (a) No contract for health spa services may require
payments or financing by the buyer over a period in excess of
thirty-six (36) months from the date that the contract is entered into.
The term of a contract may not be measured by or be for the life of
the buyer.
(b) The term of a contract may not exceed three (3) years from the
date that the contract is entered into. A buyer may renew a contract
for additional periods, but the contract price for the renewal of a
contract must be at least twenty-four dollars ($24) per year. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.15.
IC 24-5-7-4 Contracts; time for performance; voidability
Sec. 4. (a) A contract for health spa services to be rendered at an
existing health spa facility must provide that the performance of the
agreed upon services is to begin within forty-five (45) days from the
date that the contract is entered into.
(b) A contract for health spa services at a planned spa facility or
spa facility under construction is voidable at the option of the buyer
if the health spa facilities and the agreed upon services are not
available within twelve (12) months from the date the contract is
entered into. As added by P.L.249-1983, SEC.1.
IC 24-5-7-5 Contracts; cancellation; notice; refunds
Sec. 5. (a) A copy of the buyer's cancellation rights under this
chapter shall be furnished in writing to the buyer at the time the
contract is formed.
(b) In at least 10 point boldface type, every contract for health spa
services must provide that the contract may be cancelled before
midnight of the third full business day after the buyer signs the
contract.
(c) A buyer may cancel the contract by written notice, in any
form, delivered in person or mailed by certified or registered mail to
the seller at the address specified in the contract. The notice must be
accompanied by the membership cards previously delivered to the
buyer.
(d) All money paid under a contract shall be refunded within
thirty (30) days of receipt of the notice of cancellation. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.16.
IC 24-5-7-6 Contracts; cancellation provisions; contingencies
Sec. 6. (a) In at least ten (10) point boldface type, every health spa
services contract that has not been cancelled under section 5 of this
chapter must provide that the buyer or the buyer's estate may cancel
the contract if any of the following occur:
(1) The buyer dies.
(2) The buyer becomes totally physically disabled for the
duration of the contract.
(3) The health spa facility operated by the seller is moved to a
location that is more than five (5) miles from the original
facility. However, if a health spa facility is closed at any site
and a facility with similar health spa services is operated less
than five (5) miles away from the closed facility, then the
buyer's contract may be transferred to the operating facility, if
the operator of the facility to which the contract is to be
transferred accepts the transfer.
(4) The services are no longer available as provided in the
contract because of the seller's permanent discontinuance of
operation.
(b) This section does not restrict the seller from offering or
providing in a contract additional or broader reasons for cancellation. As added by P.L.249-1983, SEC.1. Amended by P.L.12-1986, SEC.8.
IC 24-5-7-7 Contracts; cancellation provisions; evidence of disability or death
Sec. 7. The health spa may require and verify reasonable evidence
of total physical disability or death. In the case of total physical
disability, the health spa may also require that the buyer submit to a
physical examination by a doctor agreeable to the buyer and the
health spa. The cost of the examination shall be borne by the health
spa. As added by P.L.249-1983, SEC.1.
IC 24-5-7-8 Contracts cancelled; refunds; proration, cancellation of loan
agreements
Sec. 8. (a) All money paid pursuant to a contract for health spa
services that is cancelled under this chapter shall be refunded within
thirty (30) days of receipt of a notice of cancellation. However, in a
cancellation under section 6 of this chapter, the seller may retain the
portion of the total price representing the services used or completed
plus reimbursement for the expenses incurred in an amount not to
exceed twenty-five percent (25%) of the total contract price. In no
instance may the seller demand more than the full contract price from
the buyer.
(b) If the buyer has executed any credit or loan agreement to pay
for all or part of the cancelled health spa services, that agreement
shall also be cancelled and returned within thirty (30) days. Notice
of the duty described by this subsection must be included in each
health spa services contract, in at least ten (10) point boldface type. As added by P.L.249-1983, SEC.1. Amended by P.L.12-1986, SEC.9.
IC 24-5-7-9 Compliance with other provisions of law
Sec. 9. The provisions of this chapter are not exclusive and do not
relieve the parties from compliance with other applicable provisions
of law. As added by P.L.249-1983, SEC.1.
IC 24-5-7-10 Contracts; voidability for noncompliance; cure by seller; actions
Sec. 10. (a) A contract for health spa services that does not
comply with this chapter is voidable at the option of the buyer.
(b) The seller may cure noncompliance with this chapter, and no
legal action may be brought by the buyer for relief under this chapter
unless, following receipt of written notice of such noncompliance,
the seller:
(1) fails within thirty (30) days of receipt of the notice of
noncompliance to notify all buyers with whom the seller has
contracted since August 31, 1983, of the noncompliance; or
(2) fails to make all contracts for health spa services which the
seller has entered into after August 31, 1983, comply with this
chapter. As added by P.L.249-1983, SEC.1.
IC 24-5-7-11 Contracts; voidability for false information or advertisement
Sec. 11. Any contract for health spa services entered into in
reliance upon any willfully or fraudulently disseminated false or
misleading information, representation, notice, or advertisement of
the seller is void and unenforceable. As added by P.L.249-1983, SEC.1.
IC 24-5-7-12 Waiver of chapter provisions void
Sec. 12. Any waiver by the buyer of part or all of this chapter is
contrary to public policy and is void and unenforceable. As added by P.L.249-1983, SEC.1.
IC 24-5-7-13 Surety bonds; contracts for services to be rendered at planned
facilities
Sec. 13. A health spa that sells contracts for health spa services to
be rendered at a planned health spa facility or a health spa facility
under construction shall file with the secretary of state a bond issued
by a surety company admitted to do business in Indiana in the
amount of twenty-five thousand dollars ($25,000) or such greater
amount as the secretary of state may specify by rule. The health spa
is relieved from the obligation to maintain such a bond upon
commencing health spa service. As added by P.L.249-1983, SEC.1.
IC 24-5-7-14 Surety bonds; requisites; cancellation; notices; new bond
Sec. 14. (a) The state of Indiana shall be the obligee under the
bond.
(b) The bond shall be:
(1) executed by the health spa as principal and by a corporate
surety licensed to do business in Indiana as surety;
(2) in such form and shall contain such terms and conditions as
the secretary of state prescribes;
(3) conditioned upon the faithful performance of all obligations
of a health spa to construct or commence operations at its
planned facility; and
(4) effective from the date of filing with the secretary of state
and shall continue in full force and effect until cancelled.
(c) The total and aggregate liability of the surety on a bond is
limited to the amount specified in the bond.
(d) A health spa may not cancel a bond prior to the
commencement of health spa services without the prior written
approval of the secretary of state and without the secretary's approval
of a substitute bond so as to provide continuous bonding of the health
spa's activities prior to the commencement of health spa services.
(e) The surety on a bond may cancel a bond filed under this
chapter only after the expiration of ninety (90) days from the date the
surety, by registered or certified mail, return receipt requested, mails
to the secretary of state and to the principal on the bond a notice of
intent to cancel.
(f) Not later than thirty (30) days prior to the date upon which a
bond cancellation becomes effective, the health spa shall give written
notice to the secretary of state that a new bond has been obtained so
as to provide continuous bond coverage of the health spa's activities
prior to the commencement of health spa services. As added by P.L.249-1983, SEC.1.
IC 24-5-7-15 Surety bonds claims against bonds; hearing and determination;
distribution of bond proceeds
Sec. 15. (a) If any health spa fails, or is alleged to have failed, to
meet its obligations prior to the commencement of health spa
services, the secretary of state shall hold a hearing and determine
whether there has been such a failure, determine those persons who,
as buyers, have sustained financial losses recoverable under the bond
and, if appropriate, distribute the bond proceeds to the persons
sustaining losses, to the extent of their losses.
(b) Actions upon the bond and the right to payment under the
bond extend solely to the secretary of state. However, if the secretary
of state has not initiated an action upon the bond by scheduling and
holding a hearing within thirty (30) days of a written request to do
so, any claimant may initiate an action in the circuit court of Marion
County, Indiana, to require the secretary of state to take action.
(c) If, upon a hearing, the secretary of state determines that the
claims of persons who have sustained financial losses recoverable
under the seller's bond exceed the amount of the bond proceeds, the
proceeds shall be prorated among those persons according to the
ratio that each person's loss bears to the total amount of all proven
losses.
(d) The determination of the secretary of state as to liability under
the bond and the amount distributed under the bond is binding upon
the principal and surety of the bond.
(e) All hearings held under this section shall be held in
accordance with IC 4-21.5-3.
(f) The existence of the bond and the bond recovery procedure in
no way affect or alter any other right or remedy which a person may
have under applicable law. As added by P.L.249-1983, SEC.1. Amended by P.L.7-1987,
SEC.109. IC 24-5-7-16 Purchase of facility; assumption of membership contract liability;
preservation of actions or defenses
Sec. 16. (a) A purchaser of a health spa facility that offers health
spa services to the public assumes all membership contract liability
from the previous seller.
(b) Any right of action or defense arising out of a health spa
services contract that the buyer has against the seller is preserved
against an assignee of or successor to the contract. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.17.
IC 24-5-7-16.5 Refunds; options; repair and maintenance
Sec. 16.5. (a) Except as provided in subsection (d), if any of a
health spa's facilities or services described in the contract are no
longer provided before full receipt of the services and use of
facilities for which the buyer contracted, the buyer is entitled to a
refund based on the total consideration proportional to the elapsed
time portion of the contract at the time of the unavailability, or may
exercise the option provided by subsection (b).
(b) A buyer has the option, instead of the proportional refund
provided in subsection (a), to choose to complete the unused portion
of the contract, including renewal periods, at another location that is
owned, controlled, affiliated with, or operated by the seller. A
modification of the contract must be made in writing.
(c) This section does not restrict a health spa's ability to:
(1) make improvements to the facilities or services; or
(2) replace a facility or service with a superior facility or
service.
(d) If a health spa ceases to provide services or access to facilities
in order to perform regular maintenance or to repair equipment, a
buyer may not exercise the rights provided in subsection (a) or (b)
until the health spa has failed to provide services or access to
facilities for a continuous period of thirty (30) days. However, if a
health spa that has ceased to provide services or access to facilities
in order to perform regular maintenance or repair equipment is
unable to resume providing services or access to facilities within
thirty (30) days due to circumstances beyond the control of the
operator of the health spa, a buyer may not exercise the rights
provided in subsection (a) or (b) until the health spa has failed to
provide services or access to facilities for a continuous period of
sixty (60) days. As added by P.L.24-1989, SEC.18.
IC 24-5-7-17 Violations by buyer or seller; actions; penalties
Sec. 17. A purchaser of a health spa facility or a seller who
violates this chapter commits a deceptive act that is actionable by the
attorney general or by a buyer under IC 24-5-0.5, and is subject to the
penalties set forth in that chapter. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.19.
IC 24-5-7-18 Enforcement powers
Sec. 18. The secretary of state shall have all powers necessary to
accomplish the responsibilities assigned to him in this chapter
including but not limited to the authority to compel the production of
financial statements and such other information as the secretary of
state may deem necessary. As added by P.L.249-1983, SEC.1.
IC 24-5-7-1 Definitions
Sec. 1. As used in this chapter:
"Business day" means a day other than Sunday or a legal holiday.
"Buyer" means a purchaser of services under a contract for health
spa services.
"Contract" means a contract for health spa services entered into
after August 31, 1983. The term includes all financial agreements
provided or arranged by the health spa or the health spa's affiliates.
"Health spa" means any business entity, other than an entity that
is exempt from taxation under Section 501 of the Internal Revenue
Code, offering health spa services to the public.
"Health spa services" means instruction, training, or assistance in
physical culture, bodybuilding, exercising, reducing, figure
development, or any other health spa service, for the use of the
facilities of a health spa, figure salon, weight loss clinic, gymnasium,
or other facility used for the delivery of health spa services, or for
membership in any group, club, association, or organization formed
to deliver health spa services.
"Seller" means a seller of services under a contract for health spa
services. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.13.
IC 24-5-7-2 Contracts; requisites
Sec. 2. Every contract for health spa services shall be in writing
and a copy shall be furnished to the buyer at the time the contract is
formed. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.14.
IC 24-5-7-3 Contracts; term; limitations
Sec. 3. (a) No contract for health spa services may require
payments or financing by the buyer over a period in excess of
thirty-six (36) months from the date that the contract is entered into.
The term of a contract may not be measured by or be for the life of
the buyer.
(b) The term of a contract may not exceed three (3) years from the
date that the contract is entered into. A buyer may renew a contract
for additional periods, but the contract price for the renewal of a
contract must be at least twenty-four dollars ($24) per year. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.15.
IC 24-5-7-4 Contracts; time for performance; voidability
Sec. 4. (a) A contract for health spa services to be rendered at an
existing health spa facility must provide that the performance of the
agreed upon services is to begin within forty-five (45) days from the
date that the contract is entered into.
(b) A contract for health spa services at a planned spa facility or
spa facility under construction is voidable at the option of the buyer
if the health spa facilities and the agreed upon services are not
available within twelve (12) months from the date the contract is
entered into. As added by P.L.249-1983, SEC.1.
IC 24-5-7-5 Contracts; cancellation; notice; refunds
Sec. 5. (a) A copy of the buyer's cancellation rights under this
chapter shall be furnished in writing to the buyer at the time the
contract is formed.
(b) In at least 10 point boldface type, every contract for health spa
services must provide that the contract may be cancelled before
midnight of the third full business day after the buyer signs the
contract.
(c) A buyer may cancel the contract by written notice, in any
form, delivered in person or mailed by certified or registered mail to
the seller at the address specified in the contract. The notice must be
accompanied by the membership cards previously delivered to the
buyer.
(d) All money paid under a contract shall be refunded within
thirty (30) days of receipt of the notice of cancellation. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.16.
IC 24-5-7-6 Contracts; cancellation provisions; contingencies
Sec. 6. (a) In at least ten (10) point boldface type, every health spa
services contract that has not been cancelled under section 5 of this
chapter must provide that the buyer or the buyer's estate may cancel
the contract if any of the following occur:
(1) The buyer dies.
(2) The buyer becomes totally physically disabled for the
duration of the contract.
(3) The health spa facility operated by the seller is moved to a
location that is more than five (5) miles from the original
facility. However, if a health spa facility is closed at any site
and a facility with similar health spa services is operated less
than five (5) miles away from the closed facility, then the
buyer's contract may be transferred to the operating facility, if
the operator of the facility to which the contract is to be
transferred accepts the transfer.
(4) The services are no longer available as provided in the
contract because of the seller's permanent discontinuance of
operation.
(b) This section does not restrict the seller from offering or
providing in a contract additional or broader reasons for cancellation. As added by P.L.249-1983, SEC.1. Amended by P.L.12-1986, SEC.8.
IC 24-5-7-7 Contracts; cancellation provisions; evidence of disability or death
Sec. 7. The health spa may require and verify reasonable evidence
of total physical disability or death. In the case of total physical
disability, the health spa may also require that the buyer submit to a
physical examination by a doctor agreeable to the buyer and the
health spa. The cost of the examination shall be borne by the health
spa. As added by P.L.249-1983, SEC.1.
IC 24-5-7-8 Contracts cancelled; refunds; proration, cancellation of loan
agreements
Sec. 8. (a) All money paid pursuant to a contract for health spa
services that is cancelled under this chapter shall be refunded within
thirty (30) days of receipt of a notice of cancellation. However, in a
cancellation under section 6 of this chapter, the seller may retain the
portion of the total price representing the services used or completed
plus reimbursement for the expenses incurred in an amount not to
exceed twenty-five percent (25%) of the total contract price. In no
instance may the seller demand more than the full contract price from
the buyer.
(b) If the buyer has executed any credit or loan agreement to pay
for all or part of the cancelled health spa services, that agreement
shall also be cancelled and returned within thirty (30) days. Notice
of the duty described by this subsection must be included in each
health spa services contract, in at least ten (10) point boldface type. As added by P.L.249-1983, SEC.1. Amended by P.L.12-1986, SEC.9.
IC 24-5-7-9 Compliance with other provisions of law
Sec. 9. The provisions of this chapter are not exclusive and do not
relieve the parties from compliance with other applicable provisions
of law. As added by P.L.249-1983, SEC.1.
IC 24-5-7-10 Contracts; voidability for noncompliance; cure by seller; actions
Sec. 10. (a) A contract for health spa services that does not
comply with this chapter is voidable at the option of the buyer.
(b) The seller may cure noncompliance with this chapter, and no
legal action may be brought by the buyer for relief under this chapter
unless, following receipt of written notice of such noncompliance,
the seller:
(1) fails within thirty (30) days of receipt of the notice of
noncompliance to notify all buyers with whom the seller has
contracted since August 31, 1983, of the noncompliance; or
(2) fails to make all contracts for health spa services which the
seller has entered into after August 31, 1983, comply with this
chapter. As added by P.L.249-1983, SEC.1.
IC 24-5-7-11 Contracts; voidability for false information or advertisement
Sec. 11. Any contract for health spa services entered into in
reliance upon any willfully or fraudulently disseminated false or
misleading information, representation, notice, or advertisement of
the seller is void and unenforceable. As added by P.L.249-1983, SEC.1.
IC 24-5-7-12 Waiver of chapter provisions void
Sec. 12. Any waiver by the buyer of part or all of this chapter is
contrary to public policy and is void and unenforceable. As added by P.L.249-1983, SEC.1.
IC 24-5-7-13 Surety bonds; contracts for services to be rendered at planned
facilities
Sec. 13. A health spa that sells contracts for health spa services to
be rendered at a planned health spa facility or a health spa facility
under construction shall file with the secretary of state a bond issued
by a surety company admitted to do business in Indiana in the
amount of twenty-five thousand dollars ($25,000) or such greater
amount as the secretary of state may specify by rule. The health spa
is relieved from the obligation to maintain such a bond upon
commencing health spa service. As added by P.L.249-1983, SEC.1.
IC 24-5-7-14 Surety bonds; requisites; cancellation; notices; new bond
Sec. 14. (a) The state of Indiana shall be the obligee under the
bond.
(b) The bond shall be:
(1) executed by the health spa as principal and by a corporate
surety licensed to do business in Indiana as surety;
(2) in such form and shall contain such terms and conditions as
the secretary of state prescribes;
(3) conditioned upon the faithful performance of all obligations
of a health spa to construct or commence operations at its
planned facility; and
(4) effective from the date of filing with the secretary of state
and shall continue in full force and effect until cancelled.
(c) The total and aggregate liability of the surety on a bond is
limited to the amount specified in the bond.
(d) A health spa may not cancel a bond prior to the
commencement of health spa services without the prior written
approval of the secretary of state and without the secretary's approval
of a substitute bond so as to provide continuous bonding of the health
spa's activities prior to the commencement of health spa services.
(e) The surety on a bond may cancel a bond filed under this
chapter only after the expiration of ninety (90) days from the date the
surety, by registered or certified mail, return receipt requested, mails
to the secretary of state and to the principal on the bond a notice of
intent to cancel.
(f) Not later than thirty (30) days prior to the date upon which a
bond cancellation becomes effective, the health spa shall give written
notice to the secretary of state that a new bond has been obtained so
as to provide continuous bond coverage of the health spa's activities
prior to the commencement of health spa services. As added by P.L.249-1983, SEC.1.
IC 24-5-7-15 Surety bonds claims against bonds; hearing and determination;
distribution of bond proceeds
Sec. 15. (a) If any health spa fails, or is alleged to have failed, to
meet its obligations prior to the commencement of health spa
services, the secretary of state shall hold a hearing and determine
whether there has been such a failure, determine those persons who,
as buyers, have sustained financial losses recoverable under the bond
and, if appropriate, distribute the bond proceeds to the persons
sustaining losses, to the extent of their losses.
(b) Actions upon the bond and the right to payment under the
bond extend solely to the secretary of state. However, if the secretary
of state has not initiated an action upon the bond by scheduling and
holding a hearing within thirty (30) days of a written request to do
so, any claimant may initiate an action in the circuit court of Marion
County, Indiana, to require the secretary of state to take action.
(c) If, upon a hearing, the secretary of state determines that the
claims of persons who have sustained financial losses recoverable
under the seller's bond exceed the amount of the bond proceeds, the
proceeds shall be prorated among those persons according to the
ratio that each person's loss bears to the total amount of all proven
losses.
(d) The determination of the secretary of state as to liability under
the bond and the amount distributed under the bond is binding upon
the principal and surety of the bond.
(e) All hearings held under this section shall be held in
accordance with IC 4-21.5-3.
(f) The existence of the bond and the bond recovery procedure in
no way affect or alter any other right or remedy which a person may
have under applicable law. As added by P.L.249-1983, SEC.1. Amended by P.L.7-1987,
SEC.109. IC 24-5-7-16 Purchase of facility; assumption of membership contract liability;
preservation of actions or defenses
Sec. 16. (a) A purchaser of a health spa facility that offers health
spa services to the public assumes all membership contract liability
from the previous seller.
(b) Any right of action or defense arising out of a health spa
services contract that the buyer has against the seller is preserved
against an assignee of or successor to the contract. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.17.
IC 24-5-7-16.5 Refunds; options; repair and maintenance
Sec. 16.5. (a) Except as provided in subsection (d), if any of a
health spa's facilities or services described in the contract are no
longer provided before full receipt of the services and use of
facilities for which the buyer contracted, the buyer is entitled to a
refund based on the total consideration proportional to the elapsed
time portion of the contract at the time of the unavailability, or may
exercise the option provided by subsection (b).
(b) A buyer has the option, instead of the proportional refund
provided in subsection (a), to choose to complete the unused portion
of the contract, including renewal periods, at another location that is
owned, controlled, affiliated with, or operated by the seller. A
modification of the contract must be made in writing.
(c) This section does not restrict a health spa's ability to:
(1) make improvements to the facilities or services; or
(2) replace a facility or service with a superior facility or
service.
(d) If a health spa ceases to provide services or access to facilities
in order to perform regular maintenance or to repair equipment, a
buyer may not exercise the rights provided in subsection (a) or (b)
until the health spa has failed to provide services or access to
facilities for a continuous period of thirty (30) days. However, if a
health spa that has ceased to provide services or access to facilities
in order to perform regular maintenance or repair equipment is
unable to resume providing services or access to facilities within
thirty (30) days due to circumstances beyond the control of the
operator of the health spa, a buyer may not exercise the rights
provided in subsection (a) or (b) until the health spa has failed to
provide services or access to facilities for a continuous period of
sixty (60) days. As added by P.L.24-1989, SEC.18.
IC 24-5-7-17 Violations by buyer or seller; actions; penalties
Sec. 17. A purchaser of a health spa facility or a seller who
violates this chapter commits a deceptive act that is actionable by the
attorney general or by a buyer under IC 24-5-0.5, and is subject to the
penalties set forth in that chapter. As added by P.L.249-1983, SEC.1. Amended by P.L.24-1989,
SEC.19.
IC 24-5-7-18 Enforcement powers
Sec. 18. The secretary of state shall have all powers necessary to
accomplish the responsibilities assigned to him in this chapter
including but not limited to the authority to compel the production of
financial statements and such other information as the secretary of
state may deem necessary. As added by P.L.249-1983, SEC.1.
