HOUSE BILL REPORT

SB 6201

BYSenators Lee and Rasmussen; by request of Attorney General

Changing regulation of health studio services.

House Committe on Commerce & Labor

Majority Report:  Do pass.  (10)

      Signed by Representatives Vekich, Chair; Cole, Vice Chair; Smith, Ranking Republican Member; Forner, R. King, Leonard, O'Brien, Prentice, Walker and Wolfe.

House Staff:Jim Kelley (786-7166)

AS PASSED HOUSE MARCH 1, 1990

BACKGROUND:

The Health Studio Services Act regulates the health studio industry in this state.  The act provides that "health studio" includes "any person or entity engaged in the sale of instruction, training, assistance or use of facilities which purport to assist patrons to improve their physical condition or appearance through physical exercise, body building, weight loss, figure development, or any other similar activity."  The act specifically excludes various types of facilities, but does not specifically include nor exclude martial arts facilities.

Under certain circumstances, buyers of health studio services are entitled to a pro rata refund of initiation or membership fees. The refund amount is determined by dividing the contract price by the number of weeks in the contract term and multiplying that number by the number of weeks remaining in the contract term. However, in some cases the contract term is not stated.

Existing law could be applied to allow a buyer to cancel a one year contract and receive a refund, even if the contract explicitly states that it is not cancellable except in cases of death, disability, or termination of services.

SUMMARY:

Martial arts facilities are explicitly included within the definition of "health studio."

Where no term is provided in the contract, a pro rata refund will be based on a term of 36 months.

A health studio must use specific language in order to warn the buyer regarding which fees are nonrefundable.  For one year contracts, the bill clarifies that the initiation or membership fee may be nonrefundable except in cases of death, disability, or termination of services.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    Donna Fisher, Attorney General's Office.

House Committee - Testified Against:      No one.

House Committee - Testimony For:    This is an Attorney General request bill.  This bill clarifies the refund formula and clarifies that martial arts are covered under the act.  Also, a loophole for refunds of the initiation fee is closed.

House Committee - Testimony Against:      None.