§ 622-a. Bond, letter of credit or certificate of deposit required. 1.\nEvery health club, except as provided in subdivision ten of this\nsection, before it enters into any contract for services for use by a\nbuyer of a health club, shall file and at all times maintain with the\nsecretary, in form, amount as prescribed herein and substance\nsatisfactory to him:\n (a) A bond with a corporate surety, from a company authorized to do\nbusiness in this state; or\n (b) An irrevocable letter of credit or a certificate of deposit from a\nNew York state or federally chartered bank, trust company, savings bank\nor savings and loan association qualified to do business in New York\nstate and insured by the federal deposit insurance corporation.\n 2. The principal sum of the bond, letter of credit, or certificate of\ndeposit shall be;\n (a) Fifty thousand dollars if the health club sells contracts for\nservices for a term not greater than twelve months; or\n (b) Seventy-five thousand dollars if the health club sells contracts\nfor services for a term more than twelve months and up to twenty-four\nmonths; or\n (c) One hundred fifty thousand dollars if the health club sells\ncontracts for services for a term more than twenty-four months and up to\nthirty-six months.\n 3. For health clubs with three or more locations, or for multiple\nfranchises of a common franchisor, the following amounts shall be added\nto the sum required in subdivision two of this section for the bond,\nletter of credit, or certificate of deposit:\n (a) For three to four locations an additional fifty thousand dollars,\n (b) For five to six locations an additional one hundred thousand\ndollars,\n (c) For seven to nine locations an additional one hundred fifty\nthousand dollars,\n (d) For ten or more locations an additional two hundred thousand\ndollars.\n 4. The bond, letter of credit or certificate of deposit shall be\npayable in favor of the people of the state of New York for the benefit\nof any buyer injured in the event that the seller goes out of business\nprior to the expiration of the buyer's contract for services, or\notherwise fails to provide a refund to the buyer after cancellation of\nthe buyer's contract for services as provided for in section six hundred\ntwenty-four of this article.\n 5. The aggregate liability of the surety upon the bond or the banking\norganization upon the letter of credit or certificate of deposit to all\npersons for all breaches of the conditions of the bond shall in no event\nexceed the amount of the bond, letter of credit or certificate of\ndeposit.\n 6. The bond, letter of credit or certificate of deposit filed and\nmaintained pursuant to this section shall not be cancelled, revoked, or\nterminated except after notice to, and with the consent of, the\nsecretary at least forty-five days in advance of such cancellation,\nrevocation, or termination.\n 7. Any person claiming against the bond, letter of credit or\ncertificate of deposit may bring and maintain an action against the\nseller and the surety or bank, trust company, savings bank or savings\nand loan association.\n 8. For the purposes of this section, a health club shall be considered\nto be a new health club subject to the requirements of a bond, letter of\ncredit or certificate of deposit as provided herein, at the time the\nhealth club changes ownership, or, in the case of corporate ownership,\nat the time thirty percent or more of the stock changes or has changed\nownership. A change in ownership of a health club shall not release,\ncancel or terminate liability under this section under any bond, letter\nof credit or certificate of deposit filed for a health club as to any\nbuyer who purchases a health club contract while such bond, letter of\ncredit or certificate of deposit is in effect unless the transferee,\npurchaser, successor, or assignee of such health club obtains a bond,\nletter of credit or certificate of deposit under this section for the\nbenef
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