Opening a studio in Colorado: escrow for presales and a 24-month limit

October 14, 2026

This is for anyone opening a Pilates, yoga, barre or boutique fitness studio in Colorado. There is no health club registration here. But if you sell founding memberships before you open, Colorado law says the money goes into a separate account at a bank or trust company doing business in Colorado, or you post $50,000 in security, until the doors open. The contract prints your opening date, and if opening slips more than 60 days past it, any member can cancel for a full refund.

The health club law reaches class studios

The Colorado Consumer Protection Act defines a health club as “an establishment which provides health club services or facilities which purport to improve or maintain the user's physical condition or appearance through exercise.” The term “may include” a “spa, exercise club, exercise gym, health studio, or playing courts” (C.R.S. 6-1-102(4.6)). The exclusions are nonprofits and schools, government, licensed health care facilities, and “any establishment which does not provide health club services or facilities as its primary purpose or business.” There is no yoga or Pilates exclusion. We found no ruling or Attorney General guidance on class studios, so a studio whose business is exercise classes should plan on being covered.

The rules sit in C.R.S. 6-1-704 as a list of deceptive trade practices. There is nothing to register and no license. A member who proves a violation can sue under 6-1-113 for the greater of actual damages or $500, or three times actual damages for bad faith shown by clear and convincing evidence, plus attorney fees. The Attorney General and district attorneys enforce it too.

Founding members and the escrow

When a club “is planned or under construction” and sells memberships before it is completed, 6-1-704(1)(e) requires three things.

• Disclose “clearly and conspicuously in the membership contract the date on which the health club will open for use.”
• “Escrow all preopening membership sales receipts in a separate account in a bank or trust company doing business in the state of Colorado,” or provide a cash bond, letter of credit, certificate of deposit or similar surety “in the amount of fifty thousand dollars,” until the club is open.
• Let the buyer cancel for a full refund if opening is delayed more than 60 days past the date in the contract.

In Frontmat a membership can be sold before opening with billing starting on opening day, so a founding member is charged nothing until the doors open. A founding membership can be capped at a number of spots. With no receipts before opening, there is nothing to escrow. The other two rules attach to the sale, not to the money. Print the opening date in the founding contract, and if the build-out runs more than 60 days late, let anyone who asks walk away.

24 months, and two bond figures

Section 6-1-704(1)(f) bars selling any membership contract “the actual or financial duration of which, including any option to renew, is longer than twenty-four months.” Contracts up to 36 months, renewable annually, are allowed only if the club has operated in Colorado more than two years, keeps a corporate surety bond whose “aggregate amount” is “one hundred thousand dollars for each club location,” payable to the state, and makes each annual renewal something the member accepts in writing. A new studio cannot sell anything longer than 24 months.

The Attorney General's health club bond page lists those same conditions, $100,000 per location included. Then it tells clubs to send a surety bond “in the amount of at least $50,000.” The statute puts the two figures in different places. $100,000 per location is the bond for contracts of 24 to 36 months, under (1)(f). $50,000 is the security a club may post instead of escrowing presale money, under (1)(e). The statute is the law. If you plan to post either one, email the Consumer Protection Section at CPassist@coag.gov and ask which form and amount they will accept.

In Frontmat, memberships bill monthly through Stripe on the member's card. There is no annual or multi-month membership. Class packs can expire after a number of days you set, or never.

What the contract must say

• A right to rescind within three business days after the member receives a copy, with conspicuous notice of that right. Notice by mail counts when postmarked, and hand delivery counts when it reaches your place of business.
• A refund of everything paid, less a prorated fee for days the member actually used the club, within 15 days of the written rescission notice.
• Cancellation when the member dies or becomes totally physically disabled for the rest of the contract, as determined by a physician or advanced practice registered nurse.
• Cancellation when you move more than five miles, or transfer the member more than five miles because you stopped service at their location.
• Cancellation when you close, or sell and the services change substantially. You get a 30-day right to cure, with the member's fees suspended.
• No “lifetime” or “perpetual” membership, no coercive sales tactics, and no misrepresenting the services.

The last one matters at launch. Do not call a founding rate a lifetime membership in Colorado.

Monthly memberships and the yearly reminder

A monthly membership is an automatic renewal contract under C.R.S. 6-1-732. Before signup you show the renewal terms clearly and conspicuously: the recurring charge, the cancellation policy and the renewal term. After signup the member gets a written acknowledgment they can keep, with the terms and how to cancel. Canceling has to be easy. Since August 2025 (Senate Bill 25-145), a member who signed up online must be able to cancel online in one step, right after logging in. An in-person method at the location the member uses counts only for members who signed up some other way, such as on paper at the desk. You may show a discount or a retention offer when someone cancels online, but only with a direct cancel link right beside it, and a member who uses that link must have the cancellation processed promptly. A material change in terms gets its own notice.

For renewals shorter than 12 months, the statute adds a reminder. You send it once in the 25 to 40 days before the renewal that would carry the contract past 12 continuous months, and again before each later 12 months. It says the membership will renew and how to cancel, by mail, by email, or by text or app if the member authorized that. For a monthly membership that is one reminder a year per member, a little over a month before their anniversary. Only the Attorney General and district attorneys enforce this section.

Sales tax: the state does not tax services

Colorado's state sales tax is 2.9%, and the Department of Revenue says “the tax does not apply to sales of services, except for those services specifically taxed by law.” Classes and memberships are services.

Home-rule cities are the open question. A sale “may also be subject to self-collected home-rule city sales taxes, which are not administered by the Department.” Aurora's Tax Division says in its Recreation Services guide (May 2023) that health and athletic club memberships “are exempt from Aurora sales tax,” and it names “group cardiovascular fitness classes” and “yoga classes” as examples. The guide says it does not bind the city. Denver's sales tax guide names the services Denver taxes, such as phone, energy and internet services, and says the list is not complete. Fitness is not on it. Denver's 10% admissions tax applies only at venues the city owns or leases. On our reading, a private studio's classes are not taxed in Denver, but no Denver guide says so directly. Boulder charges a 5% admissions tax on admission “to any place or event in the city that is open to the public,” and its guides do not say whether a class counts. Ask Boulder before you price. If it taxes classes, Frontmat does not add a sales tax line to packs or memberships today, so build the tax into the price or use another tool.

Your waiver

Colorado courts test a release on four factors from Jones v. Dressel (1981): “(1) the existence of a duty to the public; (2) the nature of the service performed; (3) whether the contract was fairly entered into; and (4) whether the intention of the parties is expressed in clear and unambiguous language.” In Brigance v. Vail Summit Resorts (10th Cir. 2018), the court said “no public duty is implicated if a business provides recreational services” and held a ski school release enforceable. For a studio, the fourth factor is the one you control.

Colorado also settles the minors question by statute. C.R.S. 13-22-107(3): “A parent of a child may, on behalf of the child, release or waive the child's prospective claim for negligence.” Subsection (4) stops short of willful and wanton, reckless, or grossly negligent acts.

In Frontmat the waiver is your own text. Members sign it once, at their first booking, with a typed name. We store the time and a fingerprint of the exact wording they signed, so a later edit never changes what an earlier member agreed to. It is plain text, so emphasis goes in CAPITALS. We never supply waiver language. Get yours from a Colorado lawyer.

Workers' comp and texts

The Division of Workers' Compensation says Colorado employers “are required to carry workers' compensation insurance if they have one or more employees,” part-time, full-time or family. “Anyone who gets paid for the work they perform is presumed to be an employee.” Your first instructor on payroll needs a policy.

Colorado's no-call law counts “text messaging” as telephone solicitation (6-1-903). You may not send one to a number on the Colorado no-call list, and anyone who makes telephone solicitations must register (6-1-904). The definition leaves out contacts with the person's prior express permission, an established business relationship within the last 18 months, and the 30 days after someone asks you about buying. Frontmat sends booking texts only (waitlist offers, confirmations and cancellations) to members who opted in, and stores the time and wording of each opt-in. It sends no marketing texts. If you text leads, do it with their permission or inside those 30 days.

Before you sign anything

1. Pick an opening date you can keep and print it in the founding contract. Past 60 days late, anyone can cancel.
2. Take no founding money before opening, or escrow it in a separate account at a bank doing business in Colorado, or post $50,000 in security.
3. Keep every contract at 24 months or less, renewal options included.
4. Write the contract: the three-business-day rescission notice, the 15-day refund, the death, disability, five-mile and closure terms. Nothing called lifetime.
5. Set up monthly memberships for 6-1-732: terms before signup, a written acknowledgment, a one-step online cancel for anyone who signed up online, and a reminder a year.
6. Ask your home-rule city whether it taxes classes.
7. Have a Colorado lawyer write your release, including the parent's release for minors.

This is our reading of the Colorado Revised Statutes (2024 edition), the 2025 change to the automatic renewal law, and agency pages as of October 14, 2026. It is not legal advice. Confirm the health club questions with the Attorney General's Consumer Protection Section and the tax questions with the Colorado Department of Revenue and your city.

If you are still choosing where to open, we keep the rules in every state on one page.