Opening a studio in Kentucky: the 31-day rule, a $10,000 bond and 6% tax

October 14, 2026

This is for anyone opening a Pilates, yoga, barre or boutique fitness studio in Kentucky. Kentucky's health spa law covers class studios. You register with the Attorney General for $100 before you sell a single membership, and you post a bond of at least $10,000 unless you charge no sign-up fee and never bill anyone more than 31 days ahead. Your memberships and classes are also subject to 6 percent sales tax.

Kentucky's health spa law covers class studios

KRS 367.900 defines a health spa as a for-profit establishment offering “services or facilities which purport to improve the user's physical condition or appearance through participation in sports activities, fitness training, exercise, or body building.” It defines services to include “exercise instruction, exercise programs, and instructional classes.” The only exclusions are 509(a) nonprofits and businesses that mainly offer diet counseling and diet foods. Nothing exempts yoga, Pilates or a class-only studio. We read it to cover any for-profit studio that sells classes.

Under KRS 367.912 a contract that does not comply “shall be void and unenforceable as contrary to public policy,” and a member's waiver of the law's protections is void too. The Attorney General enforces it with the powers of the Consumer Protection Act.

Registration: $100, then $50 a year

KRS 367.905 requires a registration statement and a $100 fee with the Attorney General's Office of Consumer Protection “prior to the sale of any memberships.” The statement lists your owners, officers and stockholders, your facilities, the square footage, whether there is a shower, your employees and their qualifications, every membership plan with its price, and any lawsuits against the studio or its officers in the last three years. You file again with $50 on or before July 1 each year after opening. Keep a copy at the studio, because members and prospects may ask to see it. Each location registers and bonds separately.

KRS 367.915 shapes your price list. You keep a list of every membership plan and its price, show it to every prospect, and may not sell a plan that is not on that list and in your registration statement. We read that to mean a new pack or membership tier goes into the registration before you sell it.

The bond, and the 31-day exemption

KRS 367.906 sizes the bond by your number of unexpired contracts:

The bond pays members back if the studio becomes insolvent, closes, or fails to open within 90 days of its first sale. The same section says the Attorney General's office “shall exempt a spa from the bonding requirement” if all its unexpired contracts and present membership plans meet both of these tests:

(a) No initiation fee, or similar nonrecurring fee, is charged at or near the beginning of the contract term or renewal period, and (b) At no time is any member charged for use of facilities or services more than thirty-one (31) days in advance.

Monthly autopay with no sign-up fee passes both tests. An annual prepay, a sign-up fee or a one-time founding fee fails them. The test covers “all” of your contracts and plans, so one plan that fails costs the exemption for the whole studio. If a new plan will require a bond, the law asks for written notice to the Attorney General at least 30 days before the change.

Class packs are where we have to label our reading. The statute does not mention packs. A 10-class pack good for 60 days is paid on day one for classes a member may take on day 50. We read that as charging a member “more than thirty-one (31) days in advance,” which would mean a bond. On the same reading, a pack that expires within 31 days of purchase stays inside the exemption. That is our reading, not the Attorney General's. We found no guidance from the office on packs. Ask when you register.

In Frontmat a class pack can expire after a number of days you set, or never. If you want to stay bond-exempt on our reading, set pack expiry at 31 days or less and charge no sign-up fee.

Selling before you open

Three rules meet here. Registration and the bond or exemption come before any sale. KRS 367.905 puts money from contracts sold “on a prepayment basis” in escrow “until the health spa has remained open for a period of thirty (30) days.” And under KRS 367.910, if the studio “fails to open for business within ninety (90) days from the sale of the first contract,” every contract is canceled and refunded, with no notice needed from the member.

A Frontmat membership can be sold before you open with billing starting on opening day, so a founding member pays nothing until the doors open. The statute defines a prepayment as a payment made before the services are available, and says a payment made the same day the services are provided is not one. So we read a founding membership billed from opening day as taking no prepayment to escrow. That is our reading. The 90-day clock still starts at the first sale, so do not open founding sales more than 90 days before you open.

Founding pricing has its own rule. KRS 367.920 bars specials or discounts unless they are “made in writing and available to all prospective members.” A founding rate has to be written down and open to everyone during the window. A founding membership in Frontmat can be capped at a number of spots, so put the cap in writing too.

What the contract must say

KRS 367.910 and 367.911 set the contract terms:

• Written, signed by the member and complete, with a full copy handed over at signing.
• In at least 10-point bold type: “NOTICE TO BUYER: DO NOT SIGN THIS CONTRACT UNTIL YOU HAVE READ ALL OF IT. ALSO, DO NOT SIGN THIS CONTRACT IF IT CONTAINS ANY BLANK SPACES.”
• Cancellation within three business days with all money refunded, and the statute's notice of that right in 10-point bold.
• The statute's “ADDITIONAL CANCELLATION RIGHTS” notice: a pro rata refund, by weeks, for death or a medical disability of 30 or more consecutive days, for a studio move of more than five miles, and for a member move of 25 miles or more with no comparable facility within five miles of the new home.
• Refunds paid within 30 days of the cancellation notice.
• No term longer than 36 months, no financing longer than 36 months, and no lifetime memberships.

The statute gives the notice wording word for word. Copy it exactly and have a Kentucky lawyer check the type size.

What that means for your products

Sales tax: 6 percent on memberships and classes

KRS 139.200 taxes “the sale of admissions” at 6 percent. KRS 139.010 defines admissions to include fees for using health spas, weight training facilities and “Fitness and recreational sports centers,” “regardless of whether the fee paid is per use or in any other form, including but not limited to an initiation fee, monthly fee, membership fee, or combination thereof.” KRS 139.200 also lists “Leisure, recreational, and athletic instructional services” and “Personal fitness training services” as taxable. Those services have been taxed since January 1, 2023.

So, on our reading, memberships, class packs, drop-ins and private training at a Kentucky studio all fall under the 6 percent tax. The Department of Revenue agrees for classes. Its Recreation and Fitness FAQ gives “exercise instruction, yoga instruction, spinning classes, aerobics” as examples of taxable personal fitness training.

Frontmat does not add a sales tax line to packs or memberships today. A Kentucky studio would build the 6 percent into its prices or collect it with other tools.

Your waiver

Kentucky courts enforce releases but read them strictly. In Hargis v. Baize (2005) the Kentucky Supreme Court said such contracts “are disfavored and are strictly construed against the parties relying upon them.” A release is upheld only if it uses the word “negligence,” or clearly releases the party from injury caused by its own conduct, or protection against negligence is the only reasonable reading, or the hazard was clearly within what the release contemplated. Hargis was about a log hauler at a sawmill, not a studio, but it sets the test.

So the word negligence belongs in your waiver, in plain sight.

For minors, in Miller v. House of Boom Kentucky (2019) the same court held that a parent's pre-injury waiver for a child at a for-profit trampoline park was “unenforceable under the specific facts of this case.” The court reasoned that a commercial business “has the ability to purchase insurance and spread the cost between its customers.” A studio is a for-profit business too. Do not count on a parent's signature for a teen class.

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 is done in CAPITALS. We never supply waiver language.

Workers' comp

KRS 342.630 makes coverage mandatory for any employer outside agriculture with “one (1) or more employees.” Your first instructor on payroll needs coverage.

Before you sign anything

1. Set up your plans first. On our reading, monthly billing with no sign-up fee and packs that expire within 31 days keep you bond-exempt.
2. File the registration statement with the Attorney General's Office of Consumer Protection with the $100 fee before you sell anything, founding memberships included. Ask for the bond exemption or post the bond. Calendar the $50 renewal for July 1.
3. Write your list of plans and prices and show it to every prospect.
4. Have a Kentucky lawyer put the 10-point bold notices and the cancellation rights into your membership contract.
5. Start founding sales no more than 90 days before you open, with the founding rate in writing and open to everyone.
6. Ask the Department of Revenue how to register to collect the 6 percent.
7. Buy workers' comp before your first employee starts, and have a Kentucky lawyer write the waiver with negligence named.

This is our reading of the Kentucky Revised Statutes and the two Kentucky Supreme Court decisions as of October 14, 2026. It is not legal advice. Confirm the registration, the bond and the pack question with the Attorney General's Office of Consumer Protection, and the tax with the Kentucky Department of Revenue.

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