Opening a studio in Minnesota: the $50 line, the bond and the cancel button

October 14, 2026

This is for anyone opening a Pilates, yoga, barre or boutique fitness studio in Minnesota. Minnesota law calls your business a health club, and you register with the Attorney General before you sell a single membership. If members pay you more than $50 before the class happens, you carry a surety bond on that unused balance. Members can cancel any time, at no charge.

The club contracts law reaches class studios

Minnesota Statutes 325G.23 defines a health club as a business “having the primary purpose of offering one or more facilities for instruction, training, encouragement, or assistance in physical fitness, in return for the payment of a fee.” The only exclusions are nonprofits, member-owned clubs and government facilities. Nothing carves out yoga or classes-only studios, so we would plan on registering.

Registration costs $250, then $150 every September 1. The Attorney General’s instructions say a club that sells memberships before opening “must register before engaging in any sales activities.” You file a copy of every version of your member contract, including the ones you plan to use.

The bond follows what members have prepaid

The statute defines a prepayment as “any payment over $50 for service or merchandise made before the service is rendered.” Enrollment, initiation and processing fees count, whatever you call them. “It is not a prepayment if a payment for service is made on the same day the service is rendered.”

A club that takes prepayments carries a surety bond from a company admitted in Minnesota, for at least what members have prepaid less the part already used up. The cap is $200,000 however many locations you run. If what you owe members grows past the bond and you do not raise it, you stop selling memberships until you do.

The only way out is a sworn, notarized declaration (form CLUB5) that you do not require or receive prepayments. The statute says “over $50,” while the Attorney General’s web page says “$50 or more.” Do not price anything at exactly $50 and count on the difference.

What that means for your products

If you sell any pack over $50, plan on the bond. Once you are open the statute sets no floor. The bond tracks what members have paid for and not yet used. In Frontmat, class packs can expire after a number of days you set, or never, and a pack with no expiry can stay an unused balance for a long time.

Founding members before you open

Section 325G.27 subdivision 4 covers selling memberships for a planned facility. Register before any sales, and keep at least $25,000 of security until what you owe members exceeds that, raising it as presales grow.

In Frontmat a membership can be sold before opening with billing starting on opening day, and a founding membership can be capped at a number of spots. That founding member pays nothing before you open. The Attorney General’s form ties the $25,000 to clubs “not yet open but that are receiving prepayments.” The statute’s presale subdivision does not mention prepayment. Ask the Attorney General whether a presale that charges nothing until opening day needs it.

What the member contract must say

• In writing, signed and dated by the member, with a copy handed over at signing (325G.25).
• Three notices, word for word from the statute, in boldface of at least 14 points: “MEMBERS’ RIGHT TO CANCEL,” “MEMBERS’ RIGHT TO UNILATERAL TERMINATION” and “NOTICE INFORMATION” with your address, phone, email and website.
• A term of 18 months or less, with the duration in 14-point bold (325G.26).

A member can cancel until midnight of the third business day and gets every payment back within 10 days. After that, a member can terminate at any time with no termination fee. It takes effect at the end of the current term, or for a membership with no set term, no later than 30 days after the notice (for contracts signed or renewed from July 1, 2025). The notice text the statute makes you print still says an at-will membership ends “immediately,” so have your lawyer reconcile the two.

You must accept a cancellation in person, by phone, by mail, by email, through a message or cancel button on your website, or the same way the member joined. A contract missing the notices can be canceled at any time by any means. The Attorney General can seek a civil penalty of up to $25,000, and a member can sue for damages plus attorney fees.

The automatic renewal rules apply too

Since January 1, 2025, Minnesota’s automatic renewal law (325G.56 to 325G.63) names health club contracts. Show the terms next to the offer, send a confirmation the member can keep, give notice before any material change or the change is void, and send a written notice of the continuing membership once a year.

If your website lets members manage a profile or subscription, it must carry a plain cancel checkbox or button. After a member asks to cancel, you may not make a retention offer until the member gives permission, asked once. You may still ask why and describe a pause or a downgrade.

Sales tax: classes are out, facility access is in

The state rate is 6.875 percent, and local taxes go on top. From October through December 2026 the combined rate is 9.025 percent in Minneapolis and 9.875 percent in St. Paul.

The Department of Revenue’s Fact Sheet 124 taxes access to exercise facilities and health clubs, and memberships to a club that provides athletic facilities. It also says “aerobic, exercise, yoga or other class fees” are not taxable “when they are optional and separately stated” from taxable charges such as a membership.

So drop-ins and packs at a class-only studio look untaxed, and a membership with open studio time or equipment use outside class looks taxed. An unlimited-classes membership at a class-only studio is the gray area. Email salesuse.tax@state.mn.us and get the answer in writing before you set prices. Frontmat does not add a sales tax line to packs or memberships today, so if anything you sell is taxable, build the tax into the price or use another tool.

Your waiver

In Justice v. Marvel (September 21, 2022) the Minnesota Supreme Court threw out a release of “any and all claims.” A release of your own negligence has to use “specific, express language” that “clearly and unequivocally” says so. In Lund v. Calhoun Orange (May 21, 2025) the court enforced a fitness studio’s intake form after a member collapsed in class. Its general waiver of “all claims” would have failed alone. The next sentence covered “all acts of active or passive negligence” of the studio and its instructors, and that saved it. The court called it “a close case.” It did not decide whether small print with no heading is clear enough, so put yours in plain sight.

Section 604.055 cuts out any part of a consumer or recreational release that covers worse than ordinary negligence, and the rest stands.

Minors are open. The Court of Appeals in Justice had said a parent could sign a release for a child. The Supreme Court reversed on the wording and did not decide that question. Section 604.055 does reach a release signed “on behalf of the minor,” but only to void the part that covers worse than ordinary negligence. It does not say a parent’s signature binds the child. If you teach teens, do not assume a parent’s signature releases the teen’s claim.

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 an edit later never changes what an earlier member agreed to. It is plain text, so emphasis is done in CAPITALS. We never supply waiver language. Get yours from a Minnesota lawyer, and have it name your own negligence.

Workers’ comp and texts

Minnesota has no minimum. The Department of Labor and Industry says “an employer with only one part-time employee generally must provide coverage.” Sole proprietors are excluded for themselves. If you pay instructors as contractors, get it right: misclassifying an employee carries a penalty of up to $10,000 per person (181.722).

Minnesota’s own telephone rules (325E.26 to 325E.31) are written around prerecorded voice calls and cold calls, and we found nothing in them that settles texts. 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.

Before you sign anything

1. Decide your menu. Anything over $50 paid ahead of class means a bond.
2. Register with the Attorney General’s Club Contracts Registration on form CLUB1 before you sell anything: $250 by check, with every version of your member contract. Renew every September 1 for $150.
3. File the surety bond with it, at least $25,000 if you are selling before you open. If you truly take nothing over $50 ahead, file CLUB5 instead.
4. Write the member contract with the three 14-point notices, a term of 18 months or less and the duration in 14-point bold.
5. Set up every cancel path the statute lists, including a cancel button if members have accounts on your site.
6. Ask the Department of Revenue in writing whether your membership is a class fee or a health club membership.
7. Have a Minnesota lawyer write the waiver, with your own negligence named plainly.

This is our reading of the statutes, forms and agency pages as of October 14, 2026. It is not legal advice. Confirm the club questions with the Attorney General’s Club Contracts Registration at (651) 757-1335 and the tax questions with the Department of Revenue.

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