California Dance Studio Bonds: One Strut Away From Creating a Legit Dancing Space

Today's steady stream of people flocking to their local dance studios garners mass media attention because many see dancing as an appealing pathway to physical fitness. This awareness spurs up-and-coming dance studio owners to set up shop. In fact, the dance studio industry has thrived in the last decade, thanks to the influence of television shows like “Dancing with the Stars.”

According to the 2016 IBISWorld's Dance Studios market research report, the annual growth of dancing studios has grown by 2.5% from years 2011-2016, with more than 66,000 businesses now employing more than 115,000 people. The report indicates that these dance workshops will generate three billion US dollars fostering greater spending on dancing activities.

Dance studios are flourishing in every city and every state. However, for dance studio owners, establishing a dance studio involves paperwork and requirements. One of the requirements for dance studios before legally conducting business is to purchase a surety bond.

What is a dance studio bond?

Dance studios are commercial spaces that mainly offer instructional dancing lessons and rehearsals. These lessons and rehearsals may include ballet, ballroom dancing, hip hop, modern dance, and so on. These dance studios cater to any particular age and skills group – children and adults, whether novice or professional dancers.

Dancing professionals and business owners who want to open a dance studio need to post a surety bond. The Secretary of State of California requires those that operate dance studios to execute a Dance Studio Bond in compliance with Section 1812.5 et seq. of the Civil Code of the State of California.

Just like the other types of surety bonds, it involves three parties:

  1. The Obligee: In this case, the state requires the bond to protect the dance studio clients (students or participants).
  2. The Principal: It is the dance studio owner or operator.
  3. The Surety: It is the surety bond company that authorizes the dance studio bonds.

Dance studio bonds protect the obligee against any financial damages incurred as a result of the principal’s disreputable financial mismanagement or failure to comply with state and local laws.

This is a type of license and permit bond that holds the principal liable for its financial and business decisions.

By securing a dance studio bond, the principal ensures that it is a trustworthy business and will promise to perform any of its obligations to the obligee.

What is the importance of California dance studio bonds?

California dance studio bonds guarantee that any person who has made payments for instructions at a dance studio can file a claim as a result of the studio’s misconduct or their failure to abide by standard business practices and professional code of conduct described for dance studios.

This bond protects clients from malpractices or damages done by dance studio companies. It also provides dancing clients peace of mind knowing that the dance studio has been backed by a third-party surety bond provider. Furthermore, the bond helps ensure that dance studios will conform to all regulations, rules, and laws and give an authentic and honest performance.

For instance, the bond guarantees dance studio will offer lessons and other services as indicated in their contract with a client. Or else, the client shall have the right to receive a refund in full and cancel the contract through the surety.

The surety company will provide disbursement if they found that the principal is at fault for a claim on the bond. To qualify for the dance studio surety bond, principals require a credit check evaluation.

How much does a dance studio bond cost?

Surety underwriters are the decision-makers that issue bond approvals. They will look into several factors that may include, but not limited to:

  • Personal credit
  • Financial capacity
  • Liens or judgments
  • Work experience
  • Bond amount
  • Type of bond

As the principal, you must provide all the pertinent information on your application so that you will have a better chance of getting an affordable price and faster approval.

The rate will depend on your credit rating; it will carry a rate from 1% to 15%. The provisions of Section 1812.50 et seq., of the Civil Code, require "that the principal file or have on file with the Secretary of State a copy of the bond in the sum of $25,000 or 25 percent of the dance studio’s gross income from the dance studio’s business in the state during the studio’s last fiscal year."

What else do I need to know about dance studio bonds?

California dance studio bonds are continuous for the term of the initial bond. Unless the surety cancels or withdraws the bond, this will remain in full force and effect. The surety may cancel the bond by the provisions of Sections 996.310 et seq. of the Code of Civil Procedure.

Note that the term for all bonds issued shall not be less than 24 months. While there is a filing fee of $30.00, there is no filing fee for an amendment to a previously filed surety bond. Executed documents and filing fees are submitted to the California Secretary of State headquartered in Sacramento, CA.

To sum things up, dance studio bonds greatly benefit both the obligee and the principal. How? The bond protects the obligee from any fraud or malpractices by the principal. In turn, when the principal secures this surety bond, it adds credibility to their business and boosts client confidence.

Contact Surety Bond Authority at 800-333-7800, and we will help you dance leap your way to becoming a more credible and reputable dance studio business.

Check out this Infographic!

"Why do you need a Dance Studio Bond in California?"

California Dance Studio Bonds Infographic
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