GNC Franchise

Financing Details

GNC Holdings, LLC does not offer direct or indirect financing to its franchisees and does not guarantee any notes, leases, or other obligations. The company also does not finance ongoing store operations or the purchase of existing franchised stores. However, GNC may, at its discretion, extend a revolving credit line to qualified franchisees for ongoing inventory purchases. The credit amount is based on the franchisee's creditworthiness, with a payment period of 50 days from the invoice date and no interest. GNC reserves the right to adjust or terminate this credit and may file a UCC-1 financing statement to secure its interest. While GNC is part of the U.S. Small Business Administration (SBA) loan program, its decision to subordinate its security interest to facilitate SBA financing is at its sole discretion. All franchisees and their spouses are required to personally guarantee their financial obligations.

Litigation Summary

GNC Holdings, LLC currently has 3 pending arbitration cases, all initiated in 2021-2023, involving international GNC franchisees. These disputes allege breaches of distribution and development agreements, wrongful termination, and tortious interference, with GNC filing counterclaims seeking injunctions and monetary damages. The company's predecessor, General Nutrition Corporation, also has 4 pending actions from 2013-2020 regarding deceptive supplement claims, lead-containing products without warnings, and wage act violations, which are being handled by a bankruptcy plan administrator. Additionally, GNC's predecessor had 24 prior resolved lawsuits, including class actions over product labeling, marketing, employee wage claims, and franchisee disputes. There were also 5 prior governmental actions against the predecessor, such as a 1994 FTC consent decree regarding hair loss claims, a 2016 agreement with the U.S. Attorney's Office concerning illegal supplement ingredients, and administrative actions related to disclosure accuracy and no-poaching clauses.

Renewal Conditions

To renew their franchise, GNC Holdings, LLC franchisees must provide written notice between 6 and 12 months before their current term ends and obtain GNC's approval. Franchisees must remodel their store if required, not be in default of the Franchise Agreement or any related agreements, and have consistently complied with System standards. They must satisfy all monetary obligations to GNC, its affiliates, lessors, sublessors, vendors, and suppliers, maintaining timely payments. Franchisees need to show they have the right to possess the store premises for the renewal term, which GNC must approve. They must sign GNC's then-current franchise agreement and any ancillary agreements, including personal guarantees, and pay a $12,500 renewal fee by the expiration date. A general release covering all existing GNC franchised stores must be executed, and franchisees must meet GNC's current qualification and training requirements for renewal. Additionally, their gross sales during the franchise term must have been sufficient to cover all operating costs, and they must have a sound credit rating and sufficient financial resources to continue operating under the new agreement. The new franchise agreement may have materially different terms and conditions.

Staffing Notes

GNC Holdings, LLC requires that either the franchisee or a designated manager directly supervise the GNC Store on its premises, devoting full-time energy and best efforts to its management. Franchisees are responsible for training their employees to be competent, conscientious, and qualified to operate necessary equipment, including the POS System, and to provide knowledgeable customer service. While GNC encourages personal owner participation, it does not require the franchisee to personally supervise the store if a designated manager is in place. Franchisees must inform GNC of any manager changes, and GNC retains the right to require any store manager to complete its training programs. GNC recommends 4-6 people for initial store setup.