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General Nutrition Corporation Franchise Cost & Fees

Date of Incorporation: 1935
Franchising Since: 1935
Headquarters: Pittsburgh, Pennsylvania

Business Description: General Nutrition Corporation (GNC) Stores are retail nutrition, health and/or fitness stores that offer for sale vitamin and mineral supplements and depending on the store size, franchisee preferences, and other requirements, may offer for sale sports nutrition products, herbs, health foods, natural cosmetics and miscellaneous healthcare products, diet products, physical fitness products, specialty workout apparel, health-management products, and related products, as approved for sale by the franchisor.

Franchise Offer: General Nutrition Corporation offer franchises for the establishment and operation of a GNC retail store specializing in the sale of vitamins, minerals and other food supplements, natural cosmetics and other health management items. GNC currently offers the following franchise programs:

  1. New Franchise Store: A new franchise Store may be awarded to a qualified person who is new to the GNC System; who is an existing franchisee; or who is an employee of GNC or an affiliate pursuant to the GNC employee program. A New Franchise Store will be a new Store constructed by GNC (unless the franchisor designates otherwise in writing) at a location approved by GNC.
  2. Conversion Store: This program to convert company-owned GNC Stores to franchised GNC Stores. This program is available to qualified new franchisees, existing franchisees, and employees of GNC or GNC affiliates pursuant to the GNC employee program.

Financial Assistance: The franchisor or affiliates may offer, directly or indirectly, financing for the franchisee’s inventory, equipment, signage, fixtures and other construction costs for the types of franchises disclosed in the FDD of GNC. Before selecting a financing program, GNC must qualify the franchisee according to a number of factors, including, but not limited to, creditworthiness. The franchisor reserves the right to refuse financing to the franchisee, even if the franchisee qualifies, at their sole discretion. GNC may also finance replacements for equipment, fixtures and inventory during the term of the Franchise Agreement. GNC will not finance ongoing store operations, nor do they finance any new or existing franchisees that purchase existing franchised stores.

Training and Assistance: The franchisee must successfully complete the three phases of initial training to the franchisor’s satisfaction to be eligible to open a New Franchise or Conversion Store. To successfully complete Phase I training, franchisees will be required to spend up to 40 hours of on-the-job training in a company-owned GNC Store. This training will provide franchisees with an orientation to the operation of a GNC Store. Phase II training requires that franchisees attend up to a five day classroom training program Phase II training will take place at the franchisor’s Franchise Support Center in Pittsburgh, Pennsylvania or such other location designated by GNC and must be completed prior to the opening of the store. Phase III Training for a New Franchise Store with a new franchisee is an up to seven-day process at the franchisee’s store. GNC does not require any additional initial training if franchisees successfully complete Phase I Phase II and Phase III training. At its option, GNC may require any manager subsequently employed by franchisees to attend and complete to its sole satisfaction the initial training program. GNC may require that franchisees attend additional training programs or periodic refresher courses at such times and places as GNC designates.

Territory: In the franchise agreement, the franchisor grants the right to operate a store at a specific location once it is approved. The franchisor will grant the franchisee a protected territory within a particular radius measured from the public entrance to the Store (not the mall or strip center entrance) for a specified period of time. If the approved location is located in an enclosed shopping mall, the protected territory will generally encompass the shopping mall premises (including the parking lot). If the approved location is not located in a shopping mall, the size of the protected territory will vary depending on a number of factors, including demographic barriers, market strength measured by various market data profile studies, population density, median income per household, and the categories of products to be offered at the franchisee’s store, particularly in relation to the competition in the relevant market.

Term of Agreement and Renewal: The length of the franchise agreement commences on the store opening date and ends on the earlier of 10 years from the store opening date, or the expiration or termination of the sublease/lease for the store. If the franchisee meets the requirements, he or she can renew their franchise for two additional consecutive five year terms.

Obligations and Restrictions: The franchisor encourages the franchise to participate personally in the on-premises supervision of the GNC Store. While the franchisor does not require the franchisee personally to participate in the direct supervision of the GNC store, they do require either the franchisee or their designated manager to directly supervise the GNC store on its premises and to devote full-time, energy and best efforts to managing the store. The franchisee may sell only products and services which have been approved and which conform to the franchisors standards and specifications. The franchisee must offer GNC Brand Supplements for sale.

Estimated Number of Units: 6,735

Investment Tables:
Initial Investment for a New Franchise Store
Name of Fee Low High
Initial Franchise Fee $20,000 $40,000
Point-of-Sale Cash Register $4,250 $4,250
Computer and Printer $1,000 $2,000
Signage $3,000 $6,500
Fixtures $22,000 $40,000
Other Construction Costs $35,000 $90,000
Opening Inventory $65,000 $65,000
Initial Promotion Materials $1,250 $1,250
Construction Handling Fee $2,500 $2,500
Security Deposits $1,500 $3,000
Business and Worker's Compensation Insurance $900 10,000
Initial Training $1,500 $3,000
Miscellaneous Opening Costs $3,000 $4,000
Additional Funds $7,000 $23,000
ESTIMATED TOTAL $167,900 $294,500
Initial Investment for a Conversion Store
Name of Fee Low High
Initial Franchise Fee $20,000 $40,000
Point-of-Sale Cash Register $4,250 $4,250
Computer and Printer $1,000 $2,000
Signage $0 $6,500
Fixtures $0 $40,000
Other Construction Costs $0 $1,334,000
Opening Inventory $65,000 $185,000
Initial Promotion Materials $1,250 $1,250
Construction Handling Fee $2,500 $2,500
Security Deposits $1,500 $3,000
Business and Worker's Compensation Insurance $900 10,000
Initial Training $1,500 $3,000
Miscellaneous Opening Costs $3,000 $4,000
Additional Funds $10,000 $30,000
ESTIMATED TOTAL $106,900 $1,660,000
Other Fees
Type of Fee Amount
Royalty 6% of total gross sales.
National Advertising 3% of total gross sales.
Transfer Fee Transfer fee equal to then-current initial franchise fee for a new franchise store. Exceptions:
(1) Transfer fee $1,000 if the franchisee transfers the franchise to an entity owned by, or under the same ownership as, the franchisee, or of the transfer to an immediate family member; and
(2) Transfer fee of $2,500 if the transfer is of less than 50% ownership of franchisee.
Relocation Fee $1,000
Refurbishing Variable; may include certain equipment upgrades or additions.
Regulatory Compliance GNC’s cost and expense for bringing the Store into compliance.
Remodeling Reasonable cost to upgrade Store.
Payments for Goods or Services See FDD.
Insurance Premiums for required insurance.
Late Payment Charges 1.5% interest per month on overdue amount.
Insufficient Funds Fee $30 per occurrence.
POS Register Maintenance $51 per month (1st year)
$73.68 per month (2nd year).
POS Communications $165 per month (Without Internet)
$233,33 per month (With Internet).
Financial Services Approximately $340 per month.
Maintenance of Inventory Variable, depending on sales.
Lease Negotiation Variable, depending on the circumstances.
Rent Variable, depending on square footage of location.
Franchise Renewal 33 1/3% of the then-current initial franchise fee for new franchisees for a new franchise store.
Advisory Assistance and Services Will vary depending on the circumstances.
Audit If an audit discloses an understatement of three percent (3%) or more in any report of Gross Sales, the franchisee must reimburse GNC for all costs and expenses of the audit.
Indemnification Will vary depending on the circumstances.
Attorneys' Fees and Costs Will vary depending on the circumstances.
Liquidated Damages Will vary depending on the circumstances.

The above information has been taken from the FDD of GNC. Year of FDD: 2015

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