GNOA: GNC Corporation Uses Anti-American Business Tactics, Threats Made to Suppliers

CHICAGO, Sept. 12 -- The franchisor of the 1,241 GNC franchised locations around the United States has begun a program of intimidation in an attempt to derail the formation of an independent association of its own operators, a group of the company’s operators claim. Any franchisee who speaks to the media is subject to termination. GNC’s franchise operators -- who invested their own money to grow the GNC chain -- have formed the non-profit General Nutrition Operators Association (GNOA) to protect and promote their economic interests.

As an incentive to join the GNOA, approved vendors of GNC offered free product to the franchise operators. However, GNC Corporation has begun contacting and threatening the vendors, pressuring them to cease support of the independent GNOA. A vendor who wished to remain anonymous sent the GNOA a letter stating, “(We) have been notified by GNC corporate management that continued sponsorship could jeopardize key business relationships now in progress.” The vendor went on to say, “If I support GNOA then GNC (corporate) will take away my ability to sell any products. This whole thing stinks.”

Larry Beck, executive director of the General Nutrition Operators Association (GNOA) thinks the whole thing stinks, too. “The value of these free supplier products was much greater than the modest dues asked for joining the association,” said Beck. “The GNC Corporation has been steadily reducing franchise operators’ ability to make a living. We simply want to offer some immediate bottom-line help to the franchise operators upon receipt of their membership dues. It is frustrating when GNC Corporation takes actions to directly hinder franchise operators’ profitability.”

“GNOA is simply doing what persons sharing a common economic purpose have done since the Middle Ages -- they’ve formed a trade association. And, freely associating for any lawful purpose is a constitutional right of every American,” said Susan P. Kezios, president of the American Franchisee Association (AFA), a national advocacy group established in 1993. “GNC Corporation is attempting to restrict two fundamental rights of Americans, freedom to associate and freedom of speech. To make matters worse, they also engage in restraint of trade. Why threaten approved GNC vendors if they support the independent GNOA? Why not work to increase franchise operators’ ability to contract with vendors at fair prices instead?”

GNC Corporation’s business model is a disaster for franchisees, according to GNOA. Their own data shows domestic stores are being shut down at a rate of over 12 stores per month. In addition, customer demands cannot be met due to the Corporation’s policy on sourcing and purchasing of supplies. “Our customers go elsewhere for products they want, because I’m not allowed to carry them,” said one franchise operator. GNC Corporation then blames falling revenue on “under-performing franchisees” and acts aggressively to terminate those franchise owners.

Currently, about 500 GNC franchise operators have begun legal proceedings against GNC Corporation regarding a variety of matters ranging from unfair business practices to the Corporation’s alleged violation of a federal court order. “The GNOA doesn’t want to use the courtroom to decide how the franchises should be run,” stated Beck. “If we can find ways to increase our bottom- line, the Corporation should assist, rather than resist. They can’t guarantee our success, but, they shouldn’t put us in a position to guarantee failure, either.”

Information about the GNOA can be found at: http://www.gncoperators.com.

Note: GNC is the registered trademark of General Nutrition Investment Company.

Contact Information

Larry Beck

Media Contact

General Nutrition Operators Association (GNOA),

Contact via E-mail