This post was updated on September 11, 2016 to reflect information from GNC’s 2016 FDD (Item 7).
Detailed Estimates of GNC Franchise Costs Based on Item 7 (Estimated Initial Investment) of GNC’s 2016 Franchise Disclosure Document
1. Initial Franchise Fee: $20,000 to $40,000
- A New Franchise Store may be awarded to a new franchisee, an existing franchisee, or an employee of the company or its affiliates pursuant to its employee program. The initial franchise fee for a New Franchise Store is $40,000 for a new franchisee; $30,000 for an existing franchisee; and $20,000 for an employee.
2. Point-of-Sale System: $5,000
- The cost for one POS system is approximately $5,000. The price does not include tax or shipping charges. You must sign the POS License Agreement and pay the POS Maintenance Fees.
- Currently, maintenance fees for the POS system are $51 per month for the first year and $73.68 per month (estimated) for the second year. If you have two POS registers, you will pay an additional $22.68 per month after the first year.
3. Computer and Printer: $1,000 to $2,000
- The franchisor also requires you to purchase a computer and printer so that you may participate in the GENESIS program, a secure website that allows you to receive company news, communicate with franchisees electronically, pose questions to the franchisor and its affiliates, etc.
- The franchisor does not charge a fee for GENESIS; however, to participate in the program, you must have access to the Internet.
4. Secure Payment System: $467
- The cost for the POS secure payment system is $467.
5. Signage: $3,000 to $8,000 per sign
- All GNC Stores are required to have approved exterior signs featuring the company’s trademarks to identify the location. Manufacturing and installation of signage must adhere to landlord and local regulations.
6. Fixtures: $22,000 to $40,000
- Fixtures include, but are not limited to, the wall units, cash wrap, gondolas, track lighting, and accent lighting.
7. Other Construction Costs: $35,000 to $120,000
- The franchisor, or a contractor approved by the franchisor, will install wiring, flooring, fixtures, and decor items which comply with its specifications. The franchisor will hire outside firms to prepare architectural, electrical, and mechanical drawings which comply with applicable governmental building codes and regulations.
- The cost will vary depending on the location and condition of the premises, the type of Store you will franchise, the requirements of the landlord for the Store location, and the building code requirements of your area.
- Shipping and installation costs are included in the construction estimates.
- Although the franchisor does not do so at the present time, it reserves the right to charge you a fee for rendering Store layouts and design plans in the future.
8. Opening Inventory: $85,000
- Opening inventory includes a supply of inventory items with a wholesale cost of approximately $85,000 for a New Franchise Store. Thereafter, the franchisor requires that you maintain a minimum of $60,000 of inventory at wholesale cost, provided that you must otherwise maintain adequate inventory to effectively operate. If the wholesale cost of your inventory falls below $60,000, your Franchise Agreement may be terminated.
- If you qualify, the franchisor may offer financing for opening inventory, signage, equipment, fixtures, and other construction costs. For New Franchise Stores, the franchisor may finance up to 75% of the total cost of the opening inventory, signage, equipment, fixtures, and other construction costs. The required down payment is at least 25% of the total cost, and the annual interest rate ranges from 8% up to 13.75%. The loan term ranges from 5 up to 7 years.
9. Initial Promotional Materials: $1,250
- The franchisor encourages you to promote your Store via grand opening advertising. The franchisor may offer special incentives for grand opening advertising, which may be discontinued at any time without any notice to you.
10. Construction Handling Fee: $2,500
- For a New Franchise Store, you must pay the franchisor a fee of $2,500 for non-stamped architectural drawings, GNC procurement, and project management.
11. Security Deposits: $1,500 to $3,000 (variable)
12. Business and Workers’ Compensation Insurance: $900 to $10,000
- Business and workers’ compensation insurance costs average approximately $2,900 per year, but the range is from $900 to $10,000.
13. Initial Training: $1,500 to $3,000
- The cost of initial training is included in your franchise fee; however, you must pay for your lodging, travel, and additional expenses incurred by traveling to Pittsburgh, Pennsylvania, where Phase II training is held.
14. Miscellaneous Opening Costs: $3,000 to $4,000
15. Additional Funds – 3 Months: $10,000 to $30,000
- The requirement for Additional Funds varies depending on the type and size of the Store you will open. This is the minimum amount of working capital the franchisor recommends you have on reserve to pay for the following: first month’s rent, organizational costs, utility deposits, business licenses, insurance, replacement of inventory, POS maintenance fees, and salaries when you begin operations.
- This estimates your initial startup expenses. These expenses include payroll costs. These figures are estimates and the franchisor cannot guarantee that you will not have additional expenses starting the business.
- You will need approximately 1,000 to 1,500 square feet for the Store. Based upon the experience of its franchisees, the franchisor estimates the total lease rental cost to be $10,021 to $171,513 per year for a mall location, $6,108 to $171,513 per year for a strip center location, and $28,994 to $148,835 per year for a location in a “downtown” or “urban” area.
16. Total: $192,117 to $354,217
- The cost estimates given in this table are based upon corporate and franchised Stores that have been opened in strip center locations. The figures in this table are approximations only.