GNC Franchise Costs: Estimated Initial Investment (Item 7, 2021 FDD)
For a New Store
1. Initial Franchise Fee: $20,000
- A New Franchise Store may be awarded to a new franchisee, an existing franchisee, or an employee of the franchisor pursuant to its employee program. The initial franchise fee for a New Franchise Store is $20,000 for a new franchisee. If you are an existing franchisee or an employee of the franchisor, the initial franchise fee is $15,000 for a New Franchise Store.
2. Security Deposit: $2,500
- The franchisor may also require you to pay it a franchise security deposit in the amount of $2,500.
- This deposit will be held by the franchisor until the expiration or termination of the Franchise Agreement, in which event the deposit will either (i) be returned to you within 60 days after expiration or termination, if you do not have any outstanding payment obligations to the franchisor under the Franchise Agreement or related agreement, or (ii) be applied to any outstanding payment obligations to the franchisor under the Franchise Agreement or related agreement (and the balance, if any, will be returned to you within 60 days after expiration or termination).
- The franchisor is not obligated to pay you interest on the security deposit.
3. POS and Peripherals, POS Secure Payment Terminal/System, and Retail Tablet: $3,000 to $7,000
- The equipment/technology the franchisor currently requires you to purchase from it is as follows: POS and peripherals, a retail tablet, and a POS secure payment system/terminal. The cost of the system will be at market pricing, and the current cost for this system is approximately $3,000 to $7,000 depending upon your register lane count. These costs do not include taxes or shipping charges.
4. 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 its Franchise Portal, a secure website that allows you to receive company news, communicate to franchisees electronically, pose questions to the franchisor or its affiliates, etc.
- The franchisor does not charge a fee for the Franchise Portal; however, to participate in the program, you must have access to the Internet.
5. GNC Smoothie Bar: $6,750 to $12,000
- If the franchisor allows you to install a GNC Smoothie Bar in your Store, you must acquire 2 freezers (one for the front, and one for the back room), a refrigerator unit, and ice cube maker and filter, as well as 2 blender stations. These GNC Smoothie Bar equipment costs do not include taxes or shipping charges.
6. Signage: $0 to $20,000
- 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.
7. Fixtures: $7,500 to $43,000
- Fixtures include, but are not limited to, the wall units, cash wrap, gondolas, track lighting, and accent lighting.
8. Construction Costs: $12,000 to $132,000
- Included in the construction costs are estimated costs to build out the Store, as well as estimated costs for outside firms to prepare architectural, electrical, and mechanical drawings that 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.
- Construction includes installation of all the materials to build out the Store such as acoustical ceiling and flooring materials, plumbing, fixtures, HVAC, electrical, and drywall.
9. 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. Your store at all times must maintain its opening order inventory value to ensure an adequate stock of inventory.
- At a minimum to not be at risk for being in default of your franchise obligations, you are required to maintain at least $60,000 of inventory at wholesale cost, in an appropriate mix that ensures that the store is at all times fully stocked in accordance with GNC’s merchandising and plan-o-gram guidelines, presents a full display of products to customers, and consists of no more that 10% of non-plan-o-gram products provided that you must otherwise maintain adequate inventory to effectively operate.
- The estimated initial inventory for a GNC Smoothie Bar includes paper products, fruit, juice, supplements, and additives.
10. Management Fees: $5,000 to $10,000
- For a New Franchise Store, you must pay to the franchisor a Project Management Fee of $5,000 for non-stamped architectural drawings and permitting for a standard GNC Store design.
- If you desire to engage the franchisor for construction management for your Store, you must pay the franchisor an additional $5,000 fee for oversight of all procurement and construction management.
11. Utility Security Deposits: $1,500 to $3,000 (variable)
12. Business and Workers’ Compensation Insurance: $1,241 to $6,789
- Business and workers’ compensation insurance costs average approximately $3,628 per year, but the range is from $1,241 to $6,789 per year.
13. Training Expenses: $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
- Miscellaneous opening costs include the costs of various supplies, including cleaning supplies, bathroom supplies, office supplies, and other general supplies necessary to operate your Store.
15. Rent/Leasehold Space: $825 to $18,433
- The cost per square foot of commercial space varies considerably depending on the location and market conditions affecting commercial property. However, in general, you must pay base rent, common area maintenance charges, and real estate taxes.
- Depending on lease requirements, you may also have to pay a rental deposit when the lease begins, in addition to other occupancy costs such as insurance, utilities, promotional fund charges, and merchant’s association charges.
- The expenditure range for this item includes estimated charges for one month for base rent, common area maintenance charges, real estate taxes, and other charges including deposits, utilities, and merchant’s association charges, and is based upon Stores that have been opened in strip center locations.
- Your Store must be at least 1,200 square feet.
16. 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 first three months of operational expenses, including rent, organizational costs, deposits, business licenses, insurance, replacement of inventory, POS maintenance fees, and salaries when you begin operations. These expenses include payroll costs.
- These figures are estimates and the franchisor cannot guarantee that you will not have additional expenses starting the business.
17. Total: $154,066 to $386,722
- 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.