The nutritional product industry is massive. There are many items that you can get your hands on, which creates a massive market. There are both big and small players in this industry, but the big ones are generally more attractive to entrepreneurs looking to own a franchise to use their brand. The biggest global brand for these products is GNC, and they are offering franchising.
You might be curious about their franchising system, how much it costs, whether it’s worth it, and other details. We will give you an overview of GNC’s franchise system and franchise cost.
About GNC and GNC History
GNC Holdings is an American global health, wellness, and performance merchandise retailer. They sell premium assortments of health and beauty, wellness supplements, performance supplements, and other similar merchandise. The company was established in 1935 in Pittsburgh, Pennsylvania, with its first storefront.
Their offerings grew to today’s wide range of products, and they reached over 4,800 locations worldwide, most of which in the United States. The company right now is the biggest global specialty retailer of nutritional products. They have been offering franchising since 1988 and have a very structured franchise system.
Franchise Model Table
| Initial Investment | $188,719-$503,642 |
| Franchise | YES |
| Franchising Since | 1988 |
| Franchise-Fee | $20,000 |
| Royalty-Fee | 6% |
| Liquidity | $240,000 |
| Estimated Outlets | 4,800 |
How Much Does it Cost to Open a GNC Franchise?
The estimated initial investment to open a GNC store is between $188,719 and $503,642, including the $20,000 franchise fee. This expected cost includes every start-up cost, like the lease of the building, training, employee costs, equipment, and other related expenses while building the store.
The numbers vary based on the location and size of the store, which products you want to offer for sale, and how big of an inventory you will buy for the first time. It may well be above the expected investment.
Franchise Requirements
GNC looks for two important requirements to approve franchisees. You need liquidity of $240,000 minimum and a credit score of at least 670. You also need to have at least 2 years of credit history in the USA. This shows that you are financially capable of opening a franchise store.
They do not look for experience with GNC or in the industry. It is beneficial to have business acumen for your process, but it’s not a necessity.
GNC Franchise Profit & Revenue
The latest available financial report for GNC is for the year 2020. According to these figures, GNC had $1.7 billion in annual revenue for the trailing 12 months in 2020. They didn’t make any profit but rather had a net loss of $340 million in the same year.
Overall Sales
An average GNC franchised store makes $540,000 annually in overall sales. This number comes from GNC’s franchise disclosure document, and it’s the average number of the 767 franchised stores that operated the full year in 2022.
GNC Franchise Owner Salary
The net profit numbers per store are not available online. However, using the average annual sales of $540,000 average profit margin of 10%, we can estimate that the franchise owner’s salary could be between around $54,000 annually.
This is how we calculated this amount:
| Financial Overview | Percentage of Revenue | Amount ($) |
|---|---|---|
| Individual Franchise Annual Revenue | 100% | 540000.00 |
| Rent | 11.25% | (60750.00) |
| Insurance | 5.63% | (30375.00) |
| Salaries | 22.50% | (121500.00) |
| Franchise Royalty Fees | 5.63% | (30375.00) |
| Utilities | 2.25% | (12150.00) |
| Cost of Goods Sold (COGS) | 28.13% | (151875.00) |
| Labor (Variable) | 14.63% | (78975.00) |
| Total (Expenses) | 90.00% | (486000.00) |
| Net Profit | 10.00% | 54000.00 |
Note: The displayed expenses are estimates based on industry averages and standard costs. Actual expenses may vary due to factors like location, business size, and market conditions. We recommend conducting detailed research or consulting with a financial advisor for a tailored financial analysis.
GNC Franchise Payback Period
With a midpoint investment of $346,180 and average net profit per store of $54,000, we can calculate the payback period of GNC Franchise.
So, to find out how long it will take to earn back the initial investment:
Payback Period = Midpoint Investment / Yearly Profit = $346,180 / $54,000 = 6.4 years
Based on these figures, it will take approximately 6 to 8 years to pay back the initial investment for GNC franchise. This time period could be longer or shorter depending on your sales, revenue, and profit figures.
GNC Failure Rate
Franchised Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2017 | 1,178 | 1,099 | -79 |
| 2018 | 1,099 | 1,037 | -62 |
| 2019 | 1,037 | 1,956 | -81 |
For the Franchised outlets:
- In 2017, the failure rate was (79)/1178×100≈6.7%
- In 2018, the failure rate was (62)/1099×1099≈5.56%
- In 2019, the failure rate was (81)/1037×100≈7.8%
Company-Owned Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2017 | 3,293 | 3,173 | -120 |
| 2018 | 3,173 | 2,984 | -189 |
| 2019 | 2,984 | 2,727 | -257 |
For the company-owned outlets:
- In 2017, the failure rate was (120)/3293×100≈3.6%
- In 2018, the failure rate was (189)/3173×100≈5.9%
- In 2019, the failure rate was (257)/2984×100≈8.6%
Total Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2017 | 4,471 | 4,272 | -199 |
| 2018 | 4,272 | 4,021 | -251 |
| 2019 | 4,021 | 4,683 | 662 |
For Total outlets:
- In 2017, the failure rate was (199)/4471×100≈2.6%
- In 2018, the failure rate was (251)/4272×100≈5.8%
- In 2019, the growth rate was (662)/4021×100≈0.001%
According to the above-mentioned data, we can see that the franchised outlets for GNC declined from 2017-2019, showing a failure rate between 6.7% and 7.8%.
Even the company-owned outlets during the same period declined, showing a failure rate between 3.6% and 8.6%.
Overall, when we combine the data of franchise and company-owned outlets, we can see that the GNC franchise has declined in the years 2017 and 2018, showing a total failure rate between 2.6% and 5.8% and a very slow growth rate of 0.001% in 2019.
GNC Franchise Training and Support
The initial training is called Phase I training and includes 40 hours of on-the-job training in a GNC store. The training focuses on the orientation of the operation of a franchised GNC store. Phase II training is the next one, which is a five-day classroom training. The last training is the Phase III training, which takes place before the grand inventory delivery arrives at the new franchised store and helps to set the store up for opening.
GNC provides ongoing support both before and after opening the GNC franchise store. They provide extra training where necessary, give marketing support, and other necessary operational support.
GNC Franchise Cost Terms of Agreement and Renewal
The initial franchise agreement is for five years. However, it might be shorter than that, depending on the building’s lease expiration, if it’s leased. At the end of the initial five years, a renewal is possible if GNC approves the renewal. Each renewal is for a five-year period, and there are no limits to how many times you can renew it.
Obligations and Restrictions
GNC doesn’t require the franchisees to personally supervise the store and be on-premises for daily operations. However, the franchisees are obligated to have a designated manager on-site to oversee the operations full-time.
Each GNC franchisee is obligated to sell products and services that the franchisor approves of and follows the franchisor’s standards and procedures. The franchisees are also obligated to offer all GNC-branded supplements for sale.
GNC Franchise Financial Assistance
GNC doesn’t offer direct or indirect financial assistance to any of their franchisees. They do not guarantee any kind of payment, lease, or note during the opening process of the store. The franchisee is obligated to find their own financing. In certain circumstances, GNC might offer extended credit to qualified franchisees for ongoing purchases of the inventory.
GNC Comparison
| Name | Franchise Fee | Royalty Fee | Initial Investment |
| Smoothie King | $30,000 | 6% | $311,601-$1.3 million |
| The Vitamin Shoppe | $39,900 | 5% | $492,900-$944,900 |
| GNC | $20,000 | 6% | $188,719-$503,642 |
GNC Franchise Cost: Conclusion
GNC is the biggest global retailer of a wide range of nutritional products, with over 4,500 stores worldwide. With a lower entry point compared to other industries and brands, it presents itself as a good opportunity for entrepreneurs. Your income will vary, but the overall sales per store are around $540,000 annually, which is extremely high.
If you are thinking about being a GNC franchisee, it might be a lucrative business endeavor and can generate good revenue.
GNC Franchise Cost: FAQ
Is GNC a franchise?
Yes, GNC is an active franchise. They have been franchising since 1988.
How much do I need to open a GNC franchise?
You need between $188,719 and $503,642 to open a GNC franchise and $240,000 in liquid assets before you open the store.
Do I need to work at GNC before being a GNC franchisee?
GNC doesn’t require you to work with them before you can apply to be a franchisee. It doesn’t matter if you worked with them or not.
How Many Locations Does GNC Has?
There are more than 4000 GNC locations in America.
Who Owns GNC?
GNC was acquired by Harbin Pharmaceutical Group, which is a multinational pharmaceutical manufacturer.
Who Founded GNC?
David B. Shakarian founded GNC in the year 1984.
Where Is GNC Headquartered?
GNC is headquartered in Pittsburgh, PA.
Sources