GNC Settles Suits By Disgruntled Franchisees

Thursday, August 16th 2001, 12:00 am
By: News On 6

PITTSBURGH (AP) - General Nutrition Companies Inc. has settled three lawsuits brought by disgruntled franchisees who claimed they were being charged more for products than nearby company-owned stores.

The stores, which sell vitamins and health supplements, had been seeking class-action status on behalf of the corporation's 1,400 franchisees.

The key provision to the settlement, announced Wednesday, is that GNC will offer wholesale product credits worth $125 per month, per franchise store, for the next 24 months - $4.2 million in all.

GNC holds a nearly 15 percent share of the supplement industry, an estimated $10 billion annual market, at least 20 times the market share of its closest rivals.

``While GNC does not admit to any wrongdoing or taking any action against the interests of our franchisees, our franchising system continues to evolve and we believe that the changes spelled out in this agreement will benefit both GNC and our franchisees,'' said Mike Meyers, GNC president and CEO.

Wayne Mack, a Philadelphia attorney representing some of the plaintiffs, did not immediately return a phone call to his office Thursday.

Franchisees had also criticized the company's handling of payment issues, new store locations and new product marketing and introductions.

The retailer agreed to put a one-time cap on franchise renewal fees in an effort to address complaints. Franchisees can elect to opt out of the settlement.

General Nutrition operates more than 4,500 stores, about 3,100 of which are owned by the company.