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WITH FRANCHISES OUTPERFORMING COMPANY-OWNED UNITS, GNC PLANS GREATER EMPHASIS ON FRANCHISING IN '93

 WITH FRANCHISES OUTPERFORMING COMPANY-OWNED UNITS,
 GNC PLANS GREATER EMPHASIS ON FRANCHISING IN '93
 PITTSBURGH, Oct. 6 /PRNewswire/ -- General Nutrition Inc. (GNC), the nation's largest chain of health management stores, announced that new franchises will account for half of its planned 25 percent expansion in 1993. The reason: sales at the company's franchised units outperform its company-owned stores by over 7 percent.
 The 57 year-old retailer currently has 1,175 stores open, of which almost 20 percent are franchised. For the second quarter of 1992, sales of franchised stores increased 19.9 percent over the previous year, whereas retail sales of company-owned stores increased 12.8 percent.
 "The franchisee has a vested interest in the success of his or her store, and often works harder than a hired manager," said William E. Watts, president and CEO of GNC. "Sales at franchised stores reflect the enthusiasm of the franchisees."
 Franchising also enables GNC to capture additional market share without an incremental increase in capital costs. Each franchise pays an initial fee of $17,500 per store, for up to five stores.
 Because of the success of its franchising program, GNC also plans to convert several of its marginally performing company stores to franchises. In the first year that a company owned store is converted to a franchise, sales increase 36 percent, on average.
 Strategies for Franchising Success:
 As part of its franchising strategy, GNC is targeting the nation's 5,600 independently-owned health management stores for conversion to GNC franchises.
 "We have converted 11 stores so far this year, and their sales have increased more than 60 percent," said Watts.
 "Gross-margins have improved by 20 percent, with a 70 percent increase in traffic." Which largely attributes to GNC's $14 million national advertising campaign. In 1993, GNC's ad budget will increase to $20 million.
 In attracting franchise candidates, GNC is focusing on the entrepreneurs of the 90s: women and minorities.
 Approximately 34 percent of GNC's franchisees are minorities, including Hispanics (16 percent), Orientals (8 percent), African- Americans (5 percent) and other minorities.
 Over one-third, 34 percent, of GNC's franchisees are women.
 GNC's growth also reflects America's desire to self-manage their health care. More than ever, consumers are taking vitamins, minerals and supplements to maintain optimum health and well-being.
 GNC is courting the active and aging baby boomer. By the year 2000, 49.5 percent of these Americans will move into the 45-54 age bracket and another 20 percent will enter middle age, (a time signaling the onset of certain diseases), reports the United States Census Bureau.
 GNC currently holds the number one share of the nutritional supplements market. It is the largest manufacturer of vitamins, minerals and supplements in the United States.
 In 1985, the company changed directions from a discounter of vitamins to a specialty health retailer selling vitamin, mineral and sports nutrition supplements, personal care, fitness and other health related products.
 Management re-merchandised stores and repackaged and reformulated product offerings, focusing on high-margin, value-added products not generally offered by mass merchandisers.
 Unlike other companies which franchise quickly, "GNC emphasizes demographic research for new store locations, and offers franchises continued support of its operators at every stage of their business," said Bob Gappa, vice president of Management 2000, a Houston-based franchise consultancy.
 In just three years, GNC has seen the number of franchise stores grow from 30 to 302. Out of the 2500 registered franchises in the United States, GNC is one of the five fastest growing.
 Franchisees have also infused the company with an entrepreneurial spirit that has benefited the entire chain. Vocal franchisees, eager to increase their earnings, provide headquarters with countless ideas for improving the system, and in return demand top-quality service from corporate headquarters.
 GNC's franchising program was listed the number one new franchise opportunity by Success and Entrepreneur magazines in 1990 and 1991 respectively.
 For the past fiscal year ending Feb. 1, GNC reported sales of $393.6 million, up 14.1 percent over the prior year. Second quarter 1992 sales released in July demonstrated a 14.4 percent increase.
 The company has stores in all 50 states. In addition to its domestic expansion, GNC plans to open franchises in the Caribbean, Latin America and the Far East.
 -0- 10/6/92
 /CONTACT: Betsy Nichol of Nichol & Company, 212-889-6401, or fax 212-532-4062, for GNC/ CO: General Nutrition Inc. ST: Pennsylvania IN: REA SU:


TM-LD -- NY080 -- 7249 10/06/92 17:02 EDT
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Date:Oct 6, 1992
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