Discount Cards Latest GNC Hotspot
Pittsburgh-A discount card is the latest point of contention between General Nutrition Centers Inc. and a contingent of unhappy franchisees.
With millions in circulation, GNC's Gold Card has been a focal marketing tool for the nutritional supplement retailer for years, allowing its customers to obtain 20-percent discounts when shopping at GNC stores the first Tuesday of each month.
Yet more GC franchisees-the company believes 50 or so, franchisees say 200-are now offering their own discount cards along with the company cards. And GNC wants it to stop.
"Due to a recent proliferation of alternate cards, GNC has decided in the best interest of the GNC system to halt the use of promotional cards other than the time-tested GNC Gold Card," stated a letter to a GNC franchisee written by Russ Cooper, senior vice president of GNC Franchising Inc.
Cooper continued: "We believe such cards have a negative impact on the GNC system, including creating confusion for GNC customers, conflict within the franchisee community and, most important, the cards detract from the consistency and uniformity requirements of the GNC operating system to the detriment of other GNC stores."
While some franchisees claim they've been offering their own cards for about three years, the practice became more widespread in 2000. And to some franchisees, Cooper's words could be worth fighting over.
"It's safe to say that we will challenge it all the way," said Daniel Brandt, a franchisee based in Silverdale, Washington, who was one of the first GNC franchisees to offer his own card. "This is one battle that we must make a stand on because our financial futures depend on it."
Jeff Goldstein, a Washington DC-based attorney who represents the Independent Association General Nutrition Franchisees, said that the organization was "considering all actions" available to it.
JJ Sorrenti, vice president of franchising for GNC, said that it would be "horribly disappointing" if the franchisees seek legal action to maintain the use of their own discount cards. "We would try to avoid that," he said. "We would hope the franchisees would avoid that."
In response to franchisee issues over cards, Sorrenti said GNC is testing a variety of new Gold Card programs in its corporate stores. He hopes to introduce new card programs that would better benefit franchisees within the next year.
He also hopes to discourage franchisees from using their own discount cards without pursuing any punitive measures. "We would much rather do things so they would see a benefit to it rather than dragging them along kicking and screaming," said Sorrenti.
Sorrenti preferred to see the situation as one in which the company is taking advantage of the opportunity to use franchisees' experience to help improve business for all parties.
"Franchisees are looking to make things better, and the company is reacting to that by testing their ideas." -Pittsburgh Business Times