Discount Cards Latest GNC Hotspot

Pittsburgh-A discount card is the latest point ofcontention between General Nutrition Centers Inc. and a contingentof unhappy franchisees.

With millions in circulation, GNC's Gold Card has been afocal marketing tool for the nutritional supplement retailer foryears, allowing its customers to obtain 20-percent discounts whenshopping 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 alongwith the company cards. And GNC wants it to stop.

"Due to a recent proliferation of alternate cards, GNC hasdecided in the best interest of the GNC system to halt the use ofpromotional cards other than the time-tested GNC Gold Card,"stated a letter to a GNC franchisee written by Russ Cooper, seniorvice president of GNC Franchising Inc.

Cooper continued: "We believe such cards have a negativeimpact on the GNC system, including creating confusion for GNCcustomers, conflict within the franchisee community and, mostimportant, the cards detract from the consistency and uniformityrequirements of the GNC operating system to the detriment of otherGNC stores."

While some franchisees claim they've been offering their owncards for about three years, the practice became more widespread in2000. And to some franchisees, Cooper's words could be worthfighting over.

"It's safe to say that we will challenge it all theway," said Daniel Brandt, a franchisee based in Silverdale,Washington, who was one of the first GNC franchisees to offer hisown card. "This is one battle that we must make a stand onbecause our financial futures depend on it."

Jeff Goldstein, a Washington DC-based attorney who representsthe Independent Association General Nutrition Franchisees, saidthat the organization was "considering all actions"available to it.

JJ Sorrenti, vice president of franchising for GNC, said that itwould be "horribly disappointing" if the franchisees seeklegal action to maintain the use of their own discount cards."We would try to avoid that," he said. "We wouldhope the franchisees would avoid that."

In response to franchisee issues over cards, Sorrenti said GNCis testing a variety of new Gold Card programs in its corporatestores. He hopes to introduce new card programs that would betterbenefit franchisees within the next year.

He also hopes to discourage franchisees from using their owndiscount cards without pursuing any punitive measures. "Wewould much rather do things so they would see a benefit to itrather than dragging them along kicking and screaming," saidSorrenti.

Sorrenti preferred to see the situation as one in which thecompany is taking advantage of the opportunity to usefranchisees' experience to help improve business for allparties.

"Franchisees are looking to make things better, and thecompany is reacting to that by testing their ideas."-Pittsburgh Business Times