GNC 2009 Annual Report Download - page 21

Table of Contents
agreed to adhere to the terms of the 1970 and 1989 consent orders and to abide by the provisions of the settlement document concerning hair
care products. We do not believe that future compliance with the outstanding consent decrees will materially affect our business operations. In
2000, the FTC amended the 1970 order to clarify language in it that was believed to be ambiguous and outmoded.
The FTC continues to monitor our advertising and, from time to time, requests substantiation with respect to such advertising to assess
compliance with the various outstanding consent decrees and with the Federal Trade Commission Act. Our policy is to use advertising that
complies with the consent decrees and applicable regulations. We review all products brought into our distribution centers to assure that such
products and their labels comply with the consent decrees. We also review the use of third-party point of purchase materials such as store
signs and promotional brochures. Nevertheless, there can be no assurance that inadvertent failures to comply with the consent decrees and
applicable regulations will not occur. Some of the products sold by franchised stores are purchased by franchisees directly from other vendors
and these products do not flow through our distribution centers. Although franchise contracts contain strict requirements for store operations,
including compliance with federal, state, and local laws and regulations, we cannot exercise the same degree of control over franchisees as we
do over our company-owned stores. As a result of our efforts to comply with applicable statutes and regulations, we have from time to time
reformulated, eliminated, or relabeled certain of our products and revised certain provisions of our sales and marketing program. We believe we
are in material compliance with the various consent decrees and with applicable federal, state, and local rules and regulations concerning our
products and marketing program. Compliance with the provisions of national, state, and local environmental laws and regulations has not had a
material effect upon our capital expenditures, earnings, financial position, liquidity, or competitive position.
Foreign
Our products sold in foreign countries are also subject to regulation under various national, local, and international laws that include
provisions governing, among other things, the formulation, manufacturing, packaging, labeling, advertising, and distribution of dietary
supplements and over-the-counter drugs. Government regulations in foreign countries may prevent or delay the introduction, or require the
reformulation, of certain of our products.
New Legislation or Regulation
We cannot determine what effect additional domestic or international governmental legislation, regulations, or administrative orders, when
and if promulgated, would have on our business in the future. New legislation or regulations may require the reformulation of certain products to
meet new standards, require the recall or discontinuance of certain products not capable of reformulation, impose additional record keeping, or
require expanded documentation of the properties of certain products, expanded or different labeling, or scientific substantiation.
Franchise Regulation
We must comply with regulations adopted by the FTC and with several state laws that regulate the offer and sale of franchises. The FTC's
Trade Regulation Rule on Franchising and certain state laws require that we furnish prospective franchisees with a franchise offering circular
containing information prescribed by the Trade Regulation Rule on Franchising and applicable state laws and regulations.
We also must comply with a number of state laws that regulate some substantive aspects of the franchisor-franchisee relationship. These
laws may limit a franchisor's business practices in a number of ways, including limiting the ability to:
• terminate or not renew a franchise without good cause;
• interfere with the right of free association among franchisees; 16