GNC 2010 Annual Report Download - page 22

Table of Contents
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;
• disapprove the transfer of a franchise;
• discriminate among franchisees with regard to franchise terms and charges, royalties, and other fees; and
• place new stores near existing franchises.
To date, these laws have not precluded us from seeking franchisees in any given area and have not had a material adverse effect on our
operations. Bills intended to regulate certain aspects of franchise relationships have been introduced into Congress on several occasions
during the last decade, but none have been enacted. Revisions to the FTC rule have also been proposed by the FTC and currently are in the
comment stage of the rulemaking process.
Our international franchise agreements and franchise operations are regulated by various foreign laws, rules, and regulations. To date,
these laws have not precluded us from seeking franchisees in any given area and have not had a material adverse effect on our operations.
Environmental Compliance
In March 2008, the South Carolina Department of Health and Environmental Control ("DHEC") requested that we investigate our South
Carolina facility for a possible source or sources of contamination detected on an adjoining property. We have commenced the investigation at
the facility as requested by DHEC. After several phases of the investigation the possible source or sources of contamination have not been
sufficiently identified. We are continuing such investigation. The proceedings in this matter have not yet progressed to a stage where it is
possible to estimate the timing and extent of any remedial action that may be required, the ultimate cost of remediation, or the amount of our
potential liability. 17