GNC 2011 Annual Report Download - page 10

Table of Contents
Retail Locations
As of December 31, 2010, there were 7,260 GNC store locations globally, including:
2,748 company-owned stores in the United States (all 50 states, the District of Columbia, and Puerto Rico);
169 company-owned stores in Canada;
903 domestic franchise stores;
1,437 international franchise stores in 46 countries (includes distribution centers where retail sales are made); and
2,003 GNC franchise "store-within-a-store" locations under our strategic alliance with Rite Aid Corporation ("Rite Aid").
Most of our company-owned and franchise U.S. stores are between 1,000 and 2,000 square feet and are primarily located in shopping malls and strip
shopping centers. Based on the information we compiled from the public securities filings of our primary competitors, we have approximately twelve times
the domestic store base of the next largest U.S. specialty retail competitor.
Website
In December 2005, we started selling products through our website, GNC.com, and re-launched the platform in September 2009, with the overall
objective of increasing traffic, conversion rates and functionality. This additional sales channel has enabled us to market and sell our products in regions
where we have limited or no retail operations. Some of the products offered on our website may not be available at our retail locations, enabling us to broaden
the assortment of products available to our customers. The ability to purchase our products through the internet also offers a convenient method for repeat
customers to evaluate and purchase new and existing products. Internet purchases are fulfilled and shipped directly from our distribution centers to our
consumers using a third-party courier service. To date, we believe that most of the sales generated by our website are incremental to the revenues from our
retail locations.
Franchise Activities
We generate income from franchise activities primarily through product sales to franchisees, royalties on franchise retail sales and franchise fees. To
assist our franchisees in the successful operation of their stores and to protect our brand image, we offer a number of services to franchisees including training,
site selection, construction assistance and accounting services. We believe that our franchise program enhances our brand awareness and market presence and
will enable us to continue to expand our store base internationally with limited capital expenditures. Over the last several years, we realigned our domestic
franchise system with our corporate strategies and re-acquired or closed unprofitable or non-compliant franchise stores in order to improve the financial
performance of the franchise system.
Franchise Store-Within-a-Store Locations
To increase brand awareness and promote access to customers who may not frequent specialty nutrition stores, we entered into a strategic alliance in
December 1998 with Rite Aid to open our GNC franchise store-within-a-store locations. Through this strategic alliance, we generate revenues from fees paid
by Rite Aid for new store-within-a-store openings, sales to Rite Aid of our products at wholesale prices, the manufacturing of Rite Aid private label products
and retail sales of certain consigned inventory. In 2007, we extended our alliance with Rite Aid through 2014 with a
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