GNC 2011 Annual Report Download - page 22

Table of Contents
Some of the products sold by franchise 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.
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
Legislation may be introduced which, if passed, would impose substantial new regulatory requirements on dietary supplements. For example, although
not yet reintroduced in this session of Congress, bills have been repeatedly proposed in past sessions of Congress which would subject the dietary ingredient
dehydroepiandrosterone ("DHEA") to the requirements of the Controlled Substances Act, which would prevent the sale of products containing DHEA. In
March 2009, the General Accounting Office (the "GAO") issued a report that made four recommendations to enhance the FDA's oversight of dietary
supplements. The GAO recommended that the Secretary of the Department of Health and Human Services direct the Commissioner of the FDA to: (1) request
authority to require dietary supplement companies to identify themselves as a dietary supplement company and update this information annually, provide a list
of all dietary supplement products they sell and a copy of the labels and update this information annually, and report all adverse events related to dietary
supplements; (2) issue guidance to clarify when an ingredient is considered a new dietary ingredient, the evidence needed to document the safety of new
dietary ingredients, and appropriate methods for establishing ingredient identity; (3) provide guidance to industry to clarify when products should be marketed
as either dietary supplements or conventional foods formulated with added dietary ingredients; and (4) coordinate with stakeholder groups involved in
consumer outreach to identify additional mechanisms for educating consumers about the safety, efficacy, and labeling of dietary supplements, implement
these mechanisms, and assess their effectiveness. These recommendations could lead to increased regulation by the FDA or future legislation concerning
dietary supplements
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
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