GNC 2012 Annual Report Download - page 22

Table of Contents
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, not just serious adverse events; (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 the laws of several states 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
concerning the regulation of 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. These laws may limit a
franchisor's business practices in a number of ways. 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.
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