F.T.C. Public Comment 71

The majority of the money this company uses for advertising goes into discounts. They force us to buy their products and then they force us to discount the products because they do national advertising and in-store advertising, where they are taking our advertising money and putting it into discount programs — discount gold cards as they call them. So again, we really can't make a reasonable profit out of this whole deal.

FTC.jpg

U.S. Federal Trade Commission
April 30, 1997

Public Comment
Richard Colenda, franchisee

Request for public comment on possible revisions to The Franchise Rule.

Comment #71

Franchise ANPR Hotline
5:20 p.m
April 30, 1997

My name is Richard Colenda. I am a GNC franchisee in Jacksonville, Florida. My address is 13170-42, Atlantic Boulevard, Jacksonville, FL 32246. Phone number: (904) 221-5888.

I just have 2 comments. One, I know that GNC is restricting me from buying products at a lower price from other suppliers, although they will not admit it. They have told suppliers that if they sell products less than what GNC sells to me, they won't do any business with them. I've had several people tell me this unofficially already, that GNC has come to them and told them that they will not do business with that company if they sell a product for less than what GNC sells to us. Meaning, that we really can't compete with GNC because they have all the power over us because we have a contract with them.

Second, the advertising funds. The majority of the money this company uses for advertising goes into discounts. They force us to buy their products and then they force us to discount the products because they do national advertising and in-store advertising, where they are taking our advertising money and putting it into discount programs — discount gold cards as they call them. So again, we really can't make a reasonable profit out of this whole deal.

I'm fortunate that I am in any area that has a large population that can drive the volume up, so I can make a little bit of money. But a lot of people in this business, in the GNC franchise business, are really hurting bad because they don't do the volume that I do.

So, that's my two concerns. Thank you very much.

For Review, see FTC “Table of Commenters”
http://www.ftc.gov/bcp/franchise/comments/tabcomm.htm


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Risks: F.T.C. Public Comments, United States, 1997, Advertising fund use disagreements, Discount programs destroy margins, Must buy only through franchisor (tied buying), United States, 19970430 Comment 71

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