June 09, 2006
Bad Medicine?
According to this article in the St. Louis Business Journal, over 70 Medicine Shoppe franchise owners representing 82 stores filed for arbitration in Missouri against Medicine Shoppe International Inc. (MSI) and its parent company, Cardinal Health Inc. MSI has about 950 pharmacy franchises in the U.S.
The franchisees apparently believe that because of changes in the pharmacy industry and the franchise business, MSI’s royalty fee structure is overwhelming and makes it impractical to compete and survive. The franchisees seek to have their royalties reduced. The franchisees' Arbitration Demand includes claims for: MSI’s failure to provide accountings of, and failure to perform, marketing and advertising obligations; Cardinal Health’s “conflict of interest and anti-competitive” activities and encroachment.
In an e-mailed statement to the St. Louis Business Journal, MSI stated that: "MSI is committed to its System and franchisees. We will continue strong efforts toward offering the programs and services our franchisees want and need. This weekend, at our national meeting, we are announcing many new programs and services that will help our franchisees succeed in a changing retail pharmacy atmosphere. These announcements should address nearly every concern raised in the Demand for Arbitration- all without the expense and distraction of a legal proceeding.”