Oregon Pharmacy Franchise Financing

By Brad MacLiver
Authorship and profile at Google


An OR pharmacy franchise is a contractual relationship between two parties: 1) The Pharmacy Franchisor, the party who developed the business model of their drug store business, branded their pharmacy related products, and created the system the pharmacy franchisees will operate under.  And 2) The Pharmacy Franchisee, who purchases a franchise license from the Pharmacy Franchisor and typically pays an ongoing pharmacy franchise fee (or royalty fees) to use the name, products, systems, trade secrets, etc., created by the Oregon Pharmacy Franchisor.

          
There are a number of options for financing a pharmacy franchise business. All pharmacy franchise funding sources, for drug stores, prefer lending to a pharmacy franchisee who will be working with a nationally recognized name and long track records. Newer pharmacy franchise models won’t possess these two traits and will be considered more risky.

Traditional Bank Financing used in funding a pharmacy franchise in Oregon is available when a pharmacy franchise has the track record and pharmacy name recognition. Many of the banks will show interest in this type of funding opportunity. Unfortunately once the bank reviews the loan documents, many of these banks decline the funding request because they don’t understand the security provided for the pharmacy loan. Community drug stores typically have very little traditional assets to offer as security. Lenders for pharmacy will use traditional methods for analyzing the cash flow available to service to the debt, and they will also need to understand the nontraditional collateral that will secure the loan.

As a borrower, even when incorporated, the independent drug store owner’s personal credit rating will be a factor, along with personal tax returns, and financial statements. The amount of actual cash on hand and the verification of the source of the down payment will be critical factor in qualifying for an Oregon pharmacy business loan.

 

OR Pharmacy Franchise Funding Tips:

1. Because there are many pharmacy franchise financing options available, pharmacy owners in Oregon should perform proper due diligence then obtain the pharmacy funding that best suits their situation.

2. It is advisable to have an accountant or attorney that is familiar with pharmacy franchise financing to review the pharmacy business loan documents.

3. There are pharmacy consulting services and franchise associations who can help guide a prospective Oregon pharmacy franchisee or borrower or a drug store loan.

4. New pharmacy owners need to make sure their funding request is enough to get the pharmacy running and profitable. Less than ample funding for the initial stages may put the drug store in a position of needing additional funding. Smaller working capital loans that would be in a subordinated position will be more difficult to obtain at a later date.

When Oregon pharmacy owners need information or have questions regarding either pharmacy franchise business loans or any type of funding for community pharmacies and drug stores, they should contact an OR pharmacy industry specialist who provides both quality answers and sound advice.

********************