Financing Pharmacy Franchises in Idaho

By Brad MacLiver
Authorship and profile at Google


An Idaho (ID) pharmacy franchise is a contractual relationship between two parties. The first party, Pharmacy Franchisor, is the party that developed their drug store business model, branded the pharmacy related products, and produced the system the pharmacy franchisees will operate under. The second party, the Pharmacy Franchisee, purchases a franchise license from the Pharmacy Franchisor, and usually pays an ongoing pharmacy franchise fee, or royalty fees, to use the name, products, systems, trade secrets, etc., created by the Pharmacy Franchisor.

When financing a pharmacy franchise business in Idaho, there are a number of options available. All Idaho 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 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 in Idaho. 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 a pharmacy business loan.

IDAHO Pharmacy Franchise Funding Tips:

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

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

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

4. New pharmacy owners should ensure that their funding request is enough to get the pharmacy in Idaho profitable and running. Less than necessary funding for the initial stages potentially puts the drug store in a position of requiring additional funding. Smaller working capital loans that would be in a subordinated position will prove more difficult to obtain at a later date.

When ID pharmacy owners have questions or need information regarding pharmacy franchise business loans, pharmacy valuations, or any other type of funding for community drug stores and pharmacies, it is recommended they contact a pharmacy industry specialist who can provide sound advice and quality answers.

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