Risk Score
Pending analysis
Investment Range
$130,000 - $894,876
Min Cash Required
$125,000
Total US Locations
292
Business Summary
The Medicine Shoppe franchise allows individuals to operate a retail pharmacy business under The Medicine Shoppe brand and its established systems. These pharmacies primarily offer prescription and healthcare items to the general public, with a significant focus on serving elderly persons due to the nature of the business and an aging population. The market for these services is well-established, and sales are generally stable year-round. Medicine Shoppe pharmacies face competition from other franchised and chain pharmacies, drug stores, independent pharmacies, and various other retailers offering medicines and vitamins.
Corporate History
Medicine Shoppe International, Inc. (MSI) was founded on March 16, 1970, as a Delaware corporation. The company began offering franchises for The Medicine Shoppe system in the same year, 1970. In 1995, MSI became a wholly-owned subsidiary of Cardinal Health, Inc. MSI also has a wholly-owned subsidiary named Medicap Pharmacies Incorporated, which began operating its first retail pharmacy in 1971 and started franchising under the Medicap Pharmacy brand in 1974.
Financial Overview
Investment Range
$130,000 - $894,876
Minimum Cash Required
$125,000
Royalty %
3%
Equipment Costs (Low)
$5,000
Equipment Costs (High)
$345,000
Working Capital
$210,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
The franchisor's financial condition, as reflected in its financial statements, raises questions about its ability to provide services and support to its franchisees. The parent company, Cardinal Health, which guarantees the franchisor's obligations, has recognized significant goodwill impairment charges in recent fiscal years: $675 million in 2024, $1.2 billion in 2023, and $2.1 billion in 2022. Additionally, Cardinal Health reported $981 million in unrecognized tax benefits as of June 30, 2024.
Financing Details
The Medicine Shoppe International, Inc. does not offer any direct or indirect financing to its franchisees. The franchisor also does not guarantee any notes, leases, or other financial obligations for franchisees.
Performance Metrics
Total US Locations
292
Franchised Units
292
Corporate Units
0
Avg Square Footage
2,500
Franchising Since
1970
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
19
Litigation Summary
The Medicine Shoppe International, Inc. has a history of legal actions, some of which are recent or ongoing. Between 2011 and 2015, The Medicine Shoppe International, Inc. was involved in 11 arbitration and district court cases primarily concerning breach of contract and implied covenant of good faith with franchisees. Most of these cases were settled between 2014 and 2016, with some resulting in payments to The Medicine Shoppe International, Inc. and others in franchise conversions or terminations. A second arbitration against TODAMAR, Inc. was filed in 2016 and settled that year. Cardinal Health, the parent company of The Medicine Shoppe International, Inc., has also been involved in significant legal proceedings. These include a 2015 FTC action concerning radiopharmaceuticals that resulted in a $26.8 million payment and consent decree with conditions lasting until 2025. The company is a defendant in the ongoing National Prescription Opiate Litigation, a large consolidated matter that began in 2017. Cardinal Health entered into a National Opioid Settlement Agreement in 2022, with payments expected through 2038, and a monitor overseeing compliance until 2027. Resolution discussions are still ongoing with certain nonparticipating political subdivisions and private plaintiffs (approximately 371 lawsuits pending as of August 7, 2024), and an Alabama settlement was finalized in February 2024. Furthermore, Cardinal Health is a defendant in the Generic Pharmaceutical Pricing Antitrust Litigation, filed in 2019, with a motion to dismiss an amended complaint pending as of June 30, 2024. The Cordis IVC Filter Litigation, involving around 450 product liability lawsuits, saw a settlement agreement executed in April 2023 with payments made between May and September 2023, though some claims remain. Additionally, Cardinal Health is a defendant in the In re Valsartan, Losartan, and Irbesartan Products Liability Litigation, created in February 2019, with no trial date scheduled as of June 30, 2024. Cardinal Health is also involved in ongoing legal proceedings with insurers regarding defense and indemnity costs for these matters, having received $34 million in recoveries in fiscal 2024. More recently, The Medicine Shoppe International, Inc., through an affiliate, initiated a lawsuit on April 7, 2023, for the collection of franchisor fees and supplier purchases against Grand Medical Group LLC and others. The Illinois Attorney General has required a financial assurance based on the franchisor's financial condition.
Bankruptcy History
The Medicine Shoppe International, Inc. has no bankruptcy history to report.
Agreement Terms
Initial Term
5 years
Renewal Term
5 years
Renewal Conditions
To renew their franchise agreement, Medicine Shoppe International, Inc. franchisees must sign the franchisor's then-current form of agreement, which may have terms and conditions that are significantly different from their original franchise agreement. This new agreement is a mandatory condition of renewal.
Training & Support Program
Franchisor Assistance
Medicine Shoppe International, Inc. offers limited assistance to franchisees before opening their business, which can include help with selecting or purchasing equipment, signs, fixtures, or supplies. Through its affiliates, the franchisor offers to sell inventory, including pharmaceutical inventory, to franchisees. After opening, Medicine Shoppe International, Inc. provides ongoing support by offering various optional programs called "Retail Solutions," for which franchisees receive a monthly credit. The franchisor also provides marketing assistance, including access to advertising templates and a basic business website. Franchisees gain access to a line of private label over-the-counter products and can participate in a network where the franchisor arranges contracts with insurance and other providers. Additionally, franchisees receive copies of the Operations Manual. The franchisor also allows participation in a Compliance and Marketshare Program, assists with reviewing third-party reimbursements, helps reconcile accounts receivable, provides an EQuIPP Program for performance benchmarking, offers a Compliance Management Service for training and checks, and assists with education and information regarding payor audits.
Ongoing Support
After opening, Medicine Shoppe International, Inc. franchisees receive ongoing support through access to various optional "Retail Solutions" programs, for which they receive a monthly credit. The franchisor provides marketing assistance, including advertising templates and basic website services. Franchisees also get access to private label over-the-counter products and participate in a pharmacy network where the franchisor arranges contracts with insurance and other providers. The franchisor provides an Operations Manual. Beyond contractual obligations, Medicine Shoppe International, Inc. also allows participation in a Compliance and Marketshare Program, assists with reviewing third-party reimbursements, helps reconcile accounts receivable, provides an EQuIPP Program for performance benchmarking, offers a Compliance Management Service for required trainings and checks, and assists with education and information regarding payor audits.
Franchise Requirements
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Absentee Allowed
Territory Type
Non-Exclusive
Staffing Notes
Medicine Shoppe International, Inc. requires that the franchise business must always be under the direct supervision of a licensed pharmacist. The franchisee is responsible for ensuring that all pharmacists employed in the business are properly licensed. The franchisor does not require the franchisee to impose any specific restrictions on managers they hire, as long as a licensed pharmacist is supervising the store.