Montana Pharmacy Franchise Financing

By Brad MacLiver
Authorship and profile at Google


A MT pharmacy franchise is a contractual relationship between two parties. One, the 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 Montana 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.

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 Montana 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. Community drug stores typically have very little traditional assets to offer as security. Lenders for the pharmacy in Montana 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.

MT Pharmacy Franchise Funding Tips:

1. Because there are many Montana 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 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 in Montana and franchise associations who can help guide a prospective pharmacy franchisee or borrower or a drug store loan.

4. It is important that new pharmacy owners make sure their funding request is enough to get the pharmacy running and profitable. Insufficient funding for the initial stages puts the drug store in a position where they require additional funding. Smaller working capital loans that would be in a subordinated position will then be harder to obtain at a later date.

Pharmacy owners with questions who need information regarding pharmacy franchise business loans, or any other type of funding for pharmacies and community drug stores, should contact a Montana pharmacy industry specialist who can provide quality answers and sound advice.

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