Financing Pharmacy Franchises in Oklahoma

By Brad MacLiver
Authorship and profile at Google


An OK 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 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 is a wide variety of options for financing Oklahoma pharmacy franchise businesses. 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 typically do not possess these two traits and will therefore be considered more risky.

Traditional Bank Financing used in funding a pharmacy franchise is available when an Oklahoma 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 quantity of actual cash available and the source of the down payment's verification is also a critical factor in qualifying for a pharmacy business loan in Oklahoma.

OK Pharmacy Franchise Funding Tips:

1. Because so many pharmacy franchise financing options are available, proper due diligence should be performed by pharmacy owners in order to obtain the pharmacy funding that best suits their situation.

2. It is advisable to have an attorney or account already familiar with Oklahoma pharmacy franchise financing to review all pharmacy business loan documents.

3. Pharmacy consulting services and franchise associations are also available.  They can help guide prospective pharmacy franchisees or borrowers with a drug store loans.

4. New pharmacy owners in Oklahoma must make sure that their funding request will be enough to get the pharmacy both running and profitable. Inadequate funding for the initial stages can put the drug store in a position of needing further funding. Smaller working capital loans that would be in a subordinated position will be more difficult to obtain at a later date.

When pharmacy owners have questions and need information regarding pharmacy franchise business loans, or any types of funding for community drug stores and pharmacies, they should contact an OK pharmacy industry specialist who can provide quality answers and sound advice.

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