Pharmacy Franchise Financing in Georgia

By Brad MacLiver
Authorship and profile at Google


A Georgia (GA) 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 Georgia Pharmacy Franchisor.

There are a number of options for financing a pharmacy franchise business in Georgia. 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 Georgia pharmacy franchise models won’t possess these two traits and will be considered more risky.

Traditional Bank Financing can be used to a Georgia pharmacy franchise when the pharmacy franchise has both a track record and pharmacy name recognition. Many banks will have interest in this type of opportunity for funding.  After the bank looks over the loan documents, however, many of them will decline the funding request because they don’t fully grasp 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, financial statements, along with the pharmacy's current retail or specialty valuation. 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 in Georgia.

GA Pharmacy Franchise Funding Tips:

1. Because there are many pharmacy franchise financing options available in Georgia, 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 Georgia pharmacy consulting services and franchise associations who can help guide a prospective pharmacy franchisee or borrower or a drug store loan.

4. New Georgia 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 pharmacy owners in GA have questions and need information regarding pharmacy franchise business loans, or any types of funding for community drug stores and pharmacies, they should contact a Georgia pharmacy industry specialist who can provide quality answers and sound advice.

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