Nebraska Pharmacy Franchise Financing

By Brad MacLiver
Authorship and profile at Google


A NE 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 in Nebraska.

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 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 Nebraska 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 verification of the down payment's source and the amount of actual cash on hand will be a critical factor when qualifying for a Nebraska pharmacy business loan.

NE Pharmacy Franchise Funding Tips:

1. Several pharmacy franchise financing options exist, so pharmacy owners should take the time to perform proper due diligence and obtain the pharmacy funding that best suits their situation.

2. It is advised to have either an accountant or attorney familiar with pharmacy franchise financing to look over any and all pharmacy business loan documents.

3. Pharmacy consulting services and franchise associations exist in Nebraska who can help guide prospective pharmacy franchisees or borrowers for a drug store loan.

4. New pharmacy owners should make sure that their funding request is for enough cash to get the pharmacy running and profitable. Funding that doesn't meet the requirements for the initial stages puts 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 NE 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 a Nebraska pharmacy industry specialist who can provide quality answers and sound advice.

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