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ST. LOUIS — About 60 Medicine Shoppe International (MSI) and Medicap pharmacy owners have filed an arbitration claim against their franchisors alleging lack of support.
The franchisees announced their breach-of-contract claim last month. Cardinal Health Inc., parent company of MSI and Medicap, denied the allegations.
“The overwhelming majority of our franchisees are pleased with the franchise system and its current offerings,” Cardinal said in a statement. “We believe these claims are without merit, and we intend to vigorously defend our position.”
The demand for arbitration was filed with the American Arbitration Association in St. Louis, and more arbitration filings were expected elsewhere, including in Iowa, according to a spokeswoman for the franchisees.
In the arbitration statement the pharmacy owners claim they invested in a “thriving” system of branded stores supported with various services from MSI/Medicap. However, they allege that those services have dissipated in recent years while MSI/Medicap has continued to collect “substantial” monthly royalties and “excessive” franchise fees.
“American consumers overwhelmingly prefer independent pharmacies over ‘big box’ retailers, yet MSI/Medicap has treated their own franchisees in such a hostile and unfair way as to make our business uncompetitive,” said Gaye Moseman, one of the claimants. “For Medicine Shoppe and Medicap, by their own hands to so damage our livelihoods and ability to fulfill the needs of our customers is morally unacceptable.”
According to the spokeswoman, the arbitration filing marks the final step of a multiyear effort by the pharmacy franchisees to negotiate with MSI/Medicap and realign the relationship.
