Do you want to start a Chemist Warehouse franchise and want to know the fees, agreement, details? If YES, here’s how much it cost to buy a Chemist Warehouse franchise for sale.
The rise of low-cost warehouse-style pharmacies has given a deathly blow to the pharmaceutical industry in Australia. Presently, there are about 5250 community pharmacies in Australia and 12 per cent of those are completely independent. According to IBISWorld, these independents are expected to gradually be forced out of the industry as they are failing to keep up with the discount pharmacies.
Aggressive price discounting and the one-stop-shop style of stores such as Chemist Warehouse have presented a real threat to traditional pharmacies, and they currently account for 25 per cent of the market. Chemist Warehouse has stores across Australia and beyond, and it doubled its sales in five years to record an estimated revenue of $2.3 billion in 2013-14.
Chemist warehouse is indeed a fast rising star in the world of pharmacy and should be on the radar of any forward thinking entrepreneur especially one that wants to invest in the pharmacy industry.
Buying a Chemist Warehouse Franchise and How Much It Cost
- Founded – 2000
- Headquarters – Melbourne
- Founder – Jack Gance, Sam and Lydia Gance, Verrocchi families
- Services – Pharmacy, medicine, perfume, health products, baby products
Known as Chemist Warehouse, this company is an Australian company that operates a chain of retail pharmacies across the continent. The company is unarguably the largest pharmacy retailer in Australia and it employs over 8,000 staff. The company prides itself on offering the best discount prices in the pharmaceutical industry in the country.
The company was founded by Jack Gance and his brother. The pair graduated from school and qualified as pharmacists in 1967. The Gance brothers teamed up and opened their first pharmacy store in Australia around that same time.
In the 1970s and 80s, the Gance brothers established the iconic Le Specs, Le Tan and Australis brands before selling them in order to build their pharmacy empire which is now worth well in excess of a billion dollars thanks to the iconic My Chemist brand with 60 stores nationally, and Chemist Warehouse with 350 stores.
The company has been dubbed “the McDonald’s of pharmacy” because it makes use of a very complex franchise structure to circumvent Australian franchise regulations. These regulations stipulate how may pharmacy locations a company is allowed to open in an area, and the official limit is six in any state or territory. The name was also used to depict it versatility in the industry.
The unique structure of Chemist Warehouse allows it to “control” about 300 pharmacies across Australia, and it makes up about 20 percent of the market share. The company’s business structure is said to involve minimal equity investment by individual pharmacists who agree to the trading terms enforced across the group.
Individual pharmacists working under the Chemist Warehouse umbrella benefit from the bulk purchasing power that comes with being part of the company.
The company offers products in the categories of health, beauty, medicines, personal care, medical aids, confectionery, and veterinary. It also operates an Internet pharmacy/online store.
The profitablity of the company was estimated at $2.3 billion in 2013-14 fiscal years. Some two million Australians walk through Chemist Warehouse doors each week, making its owners — the Gances and their partners, the Verrocchis, who rolled out the business without the need to raise outside capital — very rich.
Chemist Warehouse is not without its critics, and their reduced price business model makes the business controversial. They have been accused that their approach threatens both healthcare standards and employment conditions in the industry.
The company has ventured into radio, creating the Chemist Warehouse Remix through the Pure Gold Network. The radio was publicized as a ‘custom built station’ for Chemist Warehouse. It is not limited to stores as it can be heard via the web, or with a smartphone app.
Over the last 16 years, Chemist Warehouse has grown from a single shop in the outer Western suburbs of Melbourne to become one of Australia’s top 10 retailers. Today, the group has over 400 stores across Australia.
The company has presence in all Australian states and territories, and they serve over 1.5 million+ customers and dispense 500,000+ prescriptions a week. Chemist Warehouse has won numerous accolades and awards, it has been voted one of Australia’s best brands, and one of Australia’s most trusted retailers.
The Melbourne-based My Chemist Group is estimated to be generating around $4 billion in annual sales and has grown the Chemist Warehouse steamroller from just five stores in 1995 to what it is today.
As Australia’s number one health and beauty retailer, the Chemist Warehouse Group sells $4 billion worth of medicines, vitamins and beauty products each year through its Chemist Warehouse, My Chemist and My Beauty Spot brands.
East Yarra – the main entity through which the My Chemist and Chemist Warehouse brands are controlled – has a total worth, including “entities it owns” and consolidated revenue, of about $1.43 billion. The 2016 profit was up from $97 million the previous year, and the business has more than $400 million in retained earnings.
East Yarra Friendly Society Pty Ltd of which pharmacists Jack Gance and Mario Verrocchi are the directors – made a net profit of $101 million in the 2015-6 financial year.
The business which was founded in 2000 is still run by Mr Gances and the Verrocchi families, who have been accused of being notoriously secretive. This accusation came by because details of the business are rarely seen in the media and it’s never made public.
Chemist warehouse founder Jack Gance has a personal wealth of $319M, and this empire was built entirely by him, his business partner and their respective families.
He claims that, the average pharmacist hates them because they have affected the whole margin structure in pharmacy. “If they compete with us 100%, if they match our prices, they’ll go broke. If they match our prices, they won’t even cover their rent. So, they pretend, or they just try to provide better service. So we’re not really liked in the industry.”
According to the market, the ownership structure of the Chemist Warehouse is not clear. Analysts say the two families, Gance and Verrocchi – control the group and run it as a web of partnerships that interconnect around members of these families.
The business model used by Chemist Warehouse appears to involve minimal equity investment by individual pharmacists who then agree to all the trading terms enforced across the group. Individual pharmacists working under the Chemist Warehouse umbrella benefit from the bulk purchasing power that comes with being part of a company with 20 per cent market share.
The mode of expansion of the Chemist Warehouse chain is currently unclear, as the both families run the business under a lot of secrecy. The much that is known about their expansion model is that it is done by family members who are given limited licenses to expand the brand.