Another casualty of Target’s collapse: 133 franchise pharmacists, Suzanne Rent

Mike Jaczko, a partner and portfolio manager with K.J. Harrison & Partners Inc. in Toronto…Jaczko calls Geoff May, Target’s director of pharmacy operations, a “top drawer guy” in pharmacy. “I have a lot of time for him,” he says… “Life’s not a straight shot. Any successful entrepreneur has a few failures along the way. The reward is commensurate with the risk. And if you sat down with Warren Buffett, he’d tell you he had tremendous flame outs.”

Canadian Grocer
January 28, 2015

Another casualty of Target’s collapse: 133 franchise pharmacists
“We were surprised. Then the anger came the next day.”
Suzanne Rent


When Target announced it was closing its Canadian operations, it meant the loss of jobs for its 17,600 employees. But it also means the closures of 133 pharmacies and the loss of business for those pharmacists.

According to Jason Perepelkin, assistant professor of social and administrative pharmacy at the University of Saskatchewan’s College of Pharmacy and Nutrition, the pharmacies were the victims of poor planning on Target’s part, notably too much hype before coming into the Canadian market and lack of product on the shelves.

“If the front of the store is not bringing in people because shelves aren’t stocked, [customers] think ‘Why would I waste my time here?’” he explains. “And then the pharmacy suffers from that.”

Perepelkin says he spoke with one Target pharmacist who had “no clue” of the news prior to the announcement. “They basically found out when everyone else found out,” Perepelkin says.

Mike Jaczko, a partner and portfolio manager with K.J. Harrison & Partners Inc. in Toronto, says the news wasn’t “a complete shock.” He says when Target closed the former Zellers stores and went dark for months they lost continuity with the customer base. “They underestimated the disconnection the customer base had with the new store,” he says.

As well, the Canadian stores didn’t offer the popular product lines found in the U.S. stores, which Canadians were expecting to see on the shelves. Perepelkin says that failure applied to the pharmacies as well; for example, the Canadian pharmacies didn’t carry Target’s ClearRX trademark for prescription drug labelling that’s been successful in the U.S.

In a news release about the announcement, officials said Target will place $70 million into an Employee Trust, giving each staff member a minimum of 16 weeks’ pay, including wages and benefits. Pharmacists won’t be compensated under that trust.

A spokesperson for the company said Target “will be terminating all contractual relationships” with the pharmacist-franchisees. He further advised that patients contact their pharmacists for more details.

But Target’s use of a franchise model in its pharmacies was a popular one. Perepelkin says Target “should be highly commended” for using the franchise model because it gave pharmacists a chance to open a pharmacy without putting out all the costs up front. Franchisees took part in a four-week training program at Target’s headquarters in Mississauga.

He suspects other franchises will buy the books or the current owners will open new pharmacies. And while he says the closing of Target’s stores shouldn’t reflect on the pharmacists, he also suspects owners will still be cautious with their next moves. “If they open a pharmacy, they will be wary,” he says, “especially for the ones who go out into the community.”

Jaczko calls Geoff May, Target’s director of pharmacy operations, a “top drawer guy” in pharmacy. “I have a lot of time for him,” he says.

As for the franchisees, Jaczko says this news could be an opportunity for those pharmacists looking ahead. “It was a great opportunity for a hundred some odd pharmacists to become franchisees, and it was probably a place to learn the business of pharmacy,” he says.

“Life’s not a straight shot. Any successful entrepreneur has a few failures along the way. The reward is commensurate with the risk. And if you sat down with Warren Buffett, he’d tell you he had tremendous flame outs.”

One Target pharmacist, who asked that his name not be used because due to the limited information coming from Target’s head office, says he heard the news via a conference call during which a announcement was read aloud. Listeners were then given an email address where they could forward questions.

He says while some pharmacists may have suspected the retailer was having trouble, and some stores could close based on low performance, he says they expected “nothing on the scale of what we observed.”

“I think we were surprised and then the anger came the next day,” he says. He says franchisees are disappointed because they invested a lot of resources, knowledge and time away from family to get these franchises up and running.

“That stuff you never get back,” he says. “That’s the most painful part of it; you invested in your own business.”

He says following the news, he took stock of inventory, checked out files and is more immediately concerned about patients, as well as staff, who aren’t covered under the Employee Trust being created by Target. He hasn’t thought of future plans for now, but says he will “look at the damage and then move forward.”

“I’ve haven’t thought about myself yet,” he says.

This article originally appeared on

Risks: $50,000 Ontario Appeal award for one franchisee's pain and suffering, 95 per cent of legal fees are paid by franchisors, Activism over the internet, Advice from franchise lawyer only, Agree with proposed law or you get nothing, Anonymous: leaderless on-line resistance subculture, Appropriate franchise law, Arthur Wishart Act (Franchise Disclosure), 2000, Canada, Arthur Wishart Amendment Act (Franchise Disclosure), 2010, Canada, Attorney seeds the destruction of his own client's case, Bad faith and unfair dealings, Bank calls in debt, Bank won't finance deal because they know something you don't, Banks are industry cheerleaders, Big Franchising, Big Grocery, Big Pharma, Blame themselves, Blocking for the industry, Blogs: most effective means to justice, Brand backlash: franchisees suffer because brand owners screw up, Breach of duty, Business model had never created adequate investor returns, Buying a job, Call for a public enquiry, Call for franchise law, Canada Small Business Financing program, Cannon fodder, Career Limiting Move, CLM, Caveat emptor canard, Class action only as good as the lawyers involved, Coerced waiver of punitive damages, Commercially reasonable exercise of discretion, Companies' Creditors Arrangement Act, CCAA, Contingency fees, Contracts seen as unenforceable or void, Courts extremely picky about shoddy disclosure practices, Credence good fraudulent expert, Credence goods: taking advantage of the innocents, Cruelest lies are often told in silence, Disclosure document must disclose all material facts, Dispute resolution means franchisee goes broke, Don’t owe your lawyer money, Don't use a brand name franchise lawyer, Down-and-dirty CCAA, Employees misclassified as franchisees or independent contractors, Exponential increase in franchise bar services ($ and influence), Externalities: cheap business decision when someone else pays, Fair dealings: treat assets as if they were their own, False assumptions, multiple, Federal insolvency laws used to shirk legal claims, Fee reduction always has a catch, Fee surprises at settlement time, First we kill the lawyers…, Franchise banker, Franchise bubble will crash much harder (non-franchised), Franchise bar: Serving those most able to pick up the tab, Franchisee consultant, Franchisee leader, Franchisee revolt, Franchisee-on-franchisee opportunism, Franchisees are practice clients that help keep the lights on until franchisor clients show up, Franchisees dragged into complex legal dispute their franchisor created, Franchisee, independent contractor or employee?, Franchising Opportunism paper, Franchisor abandonment, Franchisor controls both wholesale costs and retail prices, Franchisor insolvency, intentional, Franchisor knew they were selling money losing concepts, Franchisors want the minimum regulation they can get away with, Fraudulent non-disclosure, Frenzied lobbying, Futility of taking legal action, Good faith + fair dealings = false hope, Government guaranteed loans, Government guaranteed loans, abolish program, Government guaranteed loans used a great deal in franchising, Government guaranteed loans, massive loan defaults, Government guaranteed loans: program loses $1, franchisee families lose $10, Gripe sites, Hacktivists: internet social justice activists, Hates publicity, Harassment, Intimidation, Hope springs eternal in the hearts of the delusional, Ideas once outrageous are now considered normal, Imbalance of information and power, Immigrants as prey, Independent franchisee association, Independent franchisee association betrayal, Individuals with a very successful career history, Industry Canada, Insolvency laws need to protect franchisees as well, Insolvency strips employees' severance payments, Insolvency trustee, consultant and auditor same firm, Intentional franchisor insolvency creates huge fees for legal, accounting, consulting firms, Internet information sharing, Investors steered to specific attorney, Jealously guarded monopoly on the provision of legal services, Joint Employer: franchisor legally liable along with franchisee for labour violations, Knew or could have reasonably been expected to know, Lawsuits, individual, Lawyering up without 2nd opinion is a trap, Lawyers can serve franchisors or franchisees, never both, Leaderless Franchise Network, LFN, Leadership development, Lease obligations make franchisees pay even if not in business, Lender's due diligence not done properly, Lending duty, Lending duty never enforced via regulation or litigation, Lending is subject to expert fraud because it is a credence good service, Loan repudiation, Loser pays court costs, Material facts were not disclosed, Materially misleading information, McLaw: toothless legislation designed to protect the dominant parties, Ministry of Government and Consumer Services, Ontario, Mom-and-Pop franchisees at greatest risk, Money influencing public decision-making, Moral Hazard: a party insulated from risk behaves differently than if the full risk were present, Most lucrative form of commercial lending, franchising, Network effects: unintended consequences when dealing with communities, No real penalties for abuse of federal insolvency laws, Odious debts, Office of the Superintendent of Financial Institutions, Canada, Ombudsman for Banking Services and Investments, Canada, On Cooling the Mark Out (Erving Goffman), One franchisee turned against the other (action very difficult), Online reputation grows exponentially, Operating losses from Day 1, Opinions at odds with the Minister, Opportunism Test: If asset ownership were reversed, would decision likely change?, Overconfidence effect, Pawns in a game they can't win, Political champions, Predatory franchise lending, Privacy laws violated, Punitive, exemplary and/or aggravated damages, Regulatory capture breeds its own incompetence, Reputational risk, Restructuring legislation is deficient. Reverse onus on good faith and fair dealing, Right to associate and right to harass, Rules for Radicals: make them play by their own rules, Secured creditors (banks) 100% covered in dodgy insolvency, Settlement just covers fees, Shame - humiliation emotion, Sharecropping, Shareholder activism forces franchisor action, Shill, Sincere ignorance, Sincerity, Situationism psychology: people are influenced by external factors more than internal traits, Social media triggers unskilled franchisor reaction, Social proof: in new situations, you assume others know more so you follow their lead, Sophism: an argument used to deceive, Spouse can sue for losses also, Spouse dragged into negative investment, Spouse needs independent advice, State refuses to even listen, State sanction, Stores shuttered, Strategic lawsuit against public participation, SLAPP, Sub-prime lending practices done in franchising, Sue lender for failing to do their lender's due diligence, Sue the lawyer that created the disclosure document, Sunk Cost Fallacy: very hard to resist putting good money after bad, Sunshine is the best disinfectant, Suppliers and landlords act as if they were the franchisor, Symbiotic relationships (industry, banks, lawyers), Talk to former franchisees, Taxpayers end up paying for private gain, Test for franchisee, independent contractor or employee, The burned hand teaches best, The Fixer fixes for a hefty price, The key is to commit crimes so confusing that police feel too stupid to even write a crime report about them, Thin-skinned politicians not doing their duty, Threats against supporters of franchisee association, Trade association fronts and defends best and worst franchisors, Unskilled and unaware bias (Dunning–Kruger effect), Vacuum of information favours dominant party, Wage theft, Victims are highly intelligent and educated, War of attrition, What does the independent franchisee association say?, White-knight lawyer turns black, Who pays for the research?, Wiki: a franchisee-created wiki made from your franchisor's documents, Wives free to sue franchisor, Write a letter of complaint, Canada, 20150128 Another casualty

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License