In this article, we discuss a FOFO (Franchise Owned Franchise Operated) medicine store franchise, named Sanjivani Pharmacy. We sat down for an interview with this brand’s Founder, Mr Mayank Garg, for exclusive analysis of how this medicine store franchise operates. Medicine is an imperative necessity and thus this franchise model promises to be a good investment. Read on to know more from our sit-down interview with Mr Garg.
What is the medicine store franchise business model?
Usually in India, either big medicine brands own pharmacies or individuals open their own pharmacies without any knowledge of the business. But we offer a medicine store franchise to people in the form of a pharmacy. We aim to run this medicine store franchise on a level where it is capable of competing with the big brands in the field. The USP of this medicine store franchise is that it is owned by an individual but is operated by the franchiser. We have a wide range of medicines available too. The primary focus is on allopathy since the Indian market demands it. But apart from that we also offer Ayurvedic, FMCG, OTC products as well as first aid surgical equipment.
What is the investment scheme?
The minimum investment required for this franchise is having an outlet of 200 sq ft. This would incur an investment of Rs 12-14 lakh. The outlet space can be either self-owned or rented. We advise this outlet to be in a densely populated area where people are usually shopping for their basic amenities. Otherwise, it could even be located near a hospital. In this case, it is possible to run the pharmacy for 24 hours too.
The initial fee of Rs 12-14 lakhs is a one-time investment. This includes a Franchise fee of Rs 3.5 lakh, which gives the person the rights to this franchise for 5 years. Next is the Interior cost of Rs 1.5 lakh. The franchiser provides the franchisee with an interior layout. It is up to the franchisee to either use the franchise vendor or his personal vendor to get the interior work done. The drug license cost is of Rs 50,000. The initial stock of medicines placed in the store costs up to Rs 5 lakh. Additionally, Rs 1-1.5 lakh goes into the equipment for the store, such as AC, inverter, fridge, computers, etc.
Of the Rs 5 lakh which goes into the stocking of medicines, we place around 5000 products. This comprises of 80% allopathic medicines and 20% ayurvedic and other categories. If any local products require procurement effort, then the franchiser makes that effort
How many franchisees do you currently have?
We began this journey with our first store in 2006. Initially, we ran 2 stores for 10 years and understood the full operation. Thereafter, we began the franchising in 2015 and sold our first franchise in 2016. In the same year, we are able to get 12 franchisees in just the Delhi-NCR region. As of this moment, we have successfully signed on 90+ franchisees. Around 40+ of these franchisees are already up and running while the remaining are in process and shall be live soon. They are in different stages of completion.
What is the ROI and break-even point?
From our past experience we have seen that within 1-2 years, the franchisee receives his invested amount of Rs 12-14 lakh. The USP of this pharmacy business is that the older the store, the more customers it receives. So in the initial stages, it takes about 6-9 months for customers to find the pharmacy and become regular customers. Since customers usually go to new pharmacies only when they cannot find medicines in their regular medicine store. Once they start liking the services of the new store, they make a gradual shift. Once the business picks up, we expect revenue of Rs 30,000-40,000 per day in approx 2 years. By the 5th year, we expect revenue of Rs 50,000-1 lakh per day over counter sales. Hence, if we are earning Rs 50,000-1 lakh per day, then we can expect a profit of approx Rs 2-3 lakh per month.
On average, we expect a 10% net profit per month. Meanwhile, we expect your monthly expenses to be 3% each towards rent, staff and miscellaneous. Furthermore, we charge no royalty for the franchise. You get our complete services for 5 years without any royalty fees or additional charges.
What franchise support is provided? What are the prerequisites for opening a franchise?
We have generally been approached by people who are upcoming entrepreneurs. They have the intention of investing money somewhere but do not have any idea of this medicinal business. We provide them with complete support from the first day itself. We help them in finding a suitable location for the medicine store franchise. Next, we help them to obtain a drug license which is under their personal company name. Our third-party consultant works with the franchisee on this. the drub license is valid for 5 years and requires a pharmacist. We again help the franchisee in obtaining a pharmacist via the consultant. This is available for all cities.
Furthermore, we provide franchisees with a store layout to get maximum storage out of their outlet. We also help franchisees with staff hiring, either via our in-house HR team or by outsourcing it. Once the staff hiring is complete, we move on to the next step of stock planning. We give an assurance that in case our initial stock does not liquidate then the franchisee can exchange them with fast-moving items. So, there is clear transparency in our methods. Additionally, one of our senior staff members travels to the new franchise and helps with the setup as well as the staff training. Our staff members also help with tying up with the nearby doctors. We also give marketing support in terms of health camp conduction. We also provide digital marketing support relevant to the location of the new franchise.
What is the salary of a pharmacist?
The salary of the pharmacist is Rs 15,000-25,000 per month. As for the additional staff, it depends on the location. For tier 1 cities, the staff salary varies between Rs 15,000-25,000 per month. For tier 2 cities, the staff salary varies between Rs 10,000-20,000 per month and for tier 3 cities it varies between Rs 10,000-15,000 per month. So each outlet requires a pharmacist and a staff to be hired for help.
Our longest running franchisee has been live since 2016. They have a daily revenue of Rs 50,000-60,000 currently and earn about Rs 1.5-2 lakh per month.
What is the automation period for this medicine store franchise?
The requirement of the franchisee here is just staff management. So the franchisee has to devote an hour every day towards his franchise and monitor his staff. If he does that then he need not give more time and effort into running of the medicine store franchise. Hence, 30 hours a month is the involvement of the franchisee, if he follows all the other protocols.
How strong is the Tech Support provision?
We have a history of being one of the best brands in this industry for their tech support. We manage expiry tracking of products and non-moving inventory via our tech. We have also developed our own software for this purpose, which we will begin using from January 2020 onwards. We also focus on blockchain to help identify and track fake and counterfeit medicines. We are also working on real-time inventory tracking of all our franchises. This will help with the inventory auditing too. The franchisees can view and track these records from the software via their login id and password. This will also be available on a mobile app from January 2020 onwards.
What is the USP of Sanjivani Pharmacy?
With the help of our medicine store franchise, you get a business tutorial one-on-one. We handhold you through all the steps of running a successful business. Our margins are one of the best for any medicine store brand pan India. We will be forwarding this margin to our franchises too. We provide organized inventory management. We channelize non-moving stock as well. We even help with reaching out for inventory which is difficult to get through in the local market. Not to forget, we help out with staff management.
We are open across India although our maximum number of stores are open in Delhi. Other places where we are already live are Kolkata, Pune, Hyderabad, Bengaluru, Chennai, Madurai, Jaipur, Ahmedabad and Patna. Thus, we are active in most tier 1 cities. We are venturing into tier 2 cities as well. These tier 2 cities are unexplored markets which have great potential.
Contact details for Sanjivani Pharmacy
You can get in touch with Sanjivani Pharmacy via this link.
Watch our interview with Mr Garg below.
Watch other episodes on Franchise Analysis.
Join the LLA telegram group for frequent updates and documents.
Download the telegram group and then search ‘Labour Law Advisor’ or follow the link – t.me/JoinLLA.