Franchisees File Legal Action Against Cardinal Health and Medicine Shoppe International

Biz Yahoo:

More than 70 Medicine Shoppe franchise owners representing 82 stores have filed legal action against Medicine Shoppe International, Inc. (MSI) and its parent company, Cardinal Health, Inc. (Cardinal Health). The action was filed June 2, 2006, in Missouri through the American Arbitration Association as required by the parties’ agreement.

The group of franchisees is comprised of members of the Pharmacy Franchise Owners Association (PFOA), which is made up of 220 Medicine Shoppe and Medicap franchise owners – approximately 20 percent of the total domestic franchisees of MSI.

In the filing, the franchisees lay out several key factors that have led to filing the action, including:

* MSI’s failure to provide accountings of, and failure to perform, marketing and advertising obligations;
* MSI’s continued use of a broken and archaic business model;
* Breaches of licensee agreements;
* Cardinal Health’s conflicts of interest and anti-competitive activities;
* The sale of the Managed Pharmacy Benefits Network; and
* Encroachment on protected sales territories.

The demand for arbitration seeks redress for breach of contract, breach of the implied covenant of good faith and fair dealing, violation of unfair trade practice laws, violations of anti-trust laws, and violations of state franchise laws. Participants in the action are seeking relief against Cardinal Health for tortious interference with contractual relations, violations of unfair trade practice laws, and violation of antitrust laws.