| dc.description.abstract | The pharmaceutical industry plays a key role in the provision of health, employment, research,
beauty e.t.c. in any part of the world. Doctors can only prescribe for their patients, what is in
the market from the pharmaceutical industry. For many years the industry has been seen as one
of the most lucrative businesses one can venture into. The purpose of this study was to
determine the challenges faced by the pharmaceutical franchising in Kenya with a reference to
franchisees.
A descriptive research design was used in the study. The population of interest was all the
pharmaceutical firms in Kenya engaged in franchising. A total of 86 firms are involved in
franchising of pharmaceutical products in Kenya. Fifty questionnaires were send out and it is
from this population where we obtained 32 respondents giving a response rate of 64%. Primary
data was collected using semi-structured questionnaires. The questionnaires were dropped and
picked later. Quantitative analysis was done using descriptive statistics, mainly frequencies,
percentages, mean scores, and standard deviation. The results are presented in table form.
From the results of the study most of the franchising firms in pharmaceutical industry are
locally owned with only a small number being multinational firms. Most of the firms studied
have operated for less than 20 years indicating franchising in the industry is relatively young.
Majority of the firms do both distribution and marketing while a few do distribution or
marketing alone.
The challenges were measured using mean score and standard deviation. The challenges were
grouped into five categories. From the results of this study, franchising obstacles category was
the most significant category of challenges tested. Franchising agreement and knowledge of
franchising by the franchisee were moderate categories, while finance and franchising
application were not significant categories according to the respondents. The mean scores of
the categories were pooled together and the overall result was that all the challenges were
moderate with no significant variations among the respondents
From the results of individual challenges parallel importation, counterfeits, the possibility of
the franchiser appointing a competing franchisee, and the relationship between the franchiser
and franchisee being mutual were the most significant challenges. Majority of the challenges
were perceived as moderate by the respondents and most showed significant variation within
the respondents. These challenges included the franchiser does not register all the required
patent rights in the territory of operation of the franchisee, the franchisee does not benefit from
ready made business system and concept from the franchiser, the franchiser is likely to take
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over the business in the next five years once it peaks up, the franchisee must pay a fee for use
of business concept, the franchisee lacks detailed knowledge of the concept of franchising,
franchisers and financial institutions believe that the franchisee does not have the skills to
manage and operate the business and that the respondents see franchises as being expensive.
A number of challenges to the respondents were not serious according to the results. These
included the ability by the franchisee to maintain the required standards by the franchiser,
provision of training by the franchiser to the franchisee, management support by the franchiser
to the franchisee, provision of credit facilities by the franchiser to the franchisee, time to
delivery of goods ordered by the franchisee, the franchiser interfering with the franchisees by
doing business in their exclusive territory, the franchiser does not do the required advertising
as agreed in the business contract, the franchiser does not declare the correct expected failure
rate of the business, the Kenyan legal framework is inadequate in protecting the franchisee, the
franchisee and the franchiser mutually are dependent, the provision of management expertise
by the franchisee, there are no franchising opportunities in Kenya, and that there is no retail
place available to open a franchise.
From the study it is recommended that pharmaceutical firms in franchising and those who may
want to enter this business model understand and address these key issues especially the illegal
business which constitutes a big percentage of the challenges facing pharmaceutical
franchising in Kenya. There is need for the pharmacy and poisons board (PPB) and the Kenya
Bureau of Standards (KEBS) to enforce the rules and regulations already in place to curb this
illegal business. The research limitation was the failure of some of the respondents not filling
their questionnaires in good time to be included in the analysis of this study. Further research
incorporating the franchiser challenges needs to be done to complete the picture. | en |
