The challenges facing the pharmaceutical industry franchising in Kenya: the case study Franchisee
Mboloi, Martin M
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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 8 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.
University of Nairobi