ONLINE PHARMACIES: Drug Emporium Franchisees Battle Company’s Web Site
In a landmark 2-1 vote last month, arbitrators ruled that Drug Emporium Inc. cannot use the Internet to solicit customers who live in the vicinity of the chain's smaller franchisees, the Wall Street Journal reports. For two years, a group of drugstore franchisees in the Drug Emporium Inc. chain have battled the encroachment of Internet sales on their local business. The "first of its kind," last month's order is temporary and is pending a final hearing scheduled for next month. Barry Heller, an attorney with Piper Marbury Rudnick & Wolfe, which represents parent franchise companies, said the ruling was "something everybody was waiting for." The Wall Street Journal reports that it will cause parent companies to "move more quickly to tighten aging, pre-Internet contracts with their franchises" and to "tone down how they market their Internet sites." Drug Emporium franchisees were distressed that the parent company marketed the pharmacy portion of its Web site, www.DrugEmporium.com, as "your neighborhood pharmacy for 20 years." However, Andrew Tomback, an attorney representing the parent franchise company, criticized the franchisees for not espousing the "cross-marketing" advantages of being affiliated with a Web venture. Tomback doubted that the ruling will have a significant impact, saying, "To the extent a victory has been won, it's very much a victory for a dated way of doing business and thinking about the world" (Morse, Wall Street Journal, 10/10).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.