Dear Seafarer Friends,

I am Sabahjit Yadav, a Chief Engineer and more importantly a Seafarer like you. We Seafarers generally are considered as less intelligent investors and are at times taken for a ride by the people/organizations we trust. Some of you even might have experienced some unpleasant incidents like me and have lost your hard earned money. I share with you my experience, which may act as a caution for many before they take any wrong financial initiative in life.
I signed an agreement in good faith with The Medicine Shoppe (India) on April 19, 2007. Fourteen months have now passed, sales of my Medicine Shoppe franchisee at Sector-21, Nerul, Mumbai has gone for a toss. In pharmacy business, when you don't have enough medicines at your counter, you are bound to fail. I noticed they were not supplying sufficient products to the stores on a regular basis. Reason was - at least 15 pharmaceutical wholesalers in Mumbai have suspended the drug supplies to Medicine Shoppe India, the master franchisee of the US-based pharma retail major Medicine Shoppe in the country, due to non payment of bills for last several months.
The company has not been paying the credits to the wholesalers for last six months, according to trade sources. Medicine Shoppe (India) has no follow-up training, no support visits, no visits to review financials, there was no corporate marketing, operating cost and working capital estimate were not even close to requirements. I have ceased operations and lost everything. I have lost in excess of $15,000, we lost our house, and we maxed out our credit card trying to save the business thinking break-even was just around the corner. But, it was not to be, and I am total bankrupt now.
We learnt that Medicine Shoppe (India) is guilty of fraud in several other areas too. I believed in the Franchisee Industry mantra that franchisees are the most secured way to own your own business. This thought process made me to believe that they would be professionals in their business.
Medicine Shoppe (India) provided a UFOC that showed great success of their franchisees. The document was a well-crafted marketing tool that meets the minimum requirements of the Indian Trade Commission. The data misled me. It is written by attorneys and their executives to meet the FTC requirements, which made me think they are offering me a well-developed business plan.
Their software was outdated and provided minimal value to me. I didn't get any follow-up training or assistance. Dozens of Indians are now caught in what appears to be a multi-million dollar fraud. Many have borrowed money to pay up to $10,000 for a Medicine Shoppe franchisee. Medicine Shoppe has been mobbed by frustrated wholesalers and the company says it has got no idea how many people have possibly been duped.
The man behind the alleged scam is now no longer at his Andheri address in Mumbai. His voice mail is not accepting any more messages because it is full. The message on his home office refers all enquiries to Andheri head office.
There is no accountability for what they do and they do whatever they want and however they want - legal or not. They cannot be trusted as business associates.
I feel absolutely helpless, but I want to prevent other people from joining this fraudulent scheme. I have tried to contact all possible organizations/publications about it (watchdogs, office of fair trading, different publications). We are about 20 franchisees at the moment, we are all facing the same awful situation, we lost lakhs of rupees and our franchisor is still out there convincing people that there is a lot of money in this business! I want to clarify that it's not about stupidity or naivety always. Sometimes the trap is really well laid and most people can be easily befooled. I have fallen into a trap myself.
It may appear bit strange, but I have checked into everything thoroughly before joining this franchisee. I have drawn a business plan and a bank approved it. The franchisor too approved it in writing before signing the contract. I have asked for legal advice to check whether the contract was a valid one and also talked to four existing franchisees to check their earning and they replied that they were really happy with everything.
But little did I know that after a few months, their commissions would not be paid. I made a big mistake - the company was too new and the franchisees I talked to were just a few months old. So I could not get the full picture of what was going on after the first few months.
I strongly feel something needs to be done, and may be all franchisees who have been victims of this kind of fraud should come together in some way. For anybody looking into joining a franchisee now, I would suggest they should not even trust the comments made by existing franchisees if they are not old enough (they must be in the business for at least 6 years I feel).
Also judge the market. Is it competitive or saturated? Evaluate the franchisor's experience and the brand, because these are the most important requirements. If there is no franchisee brand or you have to operate with your own name, then there is no point in buying a franchisee. And most importantly, 'Do not trust anything else other than complete honesty and transparency from the beginning.'
Lastly, I would appeal that anybody who wants to get in touch with me about any negative experience with franchising just e-mail me. Let's unite to stop our Seafarer friends being cheated by cunning people/organizations.
Sabhajit Yadav.
(E-mail ID: sabhajit.yadav@gmail.com)