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The pharmacist-owners of the Canadian franchises will not receive any compensation from Target, which wants them out by the end of the month.
Target Corp. announced mid-January its plans to shut down its Canadian operations, totaling 133 stores and 107 retail pharmacy franchises. Two weeks later, Target announced its decision to expand in the United States, planning 15 new stores with some smaller formats for urban areas.
“Smaller formats like TargetExpress and CityTarget offer customized assortments and services to meet the needs of guests who are increasingly moving into urban centers,” said Tina Tyler, Target’s executive vice president and chief stores officer. Target plans to open TargetExpress stores in the greater Washington, D.C., area and in Chicago, and CityTargets in Boston and Brooklyn, N.Y., in 2015.
As for the Canadian store closures, Target created a safety net for its 17,600 employees in the form of an Employee Trust, worth $59 million (U.S.). Each employee is entitled to a minimum of 16 weeks of compensation, even if the worker is not required for the entire wind-down period. However, Target offered little information about the effect of the closure on its 107 retail pharmacy franchises, 14 of which are located in Quebec. Target ignored repeated requests for comment.
More than 200 pharmacists and 200 pharmacy technicians will be affected by the decision to close all 133 TCC stores.
Nothing for pharmacy
Mark J. Wong, general counsel for Target Canada Co. (TCC), provided a statement to the court on behalf of an application by TCC for bankruptcy protection. In the Jan. 14 affidavit, Wong stated that each franchise is independent and wholly owned by a licensed pharmacist.
“Franchisee-pharmacists and [their] employees will not receive the compensation Target has announced,” confirmed Genevieve Gregoire, communications advisor for Metro, the owner of the Brunet trademark, which was used in conjunction with the Target trademark in the 14 pharmacies in Quebec.
Franchisee pharmacies will operate for a limited time, Target’s statement noted. Target gave them a deadline of Feb. 27 to leave, according to a report published online at www.thestar.com. Eighty-one pharmacist franchisees recently joined the Pharmacy Franchisee Association of Canada and are hiring legal counsel to fight for more time to move their pharmacies to other locations. They also are seeking financial compensation.
In its press statement, Target Corp. told its Canadian pharmacy customers that the franchisee pharmacies would operate for a limited time and that customers should contact the pharmacies for any information about the pharmacy closures.
“Target Canada is not responsible for the custody and control of patient files. Guests should contact their pharmacy franchisee for additional information,” Target said.
Target Corp.’s Chairman and CEO Brian Cornell reported that the company estimates a $5.4 billion pre-tax loss from the TCC discontinuation in its fourth quarter of 2014 and a $275 million pre-tax loss from the closure in fiscal 2015.
“We have determined that it is in the best interest of our business and our shareholders to exit the Canadian market and focus on driving growth and building further momentum in our U.S. business,” Cornell said in a press release.
A long list of creditors of TCC, identified from the records of Target Canada entities, were posted January 21 by Alvarez & Marsal Canada, the monitor of the TCC's court proceedings. Millions are owed to various creditors, such as Canada Revenue Agency and various provincial and municipal governments, media planner Carat Canada, CPP Investment Board Real Estate, wireless communication company Glentel Inc., and McKesson Canada.
McKesson Canada, which is owed more than $7 million (Canadian), said it will continue to support Target franchisees.
"While we work to understand the implicatons of the Target Canada decision, McKesson Canada's focus remains the continued support of Target franchisees during this difficult time," according to an official statement on the Target situation, emailed to Drug Topics.