What is a Territory Conflict in a Pharma Franchise

The Pharma Franchise business is popular among entrepreneurs and medical professionals in the competitive landscape of pharmaceuticals. It gives them the ability to start a business with low investment while representing a brand they trust. Pharma Franchise models can have fantastic benefits, but one of the main problems that franchise partners have is territory conflict.

In this blog, we want to help you understand what is territory conflict, why it occurs, and how to avoid it in your pharma franchise business.

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What is a Territory Conflict?

A territory conflict in a pharma franchise occurs when two or more franchise partners are allowed to sell the same products to the end customers in the same geographical area. This creates competition to sell the brand to the same customers, which can confuse, lead to lower sales and a price war, and create trust issues.

If two distributors of the same pharmaceutical company are operating in the same city or region. Both will also go to the same doctors, medical stores, and hospitals. These overlaps can create unnecessary conflict and give the brand a negative perception.

Why Do Territory Conflicts Occur in Pharmaceutical Franchises?

Territory conflicts usually occur because of:

1. Undefined Territory

Some companies do not clearly define to the franchisee the area assigned to him/her. As a result, it is problematic when they both contact the same customers, and there will often be overlap in the area of coverage.

2. Lack of contract (written agreement)

If there is no written description covering the exclusive rights to a territory, there will always be disputes.

3. Unethical Practices

Some companies will deliberately sell the same district to several parties to generate sales in the short term, but this ultimately creates conflicts and losses over time.

4. Expansion Without Communication

A company can expand its network in an area without the existing distributor ever knowing that the expansion is taking place, which ultimately creates confusion and dissatisfaction.

How Territory Conflicts Affect Your Pharma Franchise Business

Territory conflicts can lead to many problems:
Loss of Trust: Distributors lose trust in the company.
Lower Profit Margins: Price wars start due to internal competition.
Damage to Brand Reputation: Chemists and doctors are confused as to who to deal with.
Increased Operational Stress: Time and energy are wasted in resolving conflicts rather than developing the business.

How to Prevent Territory Conflicts in Pharma Franchise?

1. Ask for Monopoly Rights

Before you partner with any pharmaceutical franchise, ensure they provide monopoly rights for the territory where you will operate. This gives you the legitimacy to operate in a territory, free from competition from the same brand.

Scott Morrison provides 100% Monopoly rights to make sure our partners have full control and peace of mind.

2. Get Everything in Writing

Always sign a proper franchise agreement that details your area, a detailed description of your products, and the contract terms for external distribution. This agreement will protect you if you have to in the future.

3. Select an Open Company

Use a company that takes business seriously. At Scott Morrison, we are serious about ethics. We make sure that we have proper and professional communication about the rights of monopoly and the area. We want long-term relationships with our franchise partners.

4. Regular Communication

Stay engaged with the company and research any violations. Request regular updates about the company’s policies and decisions about your territory.

5. Do a Local Research

Before you choose a territory, complete a small market survey. This will tell you if the marketplace already has someone working on it or if it’s an opportunity.

How Scott Morrison Avoids Territory Conflict

At Scott Morrison, we implement a territory-first model. Below is how we protect our partners from competing with each other:

Territory Allocated: Each franchise partner is allocated areas that are clearly defined.
Legal Agreement: We send out a legal agreement with the territory fully outlined.
One Franchise: We operate a One Area, One Distributor Model.
Mapper: Every area is mapped out in our internal system to ensure that there is never an overlap.
Fair Expansion Policy: We discuss with our clients about any territory with the existing partners.

Conclusion

Territory dispute is a common but it can be prevented by choosing the right pharma Franchise company. Because it is the only right way to prevent this rift. The right company that adheres to an ethical code of conduct and provides full transparency can only save you from this.

Scott Morrison ensures that our franchise partners are completely supported with detailed territory rights and legal agreements. Whether you are a startup or an experienced distributor, you can count on us for a solid and fruitful business experience.

FAQs About Territory Conflict in Pharma Franchise

Q1. What is a territory conflict in a pharma franchise?

Territory conflict arises when two or more distributors sell similar products within the same territory/city, and there is a chance of internal competition.