::this post ID is 14262::::in categories of ..Legal Corner....Personal Services....Retail..::

Jean Coutu franchisees suing franchisor over royalty overpayments

BANGKOKTHAILAND - NOVEMBER 19 2013 : Medical pills and medical drugs on pharmacy stand in supermarket Siam Paragon. Siam Paragon is a one of the biggest shopping centres in Asia.Pharmacy franchisor Jean Coutu is facing a class action lawsuit from a group of Quebec franchisees who are seeking to recover $252 million in royalties.

According to an article in the Financial Post, Jean Coutu allegedly overcharged stores for franchisor services, such as advertising, branded plastic bags and flyers, over the past four years. The proceedings were filed on behalf of 284 individuals representing 306 franchises. The lawsuit claims the franchisees have been overpaying Jean Coutu in violation of Article 49 of the Code of Ethics for Pharmacists, which prohibits pharmacies from sharing fees and profits from drug sales with non-pharmacies.

The article quotes Bank of Montreal (BMO) capital markets analyst Peter Sklar, who is not convinced the lawsuit will succeed, but says it does expose stress within the company.

To read the full Financial Post article, click here.

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