Is CVS a franchise? (all you need to know)
With more than 9,900 stores in 49 states, CVS Health is one of the largest health care chains in the United States, providing prescription drugs, health supplements and beauty products to the general public.
Seeing how quickly CVS has expanded in the country, you might be wondering – is CVS a franchise? Here’s what I found out by doing some research on this!
Is CVS a franchise?
CVS Health is not a franchise, but a 58-year-old company whose subsidiaries include CVS Caremark and CVS Pharmacy. CVS does not currently offer franchise opportunities, but is publicly traded as “CVS” on the New York Stock Exchange. Franchises in retail include 7-Eleven and Circle K.
If you want to learn more about who owns CVS (if not a franchise), the difference between a franchise and a corporation, and more, keep reading!
Why is CVS not a franchise?
While franchising is a perfectly acceptable and fine business model for some companies, CVS has chosen to stay on the corporate route for now.
This is because top shareholders benefit from being able to manage each store and optimize all processes to maximize profits.
Plus, as a company, CVS can offer low prices to its customers.
As a result of volume-based contracts with associates, companies typically face fewer expenses and can therefore pass further savings on to customers by keeping costs low.
In addition to this, shareholders have more freedom in expanding the company and flagship stores through the corporate model.
When was CVS founded?
Launched in 1963 as a “Consumer Value Store,” CVS was founded by three partners: Stanley Goldstein, Sidney Goldstein and Ralph Hoagland.
Although the venture started as a health and beauty chain, drugstores were quickly added, and shortly after, the company joined Melville Corporation for further growth opportunities.
Finally, in 1996, Melville Corporation transformed into CVS Corporation, an independent company traded on the New York Stock Exchange.
Currently, the Chief Executive Officer and President of CVS Health Corporation is Karen Lynch, and the company is headquartered in Woonsocket, Rhode Island.
Who are CVS’ major shareholders?
As CVS gained significant recognition in the US market, it attracted significant investment from entrepreneurs scanning stock exchanges.
In total, shareholders own approximately 70,654,959 shares of CVS Corporation. The largest independent shareholders include:
- Larry J. Merlo owns more than 700,000 shares through direct and indirect investments and currently holds the largest stake in CVS.
- David Brown II sits on CVS’s board of directors and is reportedly the second-largest shareholder with 101,252 shares.
- Troyen A. Brennan, chief medical officer of Aetna Inc, previously acquired by CVS.
- Helena Foulkes, former president of CVS Pharmacy.
In addition to these individuals, investment firms primarily based in the United States also hold significant stakes in CVS.
For example, Octopus Investments reportedly owns approximately 8.2% (5,808,507 shares) of the company, Invesco owns 6.1%, and Columbia Threadneedle Investments owns 4.57%.
What is the difference between a franchise and a company?
Companies are owned by shareholders and run by a board of directors (BOD size varies from company to company) and each store is solely owned and operated by the company.
Furthermore, business decisions are made at the corporate level and profits are shared and distributed throughout the company.
A franchise, on the other hand, is jointly owned by the company (the franchisor) and the individual (the franchisor) who operates a location.
Companies make money through franchise fees and profits, and once the royalties are paid, franchisees distribute the profits to their employees.
In the franchise model, franchisors make business decisions for their individual store locations and must consider the cost of real estate, inventory, and franchise fees.
Which chains are franchised?
Some of the most successful franchises belong to the fast food industry, such as McDonald’s, Subway or KFC. As for retail stores, the most popular franchise companies are 7-Eleven and Circle K.
If you choose to contract with a franchisee such as 7-Eleven of a traditional store, the company will provide a single site it owns or leases that you can hire, operate and earn a return on.
To learn more about the business models of the major retail chains, you can check out our related posts on Is Walgreens a Franchise, Is Walmart a Franchise, and Is Target a Franchise.
in conclusion
CVS Health is not a franchise, but a company with multiple subsidiaries. The company is publicly traded on the New York Stock Exchange and is run by a Board of Directors with Karen S. Lynch as President and Chief Executive Officer.
While CVS is not a franchise and is unlikely to offer one in the future, there are a variety of franchises to choose from, from fast food restaurants (McDonalds) to retail supermarkets (7-11).
