With over 9,900 stores across 49 states in America, CVS Health is one of the largest healthcare chains in the country, providing prescriptions, healthcare products, and beauty products to the masses.
Seeing how quickly CVS has expanded its operations in the country, you may be wondering – is CVS a franchise? Here is what I’ve discovered by doing some research into this!
Is CVS A Franchise?
CVS Health is not a franchise and instead is a 58-year-old corporation with subsidiaries including CVS Caremark and CVS Pharmacy. CVS does not currently offer franchising opportunities but is publicly traded on the New York Stock Exchange as “CVS.” Franchises in the retail sector include 7-Eleven and Circle K.
If you want to know more about who owns CVS if it isn’t a franchise, what the difference is between a franchise and a corporation, and much more, keep on reading!
Why Isn’t CVS A Franchise?
Although franchising is a perfectly acceptable and great business model for some companies, CVS has chosen to stay on the corporate route for the time being.
This is because the top shareholders benefit from being able to manage every store and optimize all processes to maximize profits.
In addition, being a Corporation allows CVS to offer low prices to its customers.
Corporations generally face fewer expenses due to volume-based contracts with associate companies and so can pass down further savings to the customer by maintaining low costs.
Other than that, shareholders experience a lot more freedom to expand the company and flagship locations through the corporation model.
When Was CVS Established?
CVS was launched in 1963 as ‘Consumer Value Stores’ and was founded by three partners: Stanley Goldstein, Sidney Goldstein, and Ralph Hoagland.
Although the venture began as a health and beauty chain, pharmacies were soon added, and before long, the company joined the Melville Corporation for the chance to grow further.
Finally, in 1996, the Melville Corporation transformed into the CVS Corporation and became a standalone company trading on the NY Stock Exchange.
Currently, the CEO and President of CVS Health Corporation is Karen Lynch, and the headquarters for the company are in Woonsocket, Rhode Island.
Who Are The Major Shareholders Of CVS?
As CVS accumulated significant recognition in the U.S. market, it attracted large investments from entrepreneurs scanning the stock exchange.
Collectively, shareholders possess approximately 70,654,959 shares of the CVS Corporation. The largest independent shareholders include:
- Larry J. Merlo owns combined shares of 700,000+ from direct and indirect investments and currently holds the most amount of CVS shares.
- David Brown II, who sits on the CVS board of directors and is reportedly the second most significant shareholder with 101,252 shares.
- Troyen A. Brennan, the Chief Medical Officer at Aetna Inc, which CVS previously acquired.
- Helena Foulkes, a former president of the CVS pharmacy.
Other than these individuals, investment firms primarily based in America also hold significant shares in CVS.
For example, Octopus Investments reportedly has around 8.2% (5,808,507 shares) ownership of the Corporation, Invesco has 6.1%, and Columbia Threadneedle Investments has 4.57% ownership of shares.
What Is The Difference Between A Franchise And A Corporation?
A corporation is owned by shareholders and run by a board of directors (each company’s BOD differs in size), with each store being solely owned and run by the company.
Additionally, business decisions are made at the corporate level, with the profits shared and distributed throughout the company.
On the other hand, a franchise is owned by both the company (the franchisor) and an individual running one location (the franchisee).
The company earns its money through franchising fees and profit, and once the royalties are paid, the franchisee will distribute the profits to their staff.
In the franchise model, the franchisee makes business decisions for their individual store location and must consider the costs of real estate, inventory, and franchise fees.
Which Store Chains Franchise?
Some of the most successful franchises are in the fast-food industry, such as McDonald’s, Subway, or KFC. As for retail stores, the most popular franchising companies are 7-Eleven and Circle K.
If you choose to sign a contract with a franchise such as 7-Eleven for a traditional store, the company will offer a single site that it owns or leases for you to recruit employees, run, and make a return on.
To learn more about the business models of major retail chains, you can see our related posts on whether or not Walgreens is a franchise, if Walmart is a franchise, and if Target is a franchise.
Conclusion
CVS Health is not a franchise but instead is a corporation with multiple subsidiaries. The company is publicly traded on the New York Stock Market and run by a Board of Directors with Karen S. Lynch as the President and CEO.
While CVS is not a franchise and is unlikely to offer franchising in the future, there are multiple options available for franchising, ranging from fast food (McDonald’s) to retail marts (7-Eleven).
