CORNERED! Vine Pharmaceuticals boss dragged to NDA

Vine Pharmaceuticals boss Grace Munyirwa

By our reporter

Grace Munyirwa, the man behind a chain of local pharmacies and cosmetic retail outlets spread all over Kampala is in hot soup. Grace, who runs his pharmacies under Vine Pharmaceuticals Ltd as the managing director, recently boasted of running his outlets under a franchise arrangement, a business strategy he said is paying off. He told Robert Kabushengas daily mentorship program called #40DayMentor hosted on his Twitter spaces, that he was forced into the franchise arrangement because of debts. He said: “11th December 2018 was one of my worst days. I played debt. I took it lightly. One of the guys went and got an auctioneer. The guys came and swept the headquarters clean. I sank. I put in place a mechanism of making sure every month a debt is paid. There is a guy I owed 46M….”

MODUS OPERANDI QUESTIONED

However, some of his purported business partners who are 98percent female have come out to protest the way he runs his franchise business to an extent of comparing it to a Ponzi scheme. One of those aggrieved has now petitioned regulator-National Drugs Authority (NDA), requesting them to check on Grace’s dealings. The grievances are captured in a letter dated 22nd November, 2022 and addressed to NDA executive director titled “RE: COMPLAINT AGAINST MR.GRACE MUNYIRWA AND VINE PHARMACEUTICALS LIMITED OVER PONZI SCHEME OF FRANCHISES AND EXPLOITATION.” The petitioner also wants Grace to refund her money and at the same time wants the NDA to probe Vine Pharmaceuticals.

The letter which was received by NDA registry on 24th November, reads and we reproduce it here verbatim:

“I write to bring to your attention and to seek your help over the exploitation, cheating, illegality and fraud that Mr. Grace Munyirwa through his Vine Pharmaceuticals Limited perpetrated against me. I believe that his entire enterprise continues to exploit many other young women still trapped in it as “franchisees” when in fact they are reduced to exploited workers without written contracts.

PONZI SCHEME OF “FRANCHISES”

Mr.Grace Munyirwa invited me & other colleagues to work as partners/ franchisees to help revive his Vine Pharmaceutical business that was on the verge of business failure.

The initial verbal agreement was that a person interested in taking a franchise would pay an entry fee. In addition, a franchisee is required to pay 10% of the stock level of a pharmacy outlet to Mr. Munyirwa directly.

Thereafter, the franchisee takes over the operation of the outlet at the terms that Mr. Munyirwa dictated. The franchisee must meet all costs while Mr. Munyirwa has a locked in 12.l% of the sales revenue per month, not profit! Any shortfalls are paid by the franchisee.

I paid UGX 6,000,000 as entry fee for Wandegeya and Freedom City outlets in February 2019. I then paid over UGX 11.000,000. Thereafter I used my own money to restock both branches.

For over two and a half years, Mr. Munyirwa did not give me any written agreement despite my repeated requests for them. I know that all the other Vine Pharmaceutical outlets were taken over by young women on similar terms but none received a formal agreement.

I turned around both outlets doubling sales revenues, inventory level and goodwill in terms of clientele.

Until I left Mr. Munyirwa did not give a written agreement and he kept changing the terms of engagement to suit him. At all times there is no single document acknowledging us the franchisees as part owners of the business as he remains the registered and reputed owner.

WANDEGEYA BRANCH SOLD

In inviting me to purchase the franchise to Vine Pharmacy at Wandegeya, Mr. Munyirwa hid very vital information from me. Unbeknownst to the Wandegeya operation, it had a huge debt with its suppliers Abacus pharma (A) Limited. After one year of my investment of money and operating the branch, Mr. Munyirwa decided that to pay the Abacus Pharma (A) Ltd debt, he had to sell the Wandegeya outlet.

He sold the branch without my consent and caused me loss as my investment in the franchise was based on the projected business revenue of this branch. The time I had to run the branch was not sufficient for me to recover my money. After the sale, he paid me only part of the money I had invested in the branch.

Later, I learnt that he defrauded the people he sold this branch to. They have since instituted a case in the High Court against him over fraud, cheating and trickery. See HCCS 614/2021 (Commercial l Division).

This entire so-called “franchising” is a scheme of exploitation and cheating that I request you to intervene in and protect young women from further exploitation.

TREATMENT AS A WORKER

Because of the lack of a signed agreement, Mr. Munyirwa blurred and confused the lines between worker and partner/franchisee. While I joined on the understanding that I was a partner/ franchisee, in effect he treated me as a worker. Yet, he also gave no employment contract. He did not regularly pay my NSSF contributions.

I therefore had no franchise agreement and no employment contract.

My understanding is that as an employee one receives a salary for work done, as a partner one shares the profit made by the business and participates in decision making. Whereas I paid money for a franchise, Mr. Munyirwa was paying me as an employee.

This is clearly a form of cheating and I believe it is against the law. I request NOA to look into this scheme of exploitation as many young people like me have lost money and suffered disappointment.

FORCED DEALINGS WITH OTHER COMPANY

In addition to Vine Pharmaceuticals Ltd, Mr. Munyirwa owns another company named Thornton & Matthews Ltd that imports medicines & toiletries.

Mr. Munyiirwa requires all “franchisees” to buy stock from Thornton & Mathews Ltd even when other suppliers offer the same goods at much cheaper prices.

This is a form of cheating and taking advantage of the “franchises” since the bloated costs of purchases naturally reduce profits. They add to high operation costs. Yet Mr. Munyirwa gains double by profiting in Thornton & Mathews and Vine Pharmaceuticals Ltd, all to our disadvantage.

At payout, a franchisee’s profits and (or) benefits are reduced by the high costs in the form of payouts to Thorntorn & Mathews. I believe this is fraudulent dealing.

I NEED MY MONEY

After he sold the Wandegeya branch via trickery and cheating I remained with one branch at Freedom City Mall which I operated for 2 years.

In July 2021, I decided to terminate my working with Mr. Grace Munyirwa over the issues highlighted hereinabove. In addition to the cash I invested, I worked tirelessly and doubled sales revenues, inventory and clientele.

Mr.Munyirwa took the branch from me and transferred the operation to someone else who also paid to join the company. At the very least, this new entrant ought to have paid me back the money I invested but to date; Mr. Munyirwa refuses to pay me.

I believe that what Mr. Munyirwa is running is a Ponzi scheme and the authorities need to look into this matter.

EXPLOITATION OF YOUNG WOMEN

I wish to bring it to your attention that it is curious that in all ten (1OJ OF Mr. Munyirwa’s so called franchises, he only takes money from young ladies. This is possibly because it is easier for him to take advantage and exploit them as opposed to men. Vine Pharmaceutical’s workforce is 98% female. I invite you to make your own independent investigations on the working conditions and allegations of taking advantage of female employees.

CROWD FUNDING

Whenever Vine Pharmaceuticals runs into a lack of cash, Mr. Munyirwa organizes what he calls “crowd funding” from the all-female franchisees where he requires them to pool money to resolve cash shortages.

There is no agreement or return on the investment. “Franchisees” who do not contribute are ostracized.

PRAYERS

I therefore request that your good office intervene in this matter so that Mr. Munyirwa pays my money back to me.

I also request you to look into the “franchise” Ponzi scheme of exploitation of young women. I will be grateful if your office can come to my help.”

Copied in the letter is the minister of Gender, Labour and Social Development, company Secretary, Head Legal NSSF, and Pastor Moses Mukisa of Worship Harvest Ministries, Naalya where Munyirwa is a regular motivational speaker about franchise business.”

Munyirwa who is said to be out of the country could not be reached for a comment. His known telephone lines have been switched off since last Thursday.

NDA SPEAKS OUT

When contacted, the drug regulator’s public relations manager, Abiaz Rwamwiri promised to give us a full response but hastened to add that: “Whereas NDA regulates pharmacies (premises and drugs sold in), I feel this is a contractual issue that must be addressed by other agencies not us. It’s an issue of trust and business partnership gone bad!”

TO COMMENT ON THIS STORY CALL/TEXT/WHATSAPP 0777959024