In the Learningrx agreement, what does the term 'Franchisor Affiliates' collectively refer to?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
15.1 Covenants Not to Compete. During the term of this Agreement and for two (2) years after termination, transfer, or expiration of this Agreement for any reason, Franchisee agrees that neither Franchisee, nor any manager of Franchisee, any person associated with Franchisee, including officers, directors, shareholders, partners, members, trustees, employees or agents, and any members of Franchisee's immediate families (collectively "Franchisee Affiliates"), will (i) have any direct or indirect controlling interest as a legal or beneficial owner in a Competitive Business (as hereinafter defined); (ii) perform services as a director, partner, officer, manager, employee, consultant, representative, agent or otherwise for a Competitive Business; or (iii) divert or attempt to divert any business related to, or any customer or account of the LearningRx Training Center, Franchisee's Business, Franchisor's business, the business of any affiliate of Franchisor or any other franchisee licensed by Franchisor, by direct inducement or otherwise, or divert or attempt to divert the employment of any employee of Franchisor or another franchisee licensed by Franchisor, to any Competitive Business by any direct inducement or otherwise. During the term of this Agreement, this Covenant Not to Compete applies anywhere in the United States. For two (2) years after the termination, transfer, or expiration of this Agreement, for any reason, this Covenant Not to Compete applies: (a) within Franchisee's Territory; (b) within counties adjacent to Franchisee's Territory or within a Territory then operated by or under development by Franchisor or another franchisee of Franchisor; (c) within a fifty mile radius from the boundary of Franchisees Territory or from any other franchised or company-owned LearningRx Training Center, (d) on the Internet or (e) on any other Multi-Area Marketing channels used by Franchisor.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to the 2025 Learningrx Franchise Disclosure Document, the term 'Franchisee Affiliates' is defined within the context of covenants not to compete. It collectively refers to the franchisee, any manager of the franchisee, any person associated with the franchisee (including officers, directors, shareholders, partners, members, trustees, employees, or agents), and any members of the franchisee's immediate families. This definition is important because these individuals are subject to certain restrictions during the term of the franchise agreement and for two years after its termination, transfer, or expiration.
The restrictions prevent 'Franchisee Affiliates' from engaging in activities that could harm Learningrx's business interests. Specifically, they are prohibited from having a direct or indirect controlling interest in a competitive business, performing services for a competitive business, or diverting business or employees away from Learningrx or its franchisees. These restrictions apply broadly within the United States during the agreement's term and, for two years post-termination, within the franchisee's territory and surrounding areas.
This non-compete clause is a standard provision in franchise agreements, designed to protect the franchisor's brand, trade secrets, and customer relationships. For a prospective Learningrx franchisee, it's crucial to understand the scope of these restrictions and ensure that all individuals falling under the definition of 'Franchisee Affiliates' are aware of and willing to comply with these obligations. Failure to do so could result in legal action and potential damages.