What aspects of the covenants are considered reasonable limitations in the Learningrx agreement?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
vert 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;
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to the 2025 Learningrx Franchise Disclosure Document, the franchise agreement includes covenants not to compete that place certain limitations on the franchisee and their affiliates. These covenants are designed to protect Learningrx's goodwill, trade secrets, and overall system. During the term of the agreement, the franchisee is restricted from having any controlling interest in a competitive business, performing services for a competitive business, or diverting business or employees to a competitive business anywhere in the United States.
After the termination, transfer, or expiration of the agreement, the non-compete restrictions continue for two years. These restrictions apply within the franchisee's territory, in adjacent counties or territories under development by Learningrx or its other franchisees, within a 50-mile radius of the franchisee's territory or any other Learningrx center, and on the Internet or any multi-area marketing channels used by Learningrx. These limitations ensure that former franchisees do not directly compete with Learningrx in areas where they could leverage knowledge and experience gained during their franchise term.
The agreement defines a "Competitive Business" as any business offering or granting franchises or licenses to provide learning enhancement courses, brain training or cognitive training courses, or math and reading training courses. These covenants also extend to a franchisee's affiliates, including family members and employees, preventing them from engaging in activities that could harm the Learningrx business. These restrictions are considered reasonable to protect Learningrx's market position and confidential information.