Are Learningrx Centers required to use a designated merchant services provider for receiving payments from clients for agreements signed on or after January 1, 2019?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
You must purchase certain marketing materials, equipment, services, supplies, and materials used to operate your franchise from our approved or designated suppliers as indicated in the Operations Manual. For example, for any agreements signed on or after January 1, 2019, Centers are required to use our designative merchant services provider, as specified in the Operations Manual, for receiving payments from clients at your Center. If you would like to purchase items from another supplier, you may request our "Supplier Approval Criteria and Request Form." At no cost to you, upon receipt of the Supplier Approval Criteria and Request Form, we will study the proposed product or service, and within 30 days approve or disapprove the proposed supplier. We base our approval on a number of factors including vendor reputation, quality of products, delivery performance, and credit rating. However, we reserve the right to determine, in our sole discretion, whether the materials meet our standards and specifications. If you do not receive an approval within 30 days, your request will be deemed disapproved. We expect to derive some income from Franchisees' required purchases from designated and approved suppliers in the next and following fiscal years through a program of rebates from some of our designated or approved suppliers. These rebates serve to partially reimburse us for our costs in the initial sourcing, approval and ongoing monitoring of compliance with our quality standards by our suppliers, but we may receive rebates in excess of our cost to source, approve and monitor suppliers.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 22–24)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, Learningrx Centers are required to use a designated merchant services provider for receiving payments from clients for agreements signed on or after January 1, 2019. This requirement is specified in the Operations Manual, which Learningrx franchisees must adhere to.
This mandate means that franchisees do not have the freedom to choose their own merchant services provider. Instead, they must use the provider that Learningrx has designated. This ensures uniformity in payment processing across all Learningrx Centers and allows Learningrx to potentially negotiate better rates or integrate payment systems more effectively. It also gives Learningrx some control over the security and reliability of payment processing.
While franchisees are obligated to use the designated provider, Learningrx does offer a process for requesting approval of alternative suppliers for other products or services. Franchisees can submit a "Supplier Approval Criteria and Request Form," and Learningrx will evaluate the proposed supplier based on factors like vendor reputation, product quality, delivery performance, and credit rating. Learningrx has 30 days to approve or disapprove the request, but can deny the request at their sole discretion.
Learningrx also expects to derive income from franchisee purchases from designated and approved suppliers through rebates. These rebates are intended to offset the costs associated with sourcing, approving, and monitoring suppliers, but Learningrx may receive rebates exceeding these costs. This arrangement is common in franchising, where franchisors often negotiate volume discounts or rebates with suppliers, creating a revenue stream for the franchisor and potentially lowering costs for franchisees.