definition

What constitutes a prohibited action regarding Learningrx customers or business opportunities?

Learningrx Franchise · 2025 FDD

Answer from 2025 FDD Document

or upon conclusion of the use for which such information or material may have been furnished to Franchisee Affiliate.

    1. Franchisee Affiliate shall not at any time, directly or indirectly, do any act that would or would likely be injurious or prejudicial to the goodwill associated with the Licensed Marks, the Trade Secrets or the System.
    1. All Operations Manuals are loaned by Franchisor to Franchisee for limited purposes only and remain the property of Franchisor and may not be reproduced, in whole or in part, without Franchisor's written consent.

COVENANTS NOT TO COMPETE

    1. In order to protect the goodwill and unique qualities of the System and the confidentiality and value of the Trade Secrets, and in consideration for the disclosure to Franchisee Affiliate of the Trade Secrets, Franchisee Affiliate further agrees and covenants that Franchisee Affiliate will not without the prior written consent of Franchisor:
  • a. Have any direct or indirect interest as a disclosed or beneficial owner in a Competitive Business, except with Franchisor's approval;
  • b. Perform services as a director, officer, manager, employee, consultant, representative, agent or otherwise for a Competitive Business wherever operating except with Franchisor's approval;
  • c. Divert or attempt to divert, directly or indirectly, any business, business opportunity or customer of the LearningRx Business to any competitor;
  • d. Make any disparaging remarks, or otherwise take any action or do anything that could reasonably be anticipated to cause loss or damage to the business or business opportunities, affairs, reputation and goodwill of, or otherwise negatively reflect upon, Franchisor, the System or the Licensed Marks; and

The term "Competitive Business" as used in this Agreement will mean any business offering, or granting franchises or licenses to others to provide: (i) learning enhancement courses, programs or products; (ii) brain training or cognitive training courses, programs or products; or (iii) math and reading training courses, programs, or products.

    1. This Covenant Not to Compete shall apply:
  • a. during the term of Franchisee Affiliate's relationship, association with or employment by Franchisee anywhere within the United States; and,
  • b. for the two years following the termination of Franchisee Affiliate's association with or employment by Franchisee:
    • i. within Franchisee's Territory or any area serviced by Franchisee;
    • ii.

Source: Item 23 — RECEIPT (FDD pages 54–209)

What This Means (2025 FDD)

According to the 2025 Learningrx Franchise Disclosure Document, several actions are prohibited to protect the brand's goodwill, trade secrets, and customer base. Franchisees and their affiliates are restricted from diverting or attempting to divert any business, business opportunity, or customer of the Learningrx business to any competitor. Additionally, franchisees are prohibited from making disparaging remarks or taking any action that could reasonably cause loss or damage to the business, business opportunities, affairs, reputation, and goodwill of Learningrx, its system, or its licensed marks. These restrictions apply both during the term of the franchise agreement and for a specified period afterward.

Specifically, the covenant not to compete extends for two years following the termination of the franchisee's association with Learningrx. During this period, the restrictions apply within the franchisee's territory, in adjacent counties, within a fifty-mile radius of the franchisee's territory or any other Learningrx training center, and on the Internet or any other multi-area marketing channels used by Learningrx. This means a former franchisee cannot actively solicit Learningrx customers or opportunities for a competing business within these defined geographic and digital boundaries.

These covenants are designed to prevent franchisees from leveraging the knowledge and relationships gained during their time with Learningrx to unfairly compete against the franchise system after their departure. Such restrictions are common in franchising to safeguard the franchisor's investment in its brand and system. Prospective franchisees should carefully consider the scope and duration of these non-compete clauses, as they could impact their future business endeavors should they decide to leave the Learningrx system.

Furthermore, spousal affiliates also have restrictions. Spousal affiliates cannot take actions that would be harmful to the goodwill associated with the licensed marks, trade secrets, or the Learningrx system. They are also prohibited from employing or attempting to employ anyone who is currently or was employed by Learningrx, its affiliates, or its franchisees within the preceding 180 days, or inducing such a person to leave their employment. These measures ensure that confidential information and key personnel are not acquired by competitors through a franchisee's spouse.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.