What constitutes an unauthorized transfer that could lead to termination of a Learningrx franchise?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
the Franchise Agreement is terminated, Franchisee may do so only until the client's prepaid or monthly payment for current program is complete. Notwithstanding the foregoing, once a client's then-current prepaid monthly program concludes, Franchisee will cease using Franchisor's Program for that client. If Franchisor grants this continuing right, Franchisee agrees that Franchisor's audit rights will survive termination of the Agreement.
14. TRANSFER
- 14.1 Prohibited Acts. Any unauthorized Transfer or other conveyance, by operation of law or otherwise, or any attempt to do so, shall be deemed void, a breach of this Agreement, and grounds for termination of this Agreement by Franchisor.
- 14.2 Transfer by Franchisor. Franchisor's obligations under this Agreement are not personal, and Franchisor can unconditionally assign and transfer, in its sole and absolute discretion, this Agreement to another person or business entity at any time. Franchisor does not need permission of Franchisee for the transfer and may transfer free of any responsibility or liability whatsoever to the Franchisee, provided the transferee assumes the Franchisor's material obligations. Franchisor may also:
- (a) sell or issue its stock, other ownership interests, or assets, whether privately or publicly;
- (b) merge with, acquire, or be acquired by another entity, including an entity that competes directly with Franchisee; or
- (c) undertake a refinancing, recapitalization, leveraged buyout, or other economic or financial restructuring.
- 14.3 Transfer by Franchisee. Franchisee's obligations under this Agreement are personal and may not be voluntarily or involuntarily sold, pledged, assigned, transferred, shared, subdivided, sub franchised, encumbered or transferred in any way without the prior express written approval of Franchisor.
- 14.4 Conditions for Transfer. No Transfer of this Agreement will be approved by Franchisor or be effective unless and until:
- (a) Franchisee is under no material default in the performance or observance of any of its obligations under this Agreement and Franchisee is under no material default that materially impairs or detracts from the goodwill or brand under any other agreement with Franchisor at the time Franchisee requests permission to transfer the Business or at the time of the transfer;
- (b) Franchisee has settled all outstanding accounts with Franchisor, and Franchisee, and every principal of Franchisee's entity, have executed a general release of Franchisor and all principals of Franchisor from all claims that may be brought by you or any principal;
- (c) the proposed transferee pays Franchisor a fee to transfer the Business ("Transfer Fee") in the amount of Ten Thousand and 00/100 Dollars ($10,000.00), unless the transferee is: (i) a corporation, partnership, or limited liability company of which Franchisee is the majority stockholder, or a child, parent, sibling or spouse of Franchisee, in which case no Transfer Fee will be required, or (ii) another franchisee of LearningRx, in which case the Transfer Fee will be Five Thousand and 00/100 Dollars ($5,000.00).
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, an unauthorized transfer or conveyance of the franchise, or any attempt to do so, is considered a breach of the Franchise Agreement and can lead to its termination. Specifically, the Learningrx franchisee's obligations are personal and cannot be voluntarily or involuntarily sold, pledged, assigned, transferred, shared, sub-franchised, encumbered, or transferred in any way without the prior express written approval of Learningrx.
Several conditions must be met for a transfer to be approved by Learningrx. The franchisee must not be in material default of their obligations under the Franchise Agreement or any other agreement with Learningrx, and they must have settled all outstanding accounts with Learningrx. Additionally, the franchisee and every principal of the franchisee's entity must execute a general release of Learningrx and its principals from all potential claims.
Furthermore, the proposed transferee must pay a Transfer Fee, which is typically $10,000, but is reduced to $5,000 if the transferee is another Learningrx franchisee. No Transfer Fee is required if the transfer is to a corporation where the franchisee is the majority stockholder, or to the franchisee's child, parent, sibling, or spouse. The transferee must also execute a separate franchise agreement with Learningrx, attend and complete the training program for new franchisees, and pay an Initial Training and Materials Fee of $10,000 (or $6,000 if the transferee is another Learningrx franchisee). Finally, the individual transferee, or the principals of an entity transferee, must execute a personal guarantee for the transferee's obligations.