Does the Learningrx covenant not to compete apply to agents of the franchisee?
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 Learningrx's 2025 Franchise Disclosure Document, the covenant not to compete extends to agents of the franchisee. Specifically, the agreement states that during the term of the agreement and for two years after termination, the non-compete applies to the franchisee, any manager, 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, collectively referred to as "Franchisee Affiliates."
This means that Learningrx franchisees must ensure that their agents, along with other associated parties, do not engage in any competitive business activities during the term of the franchise agreement and for two years after termination. These restricted activities include having a direct or indirect controlling interest in a competitive business, performing services for a competitive business, or diverting business or employees to a competitive business.
The covenant's geographic scope is broad, applying anywhere in the United States during the agreement's term. After termination, it applies within the franchisee's territory, adjacent counties, within a fifty-mile radius of any Learningrx center, and on the Internet or other multi-area marketing channels used by Learningrx. This comprehensive non-compete agreement is designed to protect Learningrx's market position and confidential information, and franchisees must ensure their agents are fully aware of and compliant with these restrictions.