Does the Learningrx covenant not to compete apply to employees of the franchisee?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
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 the franchisee's employees. Specifically, the agreement applies to the franchisee, any manager of the franchisee, 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." These individuals are restricted from engaging in competitive business activities during the term of the franchise agreement and for two years after its termination, transfer, or expiration. This includes having a direct or indirect controlling interest in a Competitive Business, performing services for a Competitive Business, or diverting business or employees from Learningrx or its franchisees.
The non-compete restrictions for Learningrx extend to a defined geographic area. During the term of the agreement, the covenant applies anywhere in the United States. After termination, transfer, or expiration, the covenant applies within the franchisee's territory, in adjacent counties, within a fifty-mile radius of the franchisee's territory or any other Learningrx center, and on the Internet or other multi-area marketing channels used by Learningrx.
Furthermore, Learningrx requires that employees with access to confidential information sign a Confidentiality & Covenant Not to Compete Agreement. This agreement is standard and must be signed before the employee starts working or gains access to confidential information. The franchisee must provide copies of these signed agreements to Learningrx within one week of their execution, ensuring that all relevant parties are bound by the non-compete and confidentiality terms.