Does the Learningrx covenant not to compete apply to members of the franchisee's immediate families?
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 members of the franchisee's immediate family. The agreement specifies that the franchisee, their managers, individuals associated with the franchisee (including officers, directors, shareholders, partners, members, trustees, employees, or agents), and members of the franchisee's immediate families, collectively referred to as "Franchisee Affiliates," are subject to the non-compete provisions. This means that these individuals are restricted from engaging in competitive business activities during the term of the franchise agreement and for a period of two years after its termination, transfer, or expiration.
The restrictions include not having a direct or indirect controlling interest in a Competitive Business, not performing services for a Competitive Business, and not diverting business or employees to a Competitive Business. During the term of the agreement, these restrictions apply anywhere in the United States. After the agreement ends, the restrictions apply within the franchisee's territory, adjacent counties, within a fifty-mile radius of the territory or any other Learningrx center, and on the Internet or other multi-area marketing channels used by Learningrx.
This broad application of the non-compete covenant has significant implications for a prospective Learningrx franchisee. It means that not only the franchisee but also their immediate family members are legally bound to avoid any competitive business activities related to learning enhancement, brain training, or cognitive training programs. This could limit the family's business opportunities and employment options within the specified geographic areas and online. Franchisees should carefully consider these restrictions and ensure that all affected family members understand the terms and potential impact of the covenant not to compete before entering into a franchise agreement with Learningrx.