Does the Learningrx covenant not to compete apply to any person associated with 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 the 2025 Learningrx Franchise Disclosure Document, the covenant not to compete extends beyond the franchisee to include individuals associated with the franchisee. Specifically, this applies to 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, who are collectively referred to as "Franchisee Affiliates." This means that these individuals are also restricted from engaging in competitive business activities during the term of the agreement and for a period after termination, transfer, or expiration.
The Learningrx agreement specifies that neither the franchisee nor any Franchisee Affiliates can have a direct or indirect controlling interest in a Competitive Business, perform services for a Competitive Business, or divert business or employees to a Competitive Business. During the term of the agreement, these restrictions apply throughout the United States.
Post-termination, the covenant not to compete applies for two years within the franchisee's territory, adjacent counties, or within a fifty-mile radius of any Learningrx Training Center. It also extends to online activities and other multi-area marketing channels used by Learningrx. This broad scope ensures that Learningrx can protect its market and confidential information, but it also places significant restrictions on those affiliated with the franchisee, potentially limiting their future employment or business opportunities. Prospective franchisees should carefully consider these limitations and discuss them with any individuals who may be affected by the covenant not to compete.