Is the Learningrx covenant not to compete given in consideration for training?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee acknowledges that, in addition to the license of the Marks hereunder, Franchisor has also licensed commercially valuable information which comprises and is a part of the System, including without limitation, proprietary processes, operations, marketing and related information and materials and that the value of this information derives not only from the time, effort and money which went into its compilation, but from the usage of the same by all franchisees of Franchisor. Accordingly, this covenant not to compete is given in part in consideration for the commercially valuable information described herein, training and access to Franchisor's Trade Secrets, and which, if used without permission, would give Franchisee an unfair advantage over Franchisor and Franchisor's franchisees and affiliates. Franchisee
acknowledges that it will be difficult or impossible to deliver learning enhancement services or cognitive or math and reading training services without using Franchisor's proprietary information and Trade Secrets and therefore in addition to the covenant not to compete found above, Franchisee agrees that Franchisee Affiliates will have the obligation of demonstrating and proving that any deliveries of learning enhancement services or cognitive or math and reading training services do not infringe on Franchisor's rights to its proprietary Information and Trade Secrets at a time when Franchisee no longer has any rights to that proprietary information or Trade Secrets.
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 is given in consideration for commercially valuable information, training, and access to Learningrx's trade secrets. This means that as part of the franchise agreement, the franchisee agrees not to compete with Learningrx, and this agreement is made, in part, because Learningrx will provide the franchisee with valuable information, training, and access to their trade secrets.
This is a fairly standard practice in franchising, as franchisors want to protect their systems and trade secrets. The covenant not to compete prevents a franchisee from using the knowledge and training they receive from Learningrx to start a competing business, either during the term of the franchise agreement or for a certain period after the agreement ends. This protection helps Learningrx maintain its competitive advantage and protect its brand.
The Learningrx franchisee also acknowledges that it would be difficult to deliver learning enhancement services or cognitive or math and reading training services without using Learningrx's proprietary information and trade secrets. Therefore, the franchisee agrees that its affiliates will have the obligation of demonstrating and proving that any deliveries of learning enhancement services or cognitive or math and reading training services do not infringe on Learningrx's rights to its proprietary information and trade secrets at a time when the franchisee no longer has any rights to that proprietary information or trade secrets. This clause places the burden of proof on the franchisee to show they are not using Learningrx's confidential information if they engage in a similar business after the franchise agreement ends.