What is the effect of termination on the LearningRx franchisee's obligation to comply with the Confidentiality and Covenant Not To Compete Agreement?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
ed or convicted of any crime or misdemeanor involving children.
- (c) Franchisee or Franchisee's owner or any guarantor of this Agreement starts, acquires or operates a competing business or diverts or attempts to divert current or prospective customers to a competing business in violation of the terms of the Confidentiality and Covenant Not To Compete Agreement attached to this Agreement as Attachment IX, and incorporated herein by reference.
- 13.2 Effect of Termination. Franchisee or Franchisee's owner or any guarantor of this Agreement starts, acquires or operates a competing business or diverts or attempts to divert current or prospective customers to a competing business in violation of the terms of the Confidentiality and Covenant Not To Compete Agreement attached to this Agreement as Attachment IX, and incorporated herein by reference. Upon any termination or expiration of this Agreement, all obligations that by their terms or by reasonable implication survive termination, including those pertaining to non-competition, confidentiality, and indemnity, will remain in effect, and Franchisee must immediately:
- (a) promptly pay all amounts owed to Franchisor based on the operation of the Center through the effective date of termination;
- (b) return, at Franchisee's sole cost and expense, including but not limited to shipping costs, to Franchisor all copies of the Operations Manual, customer lists, records, files, instructions, brochures, advertising materials, testing materials of any form or nature, agreements, Confidential Information and any and all other materials provided by Franchisor to Franchisee or created by a third-party for Franchisee relating to the operation of the Business, all items containing any Marks, copyrights, and other proprietary items, and all other items specifically identified in any written communication to Franchisee or in the Operations Manual;
- (c) cancel or assign within five (5) business days all registrations relating to its use of any of the Marks, in Franchisor's sole and absolute discretion. Franchisee must notify the telephone, Internet, email, electronic network, directory, and listing entities of the termination or expiration of the Franchisee's right to use any numbers, addresses, domain names, locators, directories and listings associated with any of the Marks, and must authorize their transfer to the Franchisor or any new franchisee as may be directed by the Franchisor. The Franchisee acknowledges as between the Franchisor and the Franchisee, the Franchisor has the sole rights to, and interest in, all numbers, addresses, domain names, locators, directories and listings used by Franchisee to promote the System.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, the termination or expiration of the Franchise Agreement does not release the franchisee from obligations pertaining to non-competition, confidentiality, and indemnity. These obligations, along with others, remain in effect after the agreement ends.
Specifically, after termination, a Learningrx franchisee must adhere to the terms outlined in the Confidentiality and Covenant Not to Compete Agreement, which is included as Attachment IX to the Franchise Agreement. This agreement restricts the franchisee from engaging in activities that could harm Learningrx's business interests, such as operating a competing business or diverting customers.
Moreover, compliance with these post-termination obligations is critical, especially if the franchisee seeks to exercise the Early Termination Option and have Learningrx waive Lost Profits Damages. Strict adherence to the non-competition, confidentiality, and indemnity terms, as well as the obligations detailed in Section 13.2(a)-(g) of the Franchise Agreement, is required for the franchisee to benefit from these provisions.