Does the Learningrx FDD state that the covenants in Section 15 are independent of other covenants in the agreement?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
ng courses, programs or products; or (iii) math and reading training courses, programs, or products.
- 15.2 Stock Ownership. Nothing in this Section will prevent any active officer of Franchisee or member of Franchisee's family either individually or collectively, from owning not more than a total of five percent (5%) of the stock of any company, which is subject to the reporting requirements of Sections 11 or Subsection 14(d) of the Securities and Exchange Act of 1934.
- 15.3 Independent Covenants. The parties agree that each of the foregoing covenants shall be construed as independent of any other covenant or provision of this Agreement. If any or all portions of the covenants in this Section 15 are held unreasonable or unenforceable by a court or agency having valid jurisdiction in an unappealed final decision to which Franchisor is a party, Franchisee expressly agrees to be bound by any lesser covenant subsumed within the terms of such covenant that imposes the maximum duty permitted by law, as if the resulting covenant were separately stated in and made a part of this Section 15.
- 15.4 Defenses.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to the 2025 Learningrx FDD, the covenants outlined in Section 15 of the franchise agreement are designed to be independent of any other covenant or provision within the agreement. Specifically, Section 15.3 states that each covenant should be interpreted as standing alone. This means that if one part of Section 15 is deemed unenforceable by a court, Learningrx franchisees are still expected to adhere to the maximum duty permitted by law within any remaining valid parts of the covenants, as if those parts were separately stated in the agreement.
This independence of covenants has significant implications for a prospective Learningrx franchisee. It ensures that the franchisee cannot use claims against Learningrx as a defense against the enforcement of the covenants in Section 15. Furthermore, franchisees acknowledge that violating these covenants could cause irreparable harm to Learningrx, potentially leading to injunctions issued by a court. This underscores the importance of understanding and complying with the covenants, as their enforceability is not contingent on other aspects of the franchise agreement.
However, the Learningrx FDD also specifies an exception to these restrictions. Section 15.6 clarifies that the provisions in Article 15 do not prevent a franchisee or their affiliates from acquiring the rights to operate additional Learningrx centers. Moreover, franchisees cannot require their affiliates to sign agreements that would restrict them from purchasing a center from Learningrx or any existing Learningrx franchisee. This exception provides franchisees and their affiliates with some flexibility in expanding their involvement with the Learningrx franchise system without being unduly restricted by the covenants in Section 15.