Does the FDD state any exceptions to Learningrx's disclosure of administrative, criminal, or civil actions?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
Add to ITEM 3 of the Franchise Disclosure Document as follows, as the last paragraph:
- (A) Except as described above, neither we, our predecessors, a person identified in ITEM 2 nor an affiliate offering franchises under our principal trademark has an administrative, criminal or civil action pending against that person alleging: a felony; a violation of a franchise, antitrust or securities law; fraud, embezzlement, fraudulent conversion, misappropriation of property; unfair or deceptive practices or comparable civil or misdemeanor allegations; or any pending actions, other than routine litigation incidental to the business, which are significant in the context of the number of franchisees and the size, nature or financial condition of the franchise system or its business operations.
- (B) Except as described above, neither we, our predecessors, a person identified in ITEM 2, nor an affiliate offering franchises under our principal trademark has been convicted of a felony or pleaded nolo contendere to a felony charge or, within the ten (10) year period immediately preceding the application for registration, has been convicted of or pleaded nolo contendere to a misdemeanor charge or has been the subject of a civil action alleging: violation of a franchise, antifraud or securities law; fraud, embezzlement, fraudulent conversion or misappropriation of property, or unfair or deceptive practices or comparable allegations.
- (C) Except as described above, neither we, our predecessor, a person identified in ITEM 2, nor an affiliate offering franchises under our principal trademark is subject to a currently effective injunctive or restrictive order or decree relating to the franchise, or under a federal, State or Canadian franchise, securities, antitrust, trade regulation or trade practice law, resulting from a concluded or pending action or proceeding brought by a public agency; or is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities and Exchange Act of 1934, suspending or expelling such person from membership in such association or exchange; or is subject to a currently effective injunctive or restrictive order relating to any other business activity as a result of an action brought by a public agency or department, including, without limitation, actions affecting a license as a real estate broker or sales agent.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, there are specific stipulations regarding the disclosure of administrative, criminal, or civil actions. The FDD indicates that Learningrx, its predecessors, individuals identified in Item 2, or affiliates offering franchises under Learningrx's trademark are required to disclose such actions unless they fall under certain exceptions. These exceptions pertain to actions that are considered routine litigation incidental to the business, provided they are not significant in the context of the number of franchisees, the size, nature, or financial condition of the franchise system or its business operations.
Specifically, Learningrx does not need to disclose routine litigation incidental to the business if it is not significant in the context of the franchise system. However, any pending administrative, criminal, or civil action alleging a felony; a violation of franchise, antitrust, or securities law; fraud, embezzlement, fraudulent conversion, misappropriation of property; unfair or deceptive practices or comparable civil or misdemeanor allegations must be disclosed. Similarly, convictions or nolo contendere pleas to a felony charge, or within the ten-year period before the application for registration, convictions or pleas to a misdemeanor charge, or civil actions alleging violations of franchise, antifraud, or securities law; fraud, embezzlement, fraudulent conversion or misappropriation of property, or unfair or deceptive practices or comparable allegations must be disclosed unless they fall under the aforementioned exception.
Furthermore, Learningrx must disclose if it, its predecessors, individuals identified in Item 2, or affiliates are subject to any currently effective injunctive or restrictive order or decree relating to the franchise, or under a federal, State or Canadian franchise, securities, antitrust, trade regulation or trade practice law, resulting from a concluded or pending action or proceeding brought by a public agency. They must also disclose if they are subject to any currently effective order of any national securities association or national securities exchange, or any currently effective injunctive or restrictive order relating to any other business activity as a result of an action brought by a public agency or department. These disclosures are crucial for prospective franchisees to assess the risks associated with investing in a Learningrx franchise.