Does the Learningrx franchise agreement acknowledge that franchisee affiliates have other opportunities to earn a living?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
ce or on more favorable terms than disclosed to Franchisor in writing. Such transfer remains subject to Franchisor's prior written approval and other conditions specified in this Agreement. If Franchisor does not transfer the franchised Business to the transferee on the same terms offered to Franchisor, then Franchisee must again extend the right of first refusal to Franchisor in the manner described above, before another desired transfer.
15. GENERAL PROVISIONS
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 franchise agreement places restrictions on the activities of the franchisee and their affiliates regarding competitive businesses. Specifically, Learningrx requires that franchisee affiliates not have any direct or indirect interest in a Competitive Business without prior written consent from Learningrx.
Furthermore, franchisee affiliates are prohibited from performing services for a Competitive Business as a director, officer, manager, employee, consultant, representative, or agent unless Learningrx approves it. This restriction applies during the term of the agreement and for a period of two years after termination, transfer, or expiration of the agreement. The definition of "Competitive Business" includes businesses offering learning enhancement, brain training, or math and reading training courses, programs, or products.
These covenants not to compete are in place to protect Learningrx's goodwill, trade secrets, and the unique qualities of its system. The restrictions apply within the franchisee's territory, adjacent counties, a 50-mile radius of any Learningrx center, and online marketing channels used by Learningrx. Therefore, while franchisee affiliates are not explicitly barred from other employment, they are significantly restricted from engaging in any competitive business activities, requiring them to seek approval from Learningrx to avoid violating the agreement.
Prospective franchisees should carefully consider these restrictions and how they might impact the ability of themselves and their affiliates to pursue other business or employment opportunities, especially within the education and training sectors. It is important to discuss these limitations with Learningrx during the due diligence process to fully understand the scope and implications of these covenants.