Does the Learningrx franchise agreement define 'Franchisor Affiliates'?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
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 term 'Franchisee Affiliates' is defined within the context of covenants not to compete. Specifically, the agreement states that during the term of the agreement and for two years after termination, transfer, or expiration, neither the franchisee, nor any manager, person associated with the franchisee (including officers, directors, shareholders, partners, members, trustees, employees, or agents), nor any members of the franchisee's immediate families can have a direct or indirect controlling interest in a competitive business. They also cannot perform services for a competitive business or divert business from Learningrx, its affiliates, or other franchisees. This definition is important because it broadens the scope of who is bound by the non-compete agreement beyond just the franchisee themselves.
This definition has significant implications for a prospective Learningrx franchisee. It means that not only are they restricted from engaging in competitive activities, but so are their managers, business partners, and immediate family members. This could potentially limit the franchisee's options after leaving the Learningrx system, as it restricts a wide range of individuals connected to the franchisee from participating in similar businesses. The non-compete restrictions apply during the agreement term anywhere in the United States and for two years after termination within the franchisee's territory, adjacent counties, a fifty-mile radius, online, and on multi-area marketing channels used by Learningrx.
It is important for a prospective franchisee to carefully consider these restrictions and how they might impact their future plans. The definition of 'Franchisee Affiliates' is broad and encompasses many individuals who may be closely associated with the franchisee. Franchisees should seek legal counsel to fully understand the implications of these non-compete obligations and how they might affect their ability to pursue other business opportunities in the future. Understanding these restrictions is a crucial part of evaluating the Learningrx franchise opportunity.