Is a Learningrx franchisee affiliate allowed to divert business from the Learningrx Business to any competitor?
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 Learningrx's 2025 Franchise Disclosure Document, a franchisee and their affiliates are restricted from diverting business to competitors. During the term of the agreement, the franchisee and their affiliates cannot have a direct or indirect controlling interest in a competitive business, perform services for a competitive business, or divert any business or customers to a competitor. This restriction applies to the franchisee, their managers, officers, directors, shareholders, partners, members, trustees, employees, agents, and immediate family members.
After the termination, transfer, or expiration of the Learningrx franchise agreement, these restrictions continue for two years. During this period, the non-compete applies within the franchisee's territory, adjacent counties, territories operated by Learningrx or its franchisees, within a 50-mile radius of any Learningrx center, and on the Internet or multi-area marketing channels used by Learningrx.
A "Competitive Business" is defined as any business offering learning enhancement, brain training, or math and reading training courses, programs, or products. This broad definition means franchisees must be careful to avoid any activity that could be seen as competing with Learningrx, even after their franchise agreement ends. Franchisees should seek legal counsel to fully understand the scope of these restrictions and how they apply to their specific circumstances.