Can a Learningrx franchisee affiliate have an indirect interest in a Competitive Business with Franchisor approval?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
or upon conclusion of the use for which such information or material may have been furnished to Franchisee Affiliate.
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- Franchisee Affiliate shall not at any time, directly or indirectly, do any act that would or would likely be injurious or prejudicial to the goodwill associated with the Licensed Marks, the Trade Secrets or the System.
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- All Operations Manuals are loaned by Franchisor to Franchisee for limited purposes only and remain the property of Franchisor and may not be reproduced, in whole or in part, without Franchisor's written consent.
COVENANTS NOT TO COMPETE
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- In order to protect the goodwill and unique qualities of the System and the confidentiality and value of the Trade Secrets, and in consideration for the disclosure to Franchisee Affiliate of the Trade Secrets, Franchisee Affiliate further agrees and covenants that Franchisee Affiliate will not without the prior written consent of Franchisor:
- a. Have any direct or indirect interest as a disclosed or beneficial owner in a Competitive Business, except with Franchisor's approval;
- b. Perform services as a director, officer, manager, employee, consultant, representative, agent or otherwise for a Competitive Business wherever operating except with Franchisor's approval;
- c. Divert or attempt to divert, directly or indirectly, any business, business opportunity or customer of the LearningRx Business to any competitor;
- d.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, a franchisee affiliate can have a direct or indirect interest in a Competitive Business if they obtain prior written consent from Learningrx. A 'Competitive Business' is defined as any business offering or franchising learning enhancement courses, brain training, or math and reading training programs. This approval requirement is part of the covenants not to compete, designed to protect Learningrx's goodwill, unique qualities, trade secrets, and the overall system.
This condition applies not only to the franchisee but also to 'Franchisee Affiliates,' which includes managers, individuals associated with the franchisee (such as officers, directors, shareholders, partners, members, trustees, employees, and agents), and immediate family members. During the term of the franchise agreement, this covenant applies anywhere in the United States. After termination, transfer, or expiration of the agreement, the covenant extends for two years within the franchisee's territory, adjacent counties, areas under development by Learningrx or its franchisees, a 50-mile radius from any Learningrx center, and online channels.
For a prospective Learningrx franchisee, this means that any involvement by themselves or their affiliates in a competing business, even indirect, requires explicit approval from Learningrx. This restriction is in place to prevent conflicts of interest and to ensure that the franchisee and their affiliates are fully committed to the success of their Learningrx center. The franchisor's approval is critical, and franchisees should seek this approval in writing to avoid any potential breaches of the franchise agreement.
It is important for potential franchisees to fully understand the scope and limitations of these non-compete covenants, as they can significantly impact future business opportunities for both the franchisee and their affiliates. Franchisees should carefully consider these restrictions and discuss any potential conflicts with the franchisor before entering into the franchise agreement.