Can a Learningrx franchisee divert business from other franchisees?
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, franchisees are prohibited from diverting business from other franchisees. The franchise agreement states that during the term of the agreement and for two years after termination, transfer, or expiration, the franchisee and their affiliates cannot divert or attempt to divert business from Learningrx Training Centers, the franchisee's business, the franchisor's business, affiliates of the franchisor, or any other Learningrx franchisee. This includes diverting customers or accounts through direct inducement or by attempting to divert employees of the franchisor or other franchisees to a competitive business.
This covenant not to compete applies during the term of the agreement anywhere in the United States. After termination, transfer, or expiration, the covenant applies within the franchisee's territory, in adjacent counties, within a fifty-mile radius of the franchisee's territory or any other Learningrx center, on the Internet, or on any multi-area marketing channels used by Learningrx.
This restriction is designed to protect the goodwill and unique qualities of the Learningrx system, as well as the confidentiality and value of its trade secrets. It ensures that franchisees and their affiliates remain committed to the Learningrx system and do not use their knowledge or resources to benefit a competing business, potentially at the expense of other franchisees or the franchisor.