Can the Learningrx franchisor approve competition by the Area Developer in writing?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
9.02. Post-Term Competition. Area Developer covenants that, except as otherwise approved in writing by Franchisor, Area Developer shall not, for a continuous uninterrupted period
commencing upon the expiration or termination of this Agreement, regardless of the cause for termination, and continuing for two (2) years thereafter, either directly or indirectly, for itself or through, on behalf of or in conjunction with any person, persons, partnership or corporation, own, maintain, engage in, be employed by, advise, assist, invest in, franchise, make loans to, or have any interest in any business which is the same as or substantially similar to the Center and which is located within a radius of fifty (50) miles of the Development Territory hereunder or the location of any area developer, or any company-owned franchised Center under the System which is in existence on the date of expiration or termination of this Agreement. However, Sections 9.01 and 9.02 shall not apply to ownership by Area Developer of less than a five percent (5%) beneficial interest in the outstanding equity securities of any publicly held corporation.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to the 2025 Learningrx Franchise Disclosure Document, the Area Developer is restricted from engaging in any business that is the same as or substantially similar to a Learningrx center within a 50-mile radius of their development territory or any other Learningrx center. This restriction applies for two years after the termination or expiration of the Area Developer Agreement. However, this restriction does not apply if Learningrx gives written approval allowing the Area Developer to compete.
This means that during the term of the agreement and for two years afterward, an Area Developer cannot own, operate, or be involved with a competing business unless Learningrx explicitly approves it in writing. This approval provides a potential avenue for an Area Developer to pursue other business ventures in the same industry, provided they obtain Learningrx's consent.
It is important to note that Learningrx's approval is discretionary. The FDD does not specify the conditions under which Learningrx might grant such approval. A prospective Area Developer should discuss with Learningrx the circumstances under which they might consider granting written approval for competitive activities to fully understand the scope and limitations of this clause.