Can Learningrx grant extensions of time or credit to the franchisee without affecting the liability of the spouse or domestic partner?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
In consideration of, and as inducement to, the execution of that certain Franchise Agreement of even date herewith (the "Agreement") by LearningRx Franchise Corporation (the "Franchisor") and the party or parties identified on the Agreement (the "Franchisee"), and acknowledging that Franchisor would not be willing to enter into the Agreement without the commitment of each spouse or domestic partner of Franchisee's owner to guarantee the performance of the Franchisee, each of the undersigned hereby personally and unconditionally (a) guarantees to Franchisor, and its successors and assigns, for the term of the Agreement and thereafter as provided in the Agreement, that the Franchisee shall punctually pay and perform each and every undertaking, agreement and covenant set forth in the Agreement; and (b) agrees to be personally bound by, and personally liable for the breach of, each and every provision in the Agreement, both monetary obligations and obligations to take or refrain from taking specific actions or to engage or refrain from engaging in specific activities. Notwithstanding clauses (a) and (b) above, a spouse or domestic partner who is also a guarantor hereunder and who becomes widowed and who does not have (and will not obtain) an ownership interest in the Franchisee, the Agreement, or any Franchise Agreement granted thereunder as an owner, co-owner, investor, member, partner, shareholder or like capacity shall not thereafter be held responsible for any monetary obligations thereafter arising out of the terms and conditions of this Guaranty and Assumption of Obligations unless any such ownership interest is acquired in any manner by the widowed spouse or domestic partner, or the widowed spouse's children, deceased spouse's children, or domestic partner's children. Notwithstanding any change in ownership resulting from the death of a spouse or domestic partner, all monetary obligations and liabilities existing at the time of death shall continue to be an obligation of the surviving spouse or domestic partner until such obligations or liabilities shall be paid in full by the estate or by the guarantor spouse or domestic partner. Notwithstanding the limitations set forth above, any and all other non-monetary obligations of the Agreement shall remain an obligation of the surviving spouse.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, the spouse or domestic partner of a Learningrx franchisee's owner is required to guarantee the franchisee's performance under the Franchise Agreement. This guarantee ensures that the franchisee will punctually pay and perform all obligations outlined in the agreement. The spouse or domestic partner also agrees to be personally bound by and liable for any breaches of the agreement, including both monetary and non-monetary obligations.
However, the document provides a specific exception: if the spouse or domestic partner becomes widowed and does not acquire an ownership interest in the Learningrx franchise, they will not be held responsible for any monetary obligations arising after the death of their spouse or partner. This exception does not apply if the widowed spouse or domestic partner, or their children, later acquire an ownership interest in the franchise. Furthermore, any monetary obligations existing at the time of death remain the responsibility of the surviving spouse or domestic partner until they are fully paid by the estate or the guarantor.
Even with the limitations on monetary obligations for widowed spouses or domestic partners, all non-monetary obligations under the Franchise Agreement remain in effect for the surviving spouse. This means that Learningrx can grant extensions of time or credit to the franchisee without affecting the liability of the spouse or domestic partner, unless it involves new monetary obligations after the death of the franchisee and the spouse has not taken ownership. This ensures Learningrx has recourse for the franchisee's obligations while providing some protection to the widowed spouse or domestic partner regarding new monetary obligations if they do not take an ownership stake.