What happens if a Learningrx franchisee makes a general assignment for the benefit of creditors?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
A permanent or temporary receiver or trustee for the Center or all or substantially all of Franchisee's property is appointed by any court, or any such appointment is consented to or not opposed through legal action by Franchisee, or Franchisee makes a general assignment for the benefit of Franchisee's creditors or Franchisee makes a written statement to the effect that Franchisee is unable to pay its debts as they become due, or a levy or execution is made on the license, or an attachment or lien remains on the Center for thirty (30) days unless the attachment or lien is being duly contested in good faith by Franchisee and Franchisor is advised in writing;
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, if a franchisee makes a general assignment for the benefit of their creditors, it constitutes a breach of the franchise agreement. Specifically, this situation allows Learningrx to terminate the franchise agreement.
This provision protects Learningrx by allowing them to sever ties with franchisees who are facing significant financial difficulties. The assignment for the benefit of creditors is generally an indication that the franchisee is unable to manage their financial obligations, which could negatively impact the Learningrx brand and reputation.
In addition to assignment for the benefit of creditors, other actions that can trigger a termination of the Learningrx franchise agreement include the appointment of a receiver or trustee for the Learningrx center, the franchisee making a written statement that they are unable to pay debts as they become due, or a levy or execution being made on the license.