What happens if a Learningrx franchisee makes a written statement that they are unable to pay their debts?
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 the 2025 Learningrx Franchise Disclosure Document, if a franchisee makes a written statement indicating they are unable to pay their debts as they become due, it constitutes grounds for Learningrx to terminate the franchise agreement.
Specifically, the FDD states that such a declaration is treated similarly to other serious events like the appointment of a receiver or trustee for the franchisee's assets, or the franchisee making a general assignment for the benefit of creditors. These situations indicate severe financial distress and risk to the Learningrx system.
This provision protects Learningrx by allowing them to sever ties with franchisees who are demonstrably insolvent, thereby mitigating potential damage to the brand's reputation and financial stability. For a prospective franchisee, this highlights the critical importance of maintaining sound financial management and avoiding situations that could lead to such a declaration of insolvency, as it could result in the loss of their franchise.