If a Learningrx franchisee exercises the early termination option in strict compliance, what damages does Learningrx waive the right to seek?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee exercises the Early Termination Option in strict compliance with the terms of this Section 13.06, Franchisor agrees to waive Franchisor's right to seek from Franchisee, and Franchisee shall not be liable in any way for, Franchisor's lost future profits, lost future royalty fees, and/or lost future marketing/advertising fees and Franchisee shall not be subject to any liquidated damages identified in the Franchise Agreement (collectively the "Lost Profits Damages").
Franchisee acknowledges and agrees that Franchisor retains the right to pursue Franchisee for any and all damages (including, by way of example, any and all monies owed to Franchisor prior to the termination of the Franchise Agreement, damages incurred by Franchisor as the result of Franchisee's conversion of existing or prospective customers, trademark damages, reputational damages, damages incurred by Franchisor as the result of Franchisee's failure to provide all paid for services to customers or refunds to customers), other than the Lost Profits Damages, incurred by Franchisor as the result of Franchisee's exercise of the Early Termination Option.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, if a franchisee exercises the early termination option in strict compliance with the terms outlined in Section 13.06 of the franchise agreement, Learningrx agrees to waive its right to seek certain damages. Specifically, Learningrx will waive its right to claim lost future profits, lost future royalty fees, and lost future marketing/advertising fees from the franchisee. Additionally, the franchisee will not be subject to any liquidated damages identified in the Franchise Agreement, these waived items are collectively referred to as the "Lost Profits Damages".
However, it's important to note that this waiver is conditional. The franchisee must strictly adhere to the requirements specified in the franchise agreement to qualify for this waiver. Furthermore, Learningrx retains the right to pursue the franchisee for any and all other damages incurred as a result of the early termination, excluding the Lost Profits Damages. These other damages may include monies owed to Learningrx prior to termination, damages resulting from the franchisee's conversion of existing or prospective customers, trademark damages, reputational damages, and damages incurred due to the franchisee's failure to provide paid services or refunds to customers.
This provision provides a limited degree of financial protection for Learningrx franchisees who find themselves in a situation where the business is not performing as expected, specifically when the Business has a negative Net Operating Income on a cash basis. By waiving the right to claim lost future profits, royalty fees, and marketing/advertising fees, Learningrx offers some relief to franchisees who choose to terminate the agreement early under specific circumstances. However, franchisees should be aware that they may still be liable for other types of damages, and strict compliance with the terms of the early termination option is essential to benefit from this waiver.