If Learningrx grants the franchisee the right to continue training students after termination, what right of the Franchisor survives the termination of the Agreement?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
- 13.7 Post-termination payments. Franchisee is required to continue to pay Royalty and Marketing Development Fund fees based on Gross Revenues Franchisee collects on prepaid or ongoing monthly payments for use of Franchisor's training programs. In the event Franchisor agrees that Franchisee may continue to train students using Franchisor's Product after the Franchise Agreement is terminated, Franchisee may do so only until the client's prepaid or monthly payment for current program is complete. Notwithstanding the foregoing, once a client's then-current prepaid monthly program concludes, Franchisee will cease using Franchisor's Program for that client. If Franchisor grants this continuing right, Franchisee agrees that Franchisor's audit rights will survive termination of the Agreement.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to the 2025 Learningrx Franchise Disclosure Document, if Learningrx allows a franchisee to continue training students after the franchise agreement is terminated, Learningrx retains its audit rights. This means that even after the agreement ends, Learningrx can still review the franchisee's financial records to ensure proper accounting of revenues earned from the continued training.
This provision protects Learningrx's financial interests by allowing them to verify that all royalty and marketing development fund fees are correctly paid on gross revenues collected from ongoing training programs, even post-termination. The franchisee is only allowed to continue training students until the client's prepaid or monthly program is complete, and they must cease using Learningrx's program for that client once the current program concludes.
The survival of audit rights is a standard practice in franchising to ensure compliance with financial obligations, especially when there are ongoing revenue streams related to the franchisor's system or intellectual property. This clause ensures Learningrx can confirm proper payments and prevent misuse of their training programs after the formal franchise relationship has ended.
For a prospective franchisee, this means understanding that even after the franchise agreement terminates, certain obligations and rights of Learningrx continue, particularly concerning financial accountability and the use of Learningrx's intellectual property. Franchisees should maintain accurate records and be prepared for potential audits even after the agreement's end to avoid any disputes or legal issues.