If a provision of the Learningrx franchise agreement conflicts with local law, how is the provision handled?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
SCONSIN | Wisconsin Dept. of Financial Institutions Division of Securities 345 W. Washington Avenue, 4th Floor Madison, WI 53703 608-266-8557 | Wisconsin Commissioner of Securities Same Address |
MULTI STATE ADDENDUM EXHIBIT E
EXHIBIT E LEARNINGRX FRANCHISE CORPORATION
MULTI STATE ADDENDUM
The following modifications are to the LearningRx Franchise Corporation Franchise Disclosure Document and may supersede, to the extent then required by valid applicable state law, certain portions of the Franchise Agreement and Area Development Agreement.
CALIFORNIA
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- The California Franchise Investment Law requires a copy of all proposed agreements relating to the sale of the franchise be delivered together with the Disclosure Document.
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- Neither the franchisor, nor any person or franchise broker in Item 2 of the FDD is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities Exchange Act of 1934, 15 U.S.C.A. 78a et seq., suspending or expelling such persons from membership in such association or exchange.
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- California Business and Professions Code sections 20000 through 20043 provide rights to the franchisee concerning termination, transfer or non-renewal of a franchise. If the franchise agreement contains a provision that is inconsistent with the law, the law will control.
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- The franchise agreement provides for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law. (11 U.S.C.A. Sec. 101 et seq.)
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- The franchise agreement contains a covenant not to compete which extends beyond the termination of the franchise. This provision may not be enforceable under California law.
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- The franchise agreement contains a liquidated damages clause. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.
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- The franchise agreement requires binding arbitration. The arbitration will occur in Colorado with the costs being borne by both parties.
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Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to the 2025 Learningrx Franchise Disclosure Document, the handling of conflicting provisions between the franchise agreement and local law varies by state. For instance, in Washington, the provisions of the Washington Franchise Investment Protection Act, Chapter 19.100 RCW, will take precedence in the event of a conflict. Similarly, court decisions may also supersede the franchise agreement, particularly in areas concerning termination and renewal of the franchise.
In California, if any provision within the Learningrx franchise agreement is inconsistent with California law, the law will take precedence. Additionally, certain provisions like those allowing termination upon bankruptcy or including covenants not to compete extending beyond the franchise term may not be enforceable under California law. The FDD also notes that certain liquidated damages clauses may be unenforceable under California Civil Code Section 1671.
In Wisconsin, the Wisconsin Fair Dealership Law, Chapter 135 of the Wisconsin Statutes, supersedes any conflicting provision in the Learningrx Franchise Agreement. Furthermore, the FDD includes addenda for Virginia and Rhode Island, which address specific sections of their respective state franchise laws, ensuring that the franchise agreement complies with local regulations. These addenda serve to modify the franchise agreement to the extent required by applicable state law, ensuring franchisee rights are protected and that Learningrx operates within the legal framework of each state.
For a prospective Learningrx franchisee, this means that the enforceability and interpretation of certain clauses in the franchise agreement can differ based on the state in which they operate their franchise. It is crucial for franchisees to understand the specific addenda and legal provisions applicable to their state to ensure compliance and protect their rights. Consulting with a legal professional familiar with franchise law in their state is highly recommended to navigate these complexities.