What was the initial settlement payment Learningrx was required to make to the FTC?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
rative costs of $1,800 in settlement of all such claims.
Federal Trade Commission v. LearningRx Franchise Corporation et al., Civil Action No. 1:16-cv-01159 (D. CO) (May 24, 2016) ("Action"). The Federal Trade Commission ("FTC") Action alleges certain unsubstantiated claims were made about the benefits of the LearningRx brain training programs. LearningRx vigorously disputes the FTC's allegations. Nevertheless, to avoid the time, expense, and uncertainty of litigation, we determined it was in the best interest of LearningRx Franchise Corp. and the LearningRx franchise system to settle our differences with the FTC. Therefore, we entered into a Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief Against Defendants LearningRx Franchise Corp. and Ken Gibson, which became effective on May 24, 2016 ("Settlement Agreement"). In its principal parts, the Settlement Agreement requires: (1) randomized controlled trials, or RCTs, to support cognitive training-related claims of improved performance at work or in athletics; delay of or protection against age-related decline in memory or other cognitive function; and reduction in cognitive impairment or improvement in cognitive function of individuals with health conditions, including attention deficit hyperactivity disorder (ADHD), autism, traumatic brain injury (TBI), or stroke; (2) competent and reliable scientific evidence for all other claims of performance, benefits, or efficacy associated with cognitive training; (3) accurate representation of the existence, contents, validity, results, conclusions, or interpretations of tests, studies, or research, including that the benefits of cognitive training are scientifically proven; and (4) a settlement payment of $200,000, upon which the remainder of the monetary judgment entered in the Action ($4,000,000) will be suspended. The Settlement Agreement also contains standard compliance reporting and recordkeeping requirements. In compliance with the terms of the Settlement agreement, LearningRx has completed 20 plus studies includi
Source: Item 3 — LITIGATION (FDD page 12)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, the company was involved in an action with the Federal Trade Commission (FTC) regarding unsubstantiated claims about the benefits of its brain training programs. While Learningrx disputed the FTC's allegations, it chose to settle to avoid the costs and uncertainty of litigation. As part of the Settlement Agreement, Learningrx was required to make an initial settlement payment of $200,000.
In addition to the initial payment, the Settlement Agreement stipulated that the remainder of a monetary judgment entered in the Action, amounting to $4,000,000, would be suspended. The agreement also included requirements for randomized controlled trials (RCTs) to support claims related to cognitive training, as well as competent and reliable scientific evidence for other performance or efficacy claims. Learningrx was also obligated to accurately represent the validity and results of any tests or research related to its cognitive training programs.
For a prospective Learningrx franchisee, this litigation and settlement highlight the importance of substantiated marketing claims and compliance with FTC regulations. The need for scientific evidence to support claims about the effectiveness of Learningrx's programs could impact marketing strategies and require franchisees to stay informed about the latest research and compliance standards. The initial settlement payment of $200,000, while already paid, indicates the potential financial implications of non-compliance and the importance of adhering to the terms of the Settlement Agreement.