What law governs the Learningrx agreement?
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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Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to the 2025 Learningrx Franchise Disclosure Document, the franchise agreement is subject to modifications based on applicable state laws, as outlined in the Multi-State Addendum. For instance, the addendum specifies that in California, the California Franchise Investment Law requires that all proposed agreements related to the sale of the franchise be delivered with the Disclosure Document. Additionally, California Business and Professions Code sections 20000 through 20043 provide rights to the franchisee concerning termination, transfer, or non-renewal of a franchise, and if the franchise agreement contains a provision inconsistent with this law, the law will control.
Furthermore, the addendum addresses specific clauses within the franchise agreement that may not be enforceable under California law. These include provisions related to termination upon bankruptcy, covenants not to compete extending beyond the franchise term, and liquidated damages clauses, which are subject to California Civil Code Section 1671. The addendum also notes that while the franchise agreement requires binding arbitration in Colorado with costs borne by both parties, this may be affected by state law.
In Washington, the Washington Franchise Investment Protection Act, Chapter 19.100 RCW, will prevail in the event of a conflict of laws. Similarly, in Rhode Island, § 19-28.1-14 of the Rhode Island Franchise Investment Act voids any provision restricting jurisdiction or venue to a forum outside the state or requiring the application of another state's laws with respect to claims enforceable under the Act. In Minnesota, the franchise is required to comply with Minnesota Statute 80C.14 subdivisions 3, 4, and 5, regarding notice of termination and non-renewal, and Minn. Stat. Sec. 80C.21 and Minn. Rule Part 2860.4400J, may prohibit Learningrx from requiring litigation to be conducted outside Minnesota.
These stipulations highlight the importance for prospective Learningrx franchisees to understand the specific legal nuances in their respective states and how these laws may modify or supersede certain provisions of the standard franchise agreement. Franchisees should consult with legal counsel to ensure full compliance and understanding of their rights and obligations under both the franchise agreement and applicable state laws.