How many years after the agreement date can a Learningrx franchisee exercise the early termination option?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
- 13.6 Early Termination Option.
Beginning three (3) years after the date of this Agreement, Franchisee may, at its option, upon sixty (60) days prior written notice ("Notice Period") to franchisor, terminate this Agreement prior to its expiration date ("Early Termination Option") if, at the time of exercising its option, the Business has a negative Net Operating Income on a cash basis (as recorded in the Franchisee's accounting software), and verified by Certified Professional Accountant approved by Franchisor (at Franchisee's sole cost and expense) over any aggregated twelve (12) consecutive month period during the Term of this Agreement.
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, a franchisee can exercise an early termination option beginning three years after the date of the franchise agreement. To do so, the franchisee must provide Learningrx with a 60-day prior written notice.
However, this option is contingent upon the business having a negative Net Operating Income on a cash basis. This negative income must be recorded in the franchisee's accounting software and verified by a Certified Professional Accountant approved by Learningrx, with the franchisee bearing the cost of this verification. The negative net operating income must occur over any aggregated twelve consecutive month period during the term of the agreement.
If the franchisee adheres strictly to these terms when exercising the early termination option, Learningrx agrees to waive its right to claim lost future profits, lost future royalty fees, and lost future marketing/advertising fees from the franchisee. The franchisee will also not be subject to any liquidated damages identified in the Franchise Agreement. However, Learningrx retains the right to pursue the franchisee for any other damages incurred as a result of the early termination, such as monies owed prior to termination, damages from customer conversion, trademark or reputational damages, or failure to provide services or refunds.