In Michigan, can Learningrx convey or assign its rights under the franchise agreement?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
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- The rights and remedies of Franchisor under this Agreement are fully assignable and transferable and shall inure to the benefit of its respective affiliates, successor and assigns. The respective obligations of Franchisee and Franchisee Affiliate hereunder may not be assigned by Franchisee or Franchisee Affiliate without the prior written consent of Franchisor.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to the 2025 Learningrx Franchise Disclosure Document, Learningrx has the right to assign its rights and remedies under the franchise agreement. Specifically, Learningrx can transfer its rights or obligations to another person or legal entity, provided that the entity assumes Learningrx's obligations under the agreement. Upon such an assignment, Learningrx is released from further liability to the Area Developer. This means a prospective Learningrx franchisee could be dealing with a completely different company during the term of their agreement.
However, the franchisee's ability to assign their own rights is much more restricted. The Learningrx franchisee acknowledges that their rights and duties are personal and granted based on their qualifications. The franchisee must obtain Learningrx's prior written consent to directly or indirectly assign, transfer, convey, give away, pledge, mortgage, or otherwise encumber any interest in the agreement or in the Area Developer entity. Any proposed assignment, even by operation of law or a trustee in bankruptcy, without Learningrx's consent, constitutes a material default of the agreement.
If a Learningrx Area Developer wishes to sell or transfer any portion of the Development Territory or the agreement itself, they must notify Learningrx, which can approve or disapprove the transfer at its sole discretion. Learningrx can also require that all accrued monetary obligations and other outstanding obligations to Learningrx, its affiliates, and suppliers are fully paid and satisfied. Additionally, the Area Developer must not be in default of any provision of their franchise agreements or any other agreement with Learningrx or its affiliates.
These provisions regarding assignment are typical in franchise agreements, as franchisors want to maintain control over who is operating their branded centers. The restrictions on franchisee assignment protect Learningrx's interests by ensuring that any new franchisee meets their standards and is financially stable. However, the franchisee should be aware of these limitations and understand that selling their franchise may not be a straightforward process and is subject to Learningrx's approval.