What obligations survive the termination or expiration of the LearningRx franchise agreement?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
, and incorporated herein by reference.
- 13.2 Effect of Termination. Franchisee or Franchisee's owner or any guarantor of this Agreement starts, acquires or operates a competing business or diverts or attempts to divert current or prospective customers to a competing business in violation of the terms of the Confidentiality and Covenant Not To Compete Agreement attached to this Agreement as Attachment IX, and incorporated herein by reference. Upon any termination or expiration of this Agreement, all obligations that by their terms or by reasonable implication survive termination, including those pertaining to non-competition, confidentiality, and indemnity, will remain in effect, and Franchisee must immediately:
- (a) promptly pay all amounts owed to Franchisor based on the operation of the Center through the effective date of termination;
- (b) return, at Franchisee's sole cost and expense, including but not limited to shipping costs, to Franchisor all copies of the Operations Manual, customer lists, records, files, instructions, brochures, advertising materials, testing materials of any form or nature, agreements, Confidential Information and any and all other materials provided by Franchisor to Franchisee or created by a third-party for Franchisee relating to the operation of the Business, all items containing any Marks, copyrights, and other proprietary items, and all other items specifically identified in any written communication to Franchisee or in the Operations Manual;
- (c) cancel or assign within five (5) business days all registrations relating to its use of any of the Marks, in Franchisor's sole and absolute discretion. Franchisee must notify the telephone, Internet, email, electronic network, directory, and listing entities of the termination or expiration of the Franchisee's right to use any numbers, addresses, domain names, locators, directories and listings associated with any of the Marks, and must authorize their transfer to the Franchisor or any new franchisee as may be directed by the Franchisor. The Franchisee acknowledges as between the Franchisor and the Franchisee, the Franchisor has the sole rights to, and interest in, all numbers, addresses, domain names, locators, directories and listings used by Franchisee to promote the System. The Franchisee hereby irrevocably appoints the Franchisor, with full power of substitution, as its true and lawful attorney-in-fact, which appointment is coupled with an interest, to execute such directions and authorizations as may be necessary or prudent to accomplish the foregoing. Such appointment is evidenced by Attachment IV;
- (d) cease doing business under any of the Marks, cancel any assumed name registration that includes any of the Marks, assign all domain names and Internet directory listings that contain the Marks to Franchisor, and refrain from identifying itself as a LearningRx franchisee;
- (e) allow Franchisor or representatives access to the Business and the computer systems to verify and secure Franchisee's compliance with the obligations under this Agreement;
- (f) allow Franchisor to make a final inspection and audit of Franchisee's computer system, books, records and accounts; and
- (g) abide by the terms of the required noncompetition covenant.
- 13.3 Failure to Cease or Remove Identification. If, within thirty (30) days after termination of this Agreement by Franchisor, Franchisee fails to remove all displays of the Marks from the Center which are identified or associated with the System, Franchisor may enter the Center to effect removal. In this event, Franchisor will not be charged with trespass nor be accountable or required to pay for any displays or materials. If, within thirty (30) days after termination Franchisee has not taken all steps necessary to amend or terminate any registration or filing of any fictitious name or any other registration or filing containing the Marks, Franchisee hereby irrevocably appoints Franchisor as Franchisee's true and lawful attorney for Franchisee, for the purpose of amending or terminating all registrations and filings, this appointment being coupled with an interest to enable Franchisor to protect the System.
- 13.4 Other Claims. Termination of this Agreement will not affect, modify or discharge any claims, rights, causes of action or remedies, which Franchisor may have against Franchisee, whether such claims or rights arise before or after termination.
- 13.5 Other Remedies. In the case of any uncured default, Franchisor may elect, in Franchisor's sole discretion, to not terminate this Agreement but instead to impose fines or other penalties as are more fully set forth in the Operations Manual.
- 13.6 Early Termination Option.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to the 2025 LearningRx Franchise Disclosure Document, several obligations continue even after the franchise agreement ends. These include obligations related to non-competition, confidentiality, and indemnity, as well as any other obligations that logically extend beyond the termination date.
Specifically, a franchisee must promptly pay all outstanding amounts owed to LearningRx based on the center's operation up to the termination date. The franchisee is also required to return all copies of the operations manual, customer lists, records, advertising materials, testing materials, and any other proprietary items provided by LearningRx. Additionally, the franchisee must cancel or assign all registrations related to the use of LearningRx's marks as directed by LearningRx.
Moreover, the franchisee is obligated to notify all relevant entities, such as telephone, internet, and directory services, about the termination of their right to use any numbers, addresses, or listings associated with LearningRx's marks, and authorize the transfer of these to LearningRx or a new franchisee. Franchisees must also continue to pay royalty and marketing development fund fees on gross revenues collected from prepaid or ongoing monthly payments for the use of LearningRx's training programs, even after termination, until the client's current program is complete. LearningRx's audit rights also survive the termination of the agreement if LearningRx allows the franchisee to continue training students using LearningRx's product after the franchise agreement is terminated.
Furthermore, for two years after the termination, transfer, or expiration of the agreement, the franchisee is restricted from engaging in any competitive business within their former territory, adjacent counties, or within a 50-mile radius of any LearningRx center. This non-compete clause also applies to online activities and multi-area marketing channels used by LearningRx. These post-termination obligations are designed to protect LearningRx's interests and ensure a smooth transition, preventing franchisees from leveraging confidential information or competing unfairly after the agreement ends.