Can Learningrx permit pre-existing PACE licensees to continue operating inside the franchisee's Learningrx territory?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
the right to service any persons in the Territory, regardless of the method of sales, subject to Franchisor's express reservation of rights set forth in Section 4.5. Once established, the boundaries of Franchisee's Territory will not be adjusted by Franchisee without Franchisor's written consent regardless of whether the population of Franchisee's Territory increases or decreases over time. Notwithstanding the foregoing, Franchisee acknowledges that prior to the term of this Agreement, Franchisor or its affiliate may have licensed to a third-party the right to use the System and/or Marks to operate a business that may be similar to the LearningRx Center operated by Franchisee under this Agreement pursuant to a PACE license or a Clinical license in a portion of Franchisee's Territory. The pre-existing PACE licensee and/or Clinical licensee has the right to continue to operate the business per the PACE license and/or Clinical license in the portion of Franchisee's Territory and such ongoing use will not constitute a breach of this Agreement, including this Section 4.02 or an Area Developer Agreement, if any.
- 4.3 Soliciting Outside the Territory.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, pre-existing PACE licensees and Clinical licensees may continue to operate within a franchisee's territory under their existing licenses. Specifically, Learningrx retains the right to allow these licensees to continue operating, and this continuation does not constitute a breach of the franchise agreement. However, Learningrx agrees that it will not enter into any new PACE license for a location that is closer than fifteen (15) miles from the front door of Franchisee's Center.
This means that while a Learningrx franchisee is granted a territory, the rights of pre-existing PACE and Clinical licensees within that territory are protected. A prospective franchisee needs to be aware that these pre-existing licensees can continue to operate, potentially impacting the franchisee's market share. It is important to note that Learningrx retains the right to enter into Clinical licenses anywhere outside of the franchisee's territory.
This clause protects Learningrx's existing agreements and allows for flexibility in its licensing strategy. For a new franchisee, this means that the territory may not be entirely exclusive due to these pre-existing agreements. The franchisee should investigate whether any such licenses exist within their territory before signing the agreement. Understanding the competitive landscape, including the presence of PACE and Clinical licensees, is crucial for assessing the potential of the franchise.
In summary, while Learningrx offers a defined territory, the presence of pre-existing PACE and Clinical licensees introduces a degree of non-exclusivity. Franchisees need to consider this factor and its potential impact on their business when evaluating a Learningrx franchise opportunity. The 15-mile buffer for new PACE licenses offers some protection, but the continued operation of existing licensees and the possibility of new Clinical licenses outside the territory should be carefully evaluated.