Is a pre-existing PACE or Clinical licensee's operation considered a breach of the Learningrx agreement?
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, the operation of a pre-existing PACE or Clinical licensee within a franchisee's territory does not constitute a breach of the franchise agreement. Specifically, the document states that Learningrx or its affiliates may have previously licensed third parties to operate businesses similar to a Learningrx Center under a PACE or Clinical license within a franchisee's territory.
This means that a Learningrx franchisee may find themselves operating in a territory where another business, licensed by Learningrx under a different agreement, is already offering similar services. The pre-existing licensee has the right to continue operating their business under their PACE or Clinical license, and this ongoing operation will not be considered a violation of the new franchisee's 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. Learningrx retains the right to enter into Clinical licenses anywhere outside of the franchisee's territory. This clause aims to provide some territorial protection to the franchisee while allowing Learningrx to continue its licensing operations.