What was the primary reason Learningrx decided to enter into a Settlement Agreement with the FTC?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
n No. 1:16-cv-01159 (D. CO)* (May 24, 2016) ("Action"). The Federal Trade Commission ("FTC") Action alleges certain unsubstantiated claims were made about the benefits of the LearningRx brain training programs. LearningRx vigorously disputes the FTC's allegations. Nevertheless, to avoid the time, expense, and uncertainty of litigation, we determined it was in the best interest of LearningRx Franchise Corp. and the LearningRx franchise system to settle our differences with the FTC. Therefore, we entered into a Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief Against Defendants LearningRx Franchise Corp. and Ken Gibson, which became effective on May 24, 2016 ("Settlement Agreement"). In its principal parts, the Settlement Agreement requires: (1) randomized controlled trials, or RCTs, to support cognitive training-related claims of improved performance at work or in athletics; delay of or protection against age-related decline in memory or other cognitive function; and reduction in cognitive impairment or improvement in cognitive function of individuals with health conditions, including attention deficit hyperactivity disorder (ADHD), autism, traumatic brain injury (TBI), or stroke; (2) competent and reliable scientific evidence for all other claims of performance, benefits, or efficacy associated with cognitive training; (3) accurate representation of the existence, contents, validity, results, conclusions, or interpretations of tests, studies, or research, including that the benefits of cognitive training are scientifically proven; and (4) a settlement payment of $200,000, upon which the remainder of the monetary judgment entered in the Action ($4,000,000) will be suspended. The Settlement Agreement also contains standard compliance reporting and recordkeeping requirements. In compliance with the terms of the Settlement agreement, LearningRx has completed 20 plus studies includi
Source: Item 3 — LITIGATION (FDD page 12)
What This Means (2025 FDD)
According to the 2025 Learningrx Franchise Disclosure Document, Learningrx entered into a Settlement Agreement with the Federal Trade Commission (FTC) to avoid the potential burdens of litigation. While Learningrx disputed the FTC's allegations regarding unsubstantiated claims about the benefits of its brain training programs, the company determined that settling was in the best interest of the franchise system.
The Settlement Agreement, effective May 24, 2016, includes several key provisions. Learningrx is required to have randomized controlled trials (RCTs) to support claims of improved performance at work or in athletics, protection against age-related cognitive decline, and cognitive improvement for individuals with health conditions like ADHD, autism, traumatic brain injury, or stroke. For other performance claims, Learningrx must have competent and reliable scientific evidence. The agreement also mandates accurate representation of research results and includes a settlement payment of $200,000, with the remaining $4,000,000 of the monetary judgment suspended.
This settlement has significant implications for prospective Learningrx franchisees. It demonstrates the importance of substantiating marketing claims with credible scientific evidence, especially in the health and education sectors. The costs associated with conducting RCTs and ensuring compliance with the Settlement Agreement could impact the profitability and operational strategies of Learningrx centers. Franchisees should be aware of these requirements and how they may affect their business practices and marketing efforts. Learningrx states that it has completed 20 plus studies including randomized controlled trials to meet new FTC regulations.