What is the purpose of the Marketing Development Fund for Learningrx franchises?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
on its Website, as set forth in Section 9.02.
9. SOLICITATION AND ADVERTISING
- 9.1 Solicitation. Except as stated in this paragraph, Franchisee may not directly market to or solicit customers who reside outside the Territory. However, Franchisee will have the exclusive right to service customers within the Territory generated by Multi-Area Marketing Programs except through the Internet.
- 9.2 Marketing Development Fund. Franchisee must pay a fee into the Marketing Development Fund to develop marketing for the System. Franchisee will pay a Marketing Development Fund contribution equal to the greater of either (i) three percent (3%) per month of Franchisee's Gross Revenue, or, the "Minimum MDF Payment" of Two hundred and 00/100 Dollars ($200.00) for Micro Franchises and Three hundred and 00/100 Dollars ($300.00) for Standard Franchises, up to a maximum of Fifteen thousand and 00/100 Dollars ($15,000.00) per calendar year per Center, at the same time and in the same manner as the Royalty Fee. Company and Affiliate owned Centers will contribute to the Fund on the same basis as Franchisees. Franchisor will hold the Marketing Development Fund contributions in a separate bank account. Franchisor will use the Marketing Development Fund for development expenses such as the creation of marketing and sales tools for centers, development and maintenance of websites and Internet marketing, creating Pay-Per-Click campaigns, various digital marketing campaigns, other campaigns Centers can opt into, social media campaigns, media production, public relations, efforts to publish research studies, agency costs and other costs for resources or tools for developing marketing for use by Centers. This may include our attendance at trade shows, and we may also reimburse our administrative expenses incurred in administering the Marketing Development Fund. Franchisee acknowledges and agrees that expenditures from the Marketing Development Fund may or may not be proportionate to contributions made by Franchisee or provide a direct or any benefit to Franchisee. The Marketing Development Fund will be spent at Franchisor's sole discretion, and Franchisor has no fiduciary duty with
regard to the Marketing Development Fund. Franchisor agrees to operate the Marketing Development Fund for the benefit of the franchisees. Franchisor may accumulate these funds, and the balance may be carried over to subsequent years and used for the purposes stated in this Agreement. If the Marketing Development Fund operates at a deficit or requires additional funds at any time, Franchisor reserves the right to loan such funds to the Marketing Development Fund on such terms as determined by Franchisor, in Franchisor's sole discretion. Franchisor may also utilize the Marketing Development Fund to reimburse itself for administrative expenses incurred in administering the Marketing Development Fund. An unaudited annual financial statement of the Marketing Development Fund will be prepared within one hundred twenty (120) days of the close of Franchisor's fiscal year and will be available to Franchisee upon reasonable request.
Franchisee must also participate, at Franchisee's expense, in any Multi-Area Marketing Programs as determined by Franchisor. All expenditures will be reported to Franchisor at such times and in such manner as Franchisor specifies, including by electronic means. Franchisee may not advertise in any media with a primary circulation outside Franchisee's Territory, except with Franchisor's written consent and with the consent of any franchisee whose territory is reached by the media. However, Franchisee may advertise in media whose circulation is primarily inside Franchisee's Territory, even if it also reaches outside Franchisee's Territory. Internet marketing is a part of the Marketing Development Fund and must be coordinated through and approved by Franchisor.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, the Marketing Development Fund (MDF) is used to develop marketing for the Learningrx system. Franchisees are required to contribute to this fund. The contribution is the greater of either 3% per month of the franchisee's Gross Revenue, or a minimum payment. The minimum MDF payment is $200 for Micro Franchises and $300 for Standard Franchises, up to a maximum of $15,000 per calendar year per Center. Both company-owned and affiliate-owned centers contribute to the fund on the same basis as franchisees. These funds are kept in a separate bank account.
Learningrx uses the Marketing Development Fund for various development expenses. These include creating marketing and sales tools for centers, maintaining websites and Internet marketing, creating Pay-Per-Click campaigns, various digital marketing campaigns, other campaigns Centers can opt into, social media campaigns, media production, public relations, efforts to publish research studies, agency costs and other costs for resources or tools for developing marketing for use by Centers. Learningrx may also use the fund to cover administrative expenses incurred in managing the Marketing Development Fund, and for attendance at trade shows.
The FDD stipulates that expenditures from the Marketing Development Fund may not be proportionate to the contributions made by the franchisee, and may not provide a direct or any benefit to the franchisee. The fund is spent at Learningrx's sole discretion, and Learningrx has no fiduciary duty with regard to the Marketing Development Fund. Learningrx agrees to operate the Marketing Development Fund for the benefit of the franchisees. Any balance in the fund may be carried over to subsequent years and used for the stated purposes. If the fund operates at a deficit or requires additional funds, Learningrx reserves the right to loan funds to it.
An unaudited annual financial statement of the Marketing Development Fund will be prepared within 120 days of the close of Learningrx's fiscal year and will be available to the franchisee upon reasonable request. Franchisees are also required to participate in Multi-Area Marketing Programs at their own expense, as determined by Learningrx. All expenditures must be reported to Learningrx. Franchisees are restricted from advertising in media with a primary circulation outside their territory without written consent from Learningrx and any affected franchisee. However, they can advertise in media primarily within their territory, even if it reaches outside it. Internet marketing must be coordinated through and approved by Learningrx, and franchisees cannot independently market on the Internet or acquire an independent domain name or website, but Learningrx will include the franchisee's center on its website.