Does Learningrx require arbitration or litigation to be conducted outside of the franchisee's state?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
The franchise agreement requires binding arbitration.
The arbitration will occur in Colorado with the costs being borne by both parties.
MINNESOTA
We will comply with Minnesota Statute 80C.14 subdivisions 3, 4, and 5, which require except in certain specific cases, that you be given ninety (90) days' notice of termination (with 60 days to cure) and one hundred, eighty (180) days' notice for non-renewal of the Franchise Agreement and Area Developer Agreement.
Minn. Stat. Sec. 80C.21 and Minn. Rule Part 2860.4400J, may prohibit us from requiring litigation to be conducted outside Minnesota. In addition, nothing in the franchise disclosure document, Franchise Agreement or Area Developer Agreement can abrogate or reduce any of your rights as provided for in Minnesota Statutes, Chapter 80C, or your rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction.
RHODE ISLAND
§ 19-28.1-14 of the Rhode Island Franchise Investment Act provides that "A provision in a franchise agreement restricting jurisdiction or venue to a forum outside this state or requiring the application of the laws of another state is void with respect to a claim otherwise enforceable under this Act." Item 17 (u), (v), (w) of the franchise disclosure Document, Section 18.06 of the Franchise Agreement and Section 10.02 of the Area Developer Agreement are amended accordingly to the extent required by law.
MULTI STATE ADDENDUM EXHIBIT E
The following modifications are to the LearningRx Franchise Corporation Franchise Disclosure Document and may supersede, to the extent then required by valid applicable state law, certain portions of the Franchise Agreement and Area Development Agreement.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, the franchise agreement requires binding arbitration to occur in Colorado. However, this requirement may be superseded by state law in certain states like Minnesota and Rhode Island.
For example, Minnesota statutes may prohibit Learningrx from requiring litigation to be conducted outside of Minnesota. The FDD states that nothing in the disclosure document, Franchise Agreement, or Area Developer Agreement can reduce a franchisee's rights as provided for in Minnesota Statutes, Chapter 80C, or their rights to any procedure, forum, or remedies provided by the laws of the jurisdiction. Similarly, Rhode Island law voids any franchise agreement provision that restricts jurisdiction or venue to a forum outside of Rhode Island for claims enforceable under the Rhode Island Franchise Investment Act.
For prospective Learningrx franchisees, this means that while the standard agreement specifies arbitration in Colorado, the enforceability of this clause depends on the franchisee's location. Franchisees in states like Minnesota and Rhode Island may have the right to pursue legal action or arbitration within their own state, regardless of what the franchise agreement says. It is important for prospective franchisees to carefully review the multi-state addendum and any state-specific provisions to understand their rights and how they may differ from the standard franchise agreement.
It is also important to note that the FDD includes a Multi State Addendum that modifies the Franchise Disclosure Document and may supersede certain portions of the Franchise Agreement and Area Development Agreement to the extent required by valid applicable state law. Therefore, franchisees should consult with a legal professional to understand the specific implications of these clauses in their state.