Does the restriction on assignment in the Learningrx Area Development Agreement apply to assignments by operation of law or by a trustee in bankruptcy?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
- A. Neither Area Developer nor any partner, member, or shareholder thereof shall, without Franchisor's prior written consent, directly or indirectly assign, transfer, convey, give away, pledge, mortgage or otherwise encumber any interest in this Agreement or in Area Developer. Any such proposed assignment occurring by operation of law or otherwise, including any assignment by a trustee in bankruptcy, without Franchisor's prior written consent, shall be a material default of this Agreement.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to the 2025 Learningrx Franchise Disclosure Document, the Area Developer's rights and duties are personal and granted based on the Area Developer's qualifications. Therefore, Learningrx requires that the Area Developer obtain prior written consent from Learningrx before assigning any interest in the Area Development Agreement.
Specifically, any proposed assignment occurring by operation of law or otherwise, including assignment by a trustee in bankruptcy, without Learningrx's prior written consent, constitutes a material default of the Area Development Agreement. This means that if an Area Developer's interest in the agreement is transferred due to legal reasons such as bankruptcy, Learningrx's approval is still required.
This requirement protects Learningrx by ensuring that any new party taking over the Area Development Agreement meets Learningrx's standards and qualifications. Failure to obtain consent for such an assignment can result in a default of the agreement, potentially leading to termination of the agreement.