What rights do pre-existing PACE or Clinical licensees have within a Learningrx franchisee's territory?
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, a Learningrx franchisee's territory may contain pre-existing PACE or Clinical licensees. These licensees have the right to continue operating their businesses under their respective PACE or Clinical licenses within the franchisee's territory. This continued operation by pre-existing licensees does not constitute a breach of the Franchise Agreement. However, Learningrx 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 Learningrx franchisee's territory.
This means that a new Learningrx franchisee may face competition from established PACE or Clinical licensees within their designated territory from day one. While the franchisee has the right to service anyone in their territory, these pre-existing licensees maintain their operational rights, potentially impacting the franchisee's market share and revenue potential. The franchisee should consider the presence and impact of these existing licensees when evaluating the potential of a specific territory.
It is important to note that Learningrx retains the right to grant Clinical licenses outside the franchisee's territory, which could lead to further competition. However, Learningrx agrees not to grant any new PACE licenses within a 15-mile radius of the franchisee's center. This provides some level of protection against direct competition from new PACE licensees in the immediate vicinity of the franchisee's Learningrx center. Prospective franchisees should carefully assess the competitive landscape, including the presence and performance of any pre-existing PACE or Clinical licensees, before investing in a Learningrx franchise.