What rights does Learningrx have regarding the lease if a Learningrx franchisee defaults under the lease?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
- 10.3 Lease Riders. If Franchisee leases the Premises, the lease must contain substantially the following provisions:
- (a) on termination of this Agreement for any reason, Franchisor or its designee will have the option for thirty (30) days to assume Franchisee's remaining lease obligations without accruing any liability regarding the lease prior to the effective date of any assignment; or Franchisor will have the right to execute a new lease for the remaining term on the same terms and conditions;
- (b) all notices of default to Franchisee under the lease must be sent contemporaneously to Franchisor;
- (c) in the event Franchisee defaults under the lease, Franchisor or its designee will have an opportunity, but not the obligation, to cure such default and to assume Franchisee's remaining obligations under the lease, but will not have any obligation to do so; and
- (d) a provision reserving to Franchisor the right, at Franchisor's sole and absolute election, to receive an assignment of the leasehold interest from Franchisee upon termination or expiration of the initial term or any renewal term, or any termination of Franchisee, and the right to reassign the lease without becoming liable on the lease and without further approval from the landlord or additional charge.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, if a franchisee defaults on their lease, Learningrx has specific rights, but not obligations, related to the lease. The lease agreement must stipulate that Learningrx has the option to cure the default and assume the franchisee's remaining lease obligations. However, Learningrx is not obligated to take these actions. This provision protects Learningrx by giving them the option to maintain control of the location and continue operations, if desired, without being forced to do so.
Additionally, the lease agreement must state that all default notices to the franchisee are also sent to Learningrx. This ensures Learningrx is aware of any potential lease issues and can take timely action if they choose. Learningrx also reserves the right to receive an assignment of the leasehold interest from the franchisee upon termination or expiration of the initial or any renewal term, and the right to reassign the lease without liability or further approval from the landlord.
These lease provisions are designed to give Learningrx flexibility in managing the franchise network and minimizing potential disruptions. For a prospective franchisee, this means they must ensure these clauses are included in their lease agreement. It also highlights the importance of maintaining a good relationship with the landlord and adhering to the lease terms to avoid default, as Learningrx has the right to step in and take over the lease if problems arise.