During the term of the agreement, where is the Learningrx franchisee affiliate prohibited from engaging in a Competitive Business?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
vert or attempt to divert any business related to, or any customer or account of the LearningRx Training Center, Franchisee's Business, Franchisor's business, the business of any affiliate of Franchisor or any other franchisee licensed by Franchisor, by direct inducement or otherwise, or divert or attempt to divert the employment of any employee of Franchisor or another franchisee licensed by Franchisor, to any Competitive Business by any direct inducement or otherwise. During the term of this Agreement, this Covenant Not to Compete applies anywhere in the United States. For two (2) years after the termination, transfer, or expiration of this Agreement, for any reason, this Covenant Not to Compete applies: (a) within Franchisee's Territory; (b) within counties adjacent to Franchisee's Territory or within a Territory then operated by or under development by Franchisor or another franchisee of Franchisor;
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, during the term of the franchise agreement, a franchisee affiliate is restricted from engaging in a Competitive Business anywhere in the United States. A 'Competitive Business' is defined as any business offering or granting franchises or licenses to others to provide learning enhancement courses, brain training, or math and reading training programs. This non-compete clause applies to the franchisee, their managers, individuals associated with the franchisee (including officers, directors, shareholders, partners, members, trustees, employees, and agents), and members of the franchisee's immediate family.
This means that while operating a Learningrx franchise, neither the franchisee nor their affiliates can own, operate, or work for any competing business that offers similar educational services anywhere in the U.S. This restriction is in place to protect Learningrx's market position, trade secrets, and the overall integrity of the franchise system. The broad geographic scope of this restriction underscores the importance Learningrx places on preventing franchisees and their affiliates from leveraging the franchisor's confidential information and business model to benefit a competing venture.
After the franchise agreement terminates, the geographic scope of the non-compete changes. For two years post-termination, the non-compete applies (a) within the franchisee's territory, (b) in counties adjacent to the franchisee's territory or territories operated/under development by Learningrx or its franchisees, (c) within a 50-mile radius of the franchisee's territory or any Learningrx center, (d) on the Internet, and (e) on any other Multi-Area Marketing channels used by Learningrx. This extended restriction ensures that former franchisees do not directly compete with Learningrx in areas where they could unfairly capitalize on their prior association with the franchise.
Prospective franchisees should carefully consider the breadth of these non-compete clauses, both during and after the franchise term, and how they might impact future business opportunities for themselves and their affiliates. It is important to fully understand the definition of 'Competitive Business' and the geographic limitations to assess any potential conflicts of interest. Franchisees should seek legal counsel to fully understand the implications of these covenants not to compete.