During the term of the Learningrx Area Developer Agreement, can an Area Developer own a business substantially similar to a Learningrx Center?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
Area Developer covenants that during the term of this Agreement and subject to the post term provisions contained herein, except as otherwise approved in writing by Franchisor, Area Developer shall not, either directly or indirectly, for itself or through, on behalf of or in conjunction with any person, persons, partners or corporations:
- C. Own, maintain, engage in, be employed by, advise, assist, invest in, franchise, make loans to or have any interest in any business which is the same as or substantially similar to the Center.
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 Area Developer Agreement, Area Developers are restricted from owning or being involved with any business that is the same as or substantially similar to a Learningrx Center. Specifically, Area Developers cannot directly or indirectly own, maintain, engage in, be employed by, advise, assist, invest in, franchise, make loans to, or have any interest in such a business. This restriction applies unless the Area Developer obtains written approval from Learningrx.
This non-compete provision is in place to protect Learningrx's confidential information, business, System, and Marks. The restriction extends to any person, persons, partners, or corporations acting in conjunction with the Area Developer. The FDD specifies that Area Developers will receive valuable specialized Confidential Information and information regarding the business of Learningrx, and its System.
This covenant not to compete is in effect during the term of the Agreement. However, this restriction does not apply to ownership by Area Developer of less than a five percent (5%) beneficial interest in the outstanding equity securities of any publicly held corporation. After the Area Developer Agreement expires or terminates, a separate post-term covenant not to compete takes effect for a period of two years.