After termination of the Learningrx agreement, does the covenant not to compete apply within a 50-mile radius of any Learningrx Training Center?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
han disclosed to Franchisor in writing. Such transfer remains subject to Franchisor's prior written approval and other conditions specified in this Agreement. If Franchisor does not transfer the franchised Business to the transferee on the same terms offered to Franchisor, then Franchisee must again extend the right of first refusal to Franchisor in the manner described above, before another desired transfer.
15. GENERAL PROVISIONS
15.1 Covenants Not to Compete. During the term of this Agreement and for two (2) years after termination, transfer, or expiration of this Agreement for any reason, Franchisee agrees that neither Franchisee, nor any manager of Franchisee, any person associated with Franchisee, including officers, directors, shareholders, partners, members, trustees, employees or agents, and any members of Franchisee's immediate families (collectively "Franchisee Affiliates"), will (i) have any direct or indirect controlling interest as a legal or beneficial owner in a Competitive Business (as hereinafter defined); (ii) perform services as a director, partner, officer, manager, employee, consultant, representative, agent or otherwise for a Competitive Business; or (iii) divert 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; (c) within a fifty mile radius from the boundary of Franchisees Territory or from any other franchised or company-owned LearningRx Training Center, (d) on the Internet or (e) on any other Multi-Area Marketing channels used by Franchisor.
Franchisee acknowledges that, in addition to the license of the Marks hereunder, Franchisor has also licensed commercially valuable information which comprises and is a part of the System, including without limitation, proprietary processes, operations, marketing and related information and materials and that the value of this information derives not only from the time, effort and money which went into its compilation, but from the usage of the same by all franchisees of Franchisor.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to the 2025 Learningrx Franchise Disclosure Document, after the termination, transfer, or expiration of the agreement, the covenant not to compete applies within a fifty-mile radius from the boundary of the franchisee's territory or from any other franchised or company-owned Learningrx Training Center. This restriction lasts for two years after the agreement ends, regardless of the reason for termination. This prevents a former franchisee from directly competing with Learningrx within a specific geographic area.
The non-compete agreement restricts the franchisee (and their affiliates) from having a direct or indirect controlling interest in a competitive business, performing services for a competitive business, or diverting business or employees away from Learningrx. A "Competitive Business" includes businesses offering learning enhancement, brain training, or math and reading training courses, programs, or products. This definition is broad, covering various educational services that could potentially compete with Learningrx.
This post-term covenant not to compete is standard practice in franchising to protect the brand's market share, customer relationships, and confidential information. The geographic scope (50 miles) and duration (2 years) are typical in the franchise industry. The franchisee and their spouse acknowledge that they possess general skills and opportunities to earn a living, so enforcing the covenant will not deprive them of their ability to earn a living. This acknowledgement is likely intended to reinforce the enforceability of the non-compete agreement.
It is important for prospective Learningrx franchisees to understand the scope and limitations of the non-compete agreement before signing the franchise agreement. They should consider how these restrictions might affect their future business opportunities if they decide to leave the Learningrx system. Franchisees should seek legal counsel to fully understand the implications of the non-compete clause and whether its terms are reasonable and enforceable in their specific jurisdiction.