After termination of the Learningrx agreement, does the covenant not to compete apply within counties adjacent to the Learningrx franchisee's territory?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to the 2025 Learningrx Franchise Disclosure Document, the covenant not to compete does apply to counties adjacent to a franchisee's territory for a period of two years after the termination, transfer, or expiration of the agreement. This restriction is in place regardless of the reason for termination.
Specifically, the non-compete agreement prevents the franchisee, or anyone associated with the franchisee, from having a direct or indirect controlling interest in a competitive business, performing services for a competitive business, or diverting business or employees from Learningrx to a competitive business. A "Competitive Business" is defined as any business offering learning enhancement, brain training, or cognitive training courses, programs, or products.
In addition to counties adjacent to the franchisee's territory, the non-compete also applies within the franchisee's territory, within a 50-mile radius of the territory or any other Learningrx center, and on the Internet or other multi-area marketing channels used by Learningrx. This broad scope means a former franchisee's ability to engage in a similar business is significantly restricted, potentially impacting their future career options.
This type of non-compete agreement is common in franchising to protect the brand's market share, trade secrets, and customer relationships. Prospective Learningrx franchisees should carefully consider the implications of this covenant, especially if they plan to remain in the same geographic area after leaving the Learningrx system.