After termination of the Learningrx Area Developer Agreement, for how long does the covenant not to compete apply?
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 Area Developer's Development Territory; (b) within counties adjacent to the Development Territory or within a Development Territory then operated by or under development by Franchisor or another Area Developer of Franchisor; (c) within a fifty (50) mile radius from the boundary of Area Developer's Development 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, both franchisees and area developers are subject to a covenant not to compete. For Area Developers, the covenant not to compete applies for two years after the termination, transfer, or expiration of the Area Developer Agreement.
During this two-year period, the non-compete restricts the Area Developer from engaging in competitive business activities within their Development Territory, counties adjacent to their territory, or within a 50-mile radius of any Learningrx Training Center. The restriction also extends to online activities and multi-area marketing channels used by Learningrx. This prevents former Area Developers from leveraging their knowledge and resources gained during their time with Learningrx to directly compete against the franchise.
The FDD also states that these covenants are independent, and Learningrx has the right to modify the scope of the covenant. Area Developers must also ensure that their "Franchisee Affiliates" also sign a confidentiality and non-compete agreement. These measures are in place to protect Learningrx's trade secrets, goodwill, and the unique qualities of its system.
It is important to note that the non-compete restrictions do not apply to ownership of less than 5% of the equity securities of a publicly held corporation. Prospective Area Developers should carefully consider the scope and duration of these non-compete provisions and how they might impact their future business endeavors after leaving the Learningrx system.