Can Learningrx transfer its rights or obligations under the Area Development Agreement?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
oper. Upon termination or expiration of the term of this Agreement, this Agreement shall be of no further effect, and Franchisor shall have the right to itself open, or license others to open, Centers within the Development Territory. For purposes of this Section 6, any franchise agreement issued by Franchisor to Area Developer or its affiliates, or any Entity or joint venture, or their affiliates, in which Area Developer or any stockholder, partner or joint venturer of Area Developer, has any direct or indirect ownership or participation interest, shall be deemed a franchise agreement issued to Area Developer.
7. ASSIGNMENT
- 7.01. By Franchisor. Franchisor shall have the absolute right to transfer or assign all or any part of its rights or obligations hereunder to any person or legal entity which assumes its obligation under this Agreement and Franchisor shall thereby be released from any and all further liability to Area Developer.
- 7.02. By Area Developer. Area Developer understands and acknowledges that the rights and duties set forth in this Agreement are personal to Area Developer and are granted in reliance upon the personal qualifications of Area Developer or Area Developer's principals. Area Developer has represented to Franchisor that Area Developer is entering into this Agreement with the intention of complying with its terms and conditions and not for the purpose of transferring the development and option rights hereunder.
- A. Neither Area Developer nor any partner, member, or shareholder thereof shall, without Franchisor's prior written consent, directly or indirectly assign, transfer, convey, give away, pledge, mortgage or otherwise encumber any interest in this Agreement or in Area Developer. Any such proposed assignment occurring by operation of law or otherwise, including any assignment by a trustee in bankruptcy, without Franchisor's prior written consent, shall be a material default of this Agreement.
- B. Any assignment, transfer or other disposition by the Area Developer of a single-unit Center within the Development Territory will be governed by the franchise agreement to which such single-unit Center is bound.
- 7.03. Assignment Procedure.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, Learningrx has the absolute right to transfer or assign all or any part of its rights or obligations under the Area Development Agreement to any person or legal entity that assumes its obligation under the agreement. If Learningrx assigns its rights, it is released from any further liability to the Area Developer.
However, the Area Developer's ability to transfer their rights is restricted. The Area Developer acknowledges that the rights and duties in the agreement are personal and granted based on their qualifications. The Area Developer cannot directly or indirectly assign, transfer, or encumber any interest in the agreement without Learningrx's prior written consent. Any proposed assignment, including one by a trustee in bankruptcy, without Learningrx's consent, constitutes a material default of the agreement.
If the Area Developer wishes to sell or transfer any portion or all of the Development Territory or the agreement, they must notify Learningrx, which can approve or disapprove the transfer at its sole discretion. Learningrx can require certain conditions for approval, including that all of the Area Developer's accrued monetary obligations to Learningrx, its affiliates, and suppliers are fully paid and satisfied, and the Area Developer is not in default of any provision of its franchise agreements.