Under what conditions can a Learningrx franchisee assign their obligations under the franchise agreement?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
rea 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. Subject to the other provisions of this Section 7, if Area Developer wishes to sell, transfer any portion, or all, of the Development Territory, or this Agreement, the Area Developer shall notify Franchisor which may approve or disapprove the same in its sole discretion, and in addition Franchisor reserves the right to require any or all of the following as conditions of its approval:
- A. All of the Area Developer's accrued monetary obligations and all other outstanding obligations to Franchisor, its affiliates and suppliers must be fully paid and satisfied;
- B. The Area Developer must not be in default of any provision of its franchise agreements, any amendments thereof or successors thereto, or any other agreement between the Area Developer and Franchisor, its subsidiaries or affiliates;
- C. The Area Developer and each of its affiliates, shareholders, members, partners, officers and directors must execute a general release, under seal, the consideration for which shall be the approval of the transfer, in a form satisfactory to Franchisor, of any and all claims against Franchisor and its affiliates, officers, directors, shareholders and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state and local laws, rules and ordinances;
- D. The transferee must enter into a written assignment, under seal and in a form satisfactory to Franchisor, assuming and agreeing to discharge all of the Area Developer's obligations under the relevant franchise agreements and, if deemed necessary by Franchisor, the transferee's principals, individually, shall guarantee the performance of all such obligations in writing in a form satisfactory to Franchisor;
- E. The transferee must demonstrate to Franchisor's satisfaction that the transferee meets Franchisor's educational, managerial and business standards; possesses a good moral character, business reputation and credit rating; has the aptitude and ability to operate the Centers (as may be evidenced by prior related experience or otherwise); has at least the same managerial and financial acumen required of new Area Developers and shall have sufficient equity capital, as determined by Franchisor in Franchisor's sole discretion, to operate the Centers;
- F.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, a franchisee's obligations under the franchise agreement are personal and cannot be assigned without the franchisor's prior written approval. Specifically, the franchisee cannot voluntarily or involuntarily sell, pledge, assign, transfer, share, sub-franchise, encumber, or transfer their obligations in any way without obtaining Learningrx's express written consent. Any proposed assignment, including those occurring by operation of law or through a bankruptcy trustee, is considered a material default of the agreement if it lacks Learningrx's prior written consent.
If a Learningrx franchisee wishes to transfer any portion or all of their Development Territory or the agreement itself, they must notify Learningrx. Learningrx has the discretion to approve or disapprove the transfer. As conditions of approval, Learningrx may require that all accrued monetary obligations and outstanding debts to Learningrx, its affiliates, and suppliers are fully paid. Additionally, the franchisee must not be in default of any provision within their franchise agreements, amendments, or any other agreements with Learningrx or its affiliates.
Furthermore, to gain approval for a transfer, the Learningrx franchisee must meet several conditions. They must not be in material default of their obligations under the agreement or any other agreement with Learningrx that impairs the brand's goodwill. All royalties, marketing development fund fees, and amounts owed to Learningrx must be paid. The franchisee must reimburse Learningrx for reasonable external legal and administrative costs associated with the transfer. The franchisee, or an approved operational partner or manager, must continue to devote full-time efforts to managing the business, unless Learningrx approves a substitute. Learningrx must also approve the material terms of the transfer, including payment terms and post-transfer ownership, ensuring that these terms do not adversely impact the transferee's operation of the business. Finally, the transferring owners must agree to remain bound by obligations that survive termination, such as non-competition, confidentiality, and indemnity, and the new owners must sign a guaranty and assumption of obligations, with the franchise agreement amended to reflect the post-transfer ownership.