Under what conditions does the Learningrx SBA addendum automatically terminate?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
| Recitals. assisted financing. | Franchisor and Franchisee entered into a Franchise (or License) Agreement on (Franchise Agreement). The Franchisee agreed among other things to operate and maintain a franchise located at Franchisee has obtained from a lender a loan (Loan) in which funding is provided with the assistance of the United States Small Business Administration (SBA). SBA requires the execution of this Addendum as a condition for obtaining the SBA |
|---|---|
| NOW, THEREFORE, in consideration of the mutual promises below, and for good and valuable considerations in hand paid by each of the parties to the others, the receipt and sufficiency of which the parties acknowledge, the parties agree as follows: | |
| • | The Franchise Agreement is in full force and effect, and Franchisor has sent no official notice of default to Franchisee under the Franchise Agreement that remains uncured on the date hereof. |
| • | Franchisor will not unreasonably withhold, delay or condition its consent to any proposed transfer or assignment by Franchisee which requires Franchisor's consent under Section 14.4 of the Franchise Agreement. |
| • | In the event of a disability or incompetency, the franchisee's representative will be able to transfer the franchise subject to the franchisor's consent which will not be unreasonably withheld. |
| • | This Addendum automatically terminates on the earliest to occur of the following: (i) a Termination occurs under the Franchise Agreement; (ii) the Loan is paid; or (iii) SBA no longer has any interest in the SBA financing. |
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, the SBA addendum to the franchise agreement will automatically terminate under specific conditions. These conditions are designed to reflect the status and security of the loan provided with the assistance of the Small Business Administration (SBA). Understanding these termination conditions is crucial for a Learningrx franchisee, as the addendum contains provisions impacting the franchisee's rights and obligations related to the franchise.
The Learningrx SBA addendum will automatically terminate upon the earliest occurrence of one of three events. First, if a termination occurs under the main Franchise Agreement, the addendum is also terminated. This means any breach or event that leads to the termination of the franchise itself will also end the SBA addendum. Second, the addendum terminates automatically when the franchisee has fully paid off the loan obtained with SBA assistance. This is a standard provision, as the SBA's involvement is tied to the loan's existence.
Finally, the Learningrx SBA addendum terminates if the SBA no longer has any interest in the financing provided. This could occur if the SBA's guarantee or other form of involvement is released or otherwise concluded. As a prospective franchisee, it is important to understand the implications of the SBA addendum's termination, particularly regarding any ongoing obligations or changes to the franchise agreement terms once the addendum is no longer in effect. Franchisees should consult with legal and financial advisors to fully understand these implications.