Under what state's laws is the Learningrx agreement governed, construed, and enforced?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
SCONSIN | Wisconsin Dept. of Financial Institutions Division of Securities 345 W. Washington Avenue, 4th Floor Madison, WI 53703 608-266-8557 | Wisconsin Commissioner of Securities Same Address |
MULTI STATE ADDENDUM EXHIBIT E
EXHIBIT E LEARNINGRX FRANCHISE CORPORATION
MULTI STATE ADDENDUM
The following modifications are to the LearningRx Franchise Corporation Franchise Disclosure Document and may supersede, to the extent then required by valid applicable state law, certain portions of the Franchise Agreement and Area Development Agreement.
CALIFORNIA
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- The California Franchise Investment Law requires a copy of all proposed agreements relating to the sale of the franchise be delivered together with the Disclosure Document.
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- Neither the franchisor, nor any person or franchise broker in Item 2 of the FDD is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities Exchange Act of 1934, 15 U.S.C.A. 78a et seq., suspending or expelling such persons from membership in such association or exchange.
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- California Business and Professions Code sections 20000 through 20043 provide rights to the franchisee concerning termination, transfer or non-renewal of a franchise. If the franchise agreement contains a provision that is inconsistent with the law, the law will control.
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- The franchise agreement provides for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law. (11 U.S.C.A. Sec. 101 et seq.)
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- The franchise agreement contains a covenant not to compete which extends beyond the termination of the franchise. This provision may not be enforceable under California law.
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- The franchise agreement contains a liquidated damages clause. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.
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- The franchise agreement requires binding arbitration. The arbitration will occur in Colorado with the costs being borne by both parties.
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- Prospective franchisees are encouraged to consult private legal counsel to determine the applicability of California and federal laws (such as Business and Professions Code Section 20040.5, Code Procedure Section 1281, and the Federal Arbitration Act) to any provisions of a franchise agreement restricting venue to a forum outside the State of California.
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- The franchise agreement requires application of the laws of Colorado. This provision may not be enforceable under California law.
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Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
Based on the 2025 Learningrx Franchise Disclosure Document, the agreement's governing law isn't explicitly stated. However, the document includes addenda for various states like California, Virginia, Washington, Michigan, Minnesota, Rhode Island, and South Dakota, addressing how those states' laws may modify or supersede certain franchise agreement terms. These addenda primarily focus on franchisee rights regarding termination, transfer, non-renewal, covenants not to compete, arbitration, and waivers.
For example, the California addendum notes that if the franchise agreement contains a provision inconsistent with California law, the law will control. Similarly, the Rhode Island addendum states that any provision restricting jurisdiction or venue to a forum outside of Rhode Island or requiring the application of another state's laws is void concerning claims enforceable under the Rhode Island Franchise Investment Act. The Minnesota addendum indicates that nothing in the franchise documents can reduce a franchisee's rights under Minnesota Statutes, Chapter 80C.
These addenda suggest that while the Learningrx franchise agreement likely has a standard governing law clause, the specific terms may be superseded or modified by the franchise laws of the state in which the franchisee operates. This is a common practice in franchising to ensure compliance with varying state regulations designed to protect franchisees. A prospective franchisee should carefully review the addendum for their specific state and consult with legal counsel to understand how local laws affect the franchise agreement.