Does Learningrx use cooperative funds to sell franchises?

According to Learningrx's 2025 Franchise Disclosure Document, cooperative funds are not used to sell franchises. The document states clearly, "No cooperative funds will be used to sell franchises." This means that the money contributed to advertising cooperatives by Learningrx franchisees is exclusively for marketing and advertising efforts aimed at promoting the services of existing Learningrx centers, not for attracting new franchisees.

Learningrx franchisees may, but are not obligated to, form local advertising cooperatives with other franchisees or company-owned centers within a 25-mile radius. These cooperatives are managed by a majority vote of the franchisees in the region. Learningrx retains the right to mandate participation in any advertising cooperative it establishes. During the first six months of operation, franchisees may be required to contribute the greater of 3% of gross revenues or 2/3 of the lowest amount paid by another center in the cooperative, but not more than $3,000 per month. After this initial period, the required contribution can be up to 3% of gross revenues, subject to the same maximum limit.

The advertising cooperative is responsible for Yellow Pages advertising in the relevant metropolitan area. All franchises within the cooperative, including company-owned centers, contribute at the same rates. Learningrx may accumulate these contributions and carry over any balance to subsequent years. They also reserve the right to loan funds to the Advertising Cooperative as needed. The cooperative must prepare annual financial statements within 120 days after Learningrx's fiscal year end, providing transparency to all members. As of the last fiscal year, no cooperatives were formed, and therefore no monies were spent or carried forward.

In addition to local advertising cooperatives, Learningrx also manages a Marketing Development Fund, which is funded by a mandatory annual contribution of $15,000 per center, starting after the center has been in operation for six full months. These funds are used for various marketing and development expenses, such as creating marketing materials, website development, internet marketing campaigns, and public relations efforts. Learningrx has discretion over how these funds are spent and is not obligated to allocate them proportionally to franchisee contributions or provide direct benefits to specific franchisees. During the fiscal year ended September 30, 2024, Learningrx spent $397,204.67 from the Marketing Development Fund, with the majority allocated to internet marketing and the production of marketing materials.