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FDD Talk 2017: What You Need to Know About the LearningRx Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

by Franchise Chatter on March 29, 2017

in Child-Related Franchises, Education Franchise, FDD Talk 2017: Children's Franchises, Franchise Earnings



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In this FDD Talk 2017 post, you’ll learn the following:

  • Section I – Background information on the LearningRx franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a LearningRx franchise, based on Item 7 of the company’s 2017 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a LearningRx franchise, based on Items 5 and 6 of the company’s 2017 FDD
  • Section IV – Presentation and analysis of LearningRx’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
  • fiscal year 2016 average revenue charged, case size, satisfaction rating (out of 10), and percentage of consultation to students for all 72 LearningRx franchisee-owned Centers open during the full fiscal year October 1, 2015 through September 30, 2016
  • fiscal year 2016 average advertising expenses, bank and credit card fees, facilities costs, insurance, miscellaneous expenses, royalty fee, supplies, taxes (non-payroll), travel and entertainment expenses, and percentage available for salaries and profits for all 72 LearningRx franchisee-owned Centers open during the full fiscal year October 1, 2015 through September 30, 2016

Section I – Background Information

18 Things You Need to Know About the LearningRx Franchise

Leadership Changes

1.  In the beginning of 2017, LearningRx announced that the company would be undergoing leadership changes as the company’s founder and CEO Dr. Ken Gibson moved into the position of Chairman of the Board.

2.  Kim Hanson, who is Dr. Gibson’s daughter, stepped in as CEO while Dean Tenpas, Gibson’s son-in-law, was appointed as the new Chief Operating Officer. Tanya Mitchell, who is also Gibson’s daughter, serves as the new Chief Recruitment and Research Officer.



3.  Dr. Gibson says that he hopes to guide the new executive team as LearningRx steps up its efforts to grow the franchise.

Recovering After Lawsuit From the Federal Trade Commission

4.  In the fall of 2016, LearningRx said that the company had finally began to recover after facing a 1½ year battle with the Federal Trade Commission over the company’s claims that its program “could permanently improve serious health conditions such as ADHD (attention deficit hyperactivity disorder), autism, dementia, Alzheimer’s disease, strokes, and concussions.”

5.  LearningRx settled the lawsuit in May 2016. The settlement, which included a $4 million judgment against the company, but was lowered to $200,00, bars LearningRx from claiming that its programs can improve performance on the job or in athletics or increase cognitive function of people with age-related memory loss, dementia, Alzheimer’s disease, ADHD, autism, traumatic brain injury, or stroke.

6.  Going forward, LearningRx can only make these claims if the company can provide sufficient and reliable scientific research.



7.  During the lawsuit, LearningRx stopped all franchise sales. According to Tanya Mitchell, this caused a 20 percent revenue decline that continued until September 2016.

8.  The company resumed marketing and advertising of its programs in late fall, but had not signed any new franchise agreements.

9. Mitchell says that the company is working hard to conduct the scientific research that the FTC is requiring.

Launching a Website to Review Brainy Toys

10.  In early December 2016, LearningRx launched a website called LearningRxReviews.com to showcase the best brain-boosting toys, games, books, apps, and blogs.

11.  At the time of the launch, the items reviewed included: Bop It (game), Metamorphabet (app/game), Squigz (toy), Ninety-Nine or Bust (game), and Lego Chain Reactions (game).

12.  All the reviews are provided by several moms who work at LearningRx’s national headquarters in Colorado Springs, Colorado.

13.  Prior to launching the website, the company had been releasing an annual toy list called “Smart Mom’s Toy Box.”

14.  According to Tanya Mitchell, the website will only be publishing positive reviews on products that the moms actually like.

15.  LearningRx says that it is open to companies sending in games, toys, books, and apps that are related to learning struggles, special needs, cognitive skills, etc.

Company History

16.  LearningRx was founded in 2002 by Dr. Ken Gibson in Colorado Springs, Colorado.

17.  Today, there are nearly 80 locations throughout the United States.

Entrepreneur’s Franchise 500

18.  LearningRx has ranked on Entrepreneur’s Franchise 500 list a few times in the last decade. The company’s highest rank was No. 263 in 2014, while its lowest rank was No. 315 in 2016.

Section II – Estimated Costs

  • Please click here for detailed estimates of LearningRx franchise costs, based on Item 7 of the company’s 2017 FDD (updated).

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on LearningRx’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.

Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis



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