Does the Focus Cfo franchise agreement specify who bears the cost of investigation related to an indemnification claim?
Focus_Cfo Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee and Equity Owner shall hold harmless, defend and indemnify Focus CFO, any affiliate of Focus CFO, all employees, officers, directors, managers, members, franchisees, licensees, successors and assigns of Focus CFO and Focus CFO affiliates (collectively "Focus CFO Indemnitees") from and against all losses, damages, fines, costs, expenses or liabilities (including reasonable attorneys' fees, costs of investigation, expert fees and disbursements and all other costs of investigation, arbitration and/or litigation, court costs, settlement amounts, judgments, and compensation for damages to Focus CFO's reputation and goodwill) incurred in connection with any action, suit, demand, claim, investigation or proceeding, or any settlement thereof, which arises from or is based upon Franchisee's: (i) violation, breach or asserted violation of any federal, state or local law, regulation or rule; (ii) the commission of an act or omission involving a felony or involving fraud, embezzlement or other criminal conduct; (iii) material breach of any representation, warranty, covenant or provision of this Agreement or any other agreement between Franchisee and Focus CFO; (iv) gross negligence or intentional acts, especially related to work performed for a Focus CFO client, (v) infringement or alleged infringement, of a third party's patent, copyright, trademark, tradename, trade secrets or other intellectual property or the misuse or disclosure of third party confidential information or (vi) any behavior causing physical harm to an individual or property or behavior which is coercive, threatening, abusive, exploitive, harassing (including sexual, verbal or physical harassment) or which is otherwise inappropriate in a workplace or professional environment.
The obligations of Franchisee and Equity Owner in this Section shall expressly survive the expiration or early termination of this Agreement.
Furthermore, Franchisee and Equity Owner agree that their obligations and liabilities under this Section are joint and several.
Source: Item 23 — Receipts (FDD pages 37–126)
What This Means (2025 FDD)
According to Focus Cfo's 2025 Franchise Disclosure Document, the franchisee is responsible for the costs of investigation related to an indemnification claim under certain circumstances. Specifically, the franchisee must indemnify Focus CFO against losses, damages, and costs, including costs of investigation, arising from certain actions or omissions. These include violations of laws, criminal conduct, breaches of the franchise agreement, gross negligence, intellectual property infringement, or harmful behavior.
This means that if a claim, lawsuit, or investigation arises against Focus CFO due to the franchisee's actions in these specified areas, the franchisee will be required to cover all associated costs. These costs extend beyond typical legal fees to include expenses like expert witness fees, arbitration costs, and compensation for damage to Focus CFO's reputation. The franchisee's obligation to cover these costs survives even after the termination of the franchise agreement.
This requirement places a significant financial burden on the Focus Cfo franchisee. It is crucial for prospective franchisees to understand the scope of their potential liability and to ensure they operate their business in compliance with all applicable laws and the franchise agreement. Adequate insurance coverage is also essential to mitigate the risk of incurring substantial indemnification costs. Franchisees should also be aware of the joint and several liability with Equity Owners, meaning each party is fully liable for the entire debt.