Is a Focus Cfo franchisee required to indemnify Focus Cfo for criminal conduct, such as fraud or embezzlement?
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.
- 10.6.
Notice.
Franchisee shall give Focus CFO immediate notice (within 24 hours) of any such action, suit, demand, claim, investigation or proceeding that may give rise to a claim for indemnification.
Source: Item 23 — Receipts (FDD pages 37–126)
What This Means (2025 FDD)
According to the 2025 Focus Cfo Franchise Disclosure Document, a franchisee is required to indemnify Focus Cfo and its affiliates against losses, damages, fines, costs, expenses, or liabilities, including attorney's fees and damages to Focus Cfo's reputation and goodwill, if the claim arises from the franchisee's commission of an act involving a felony, fraud, embezzlement, or other criminal conduct. This indemnification extends to any action, suit, demand, claim, investigation, or proceeding related to these issues.
This means that if a Focus Cfo franchisee engages in criminal activities such as fraud or embezzlement, they are responsible for covering all associated costs incurred by Focus Cfo, including legal fees, settlement amounts, and any damage to the company's reputation. This obligation survives the expiration or termination of the Franchise Agreement, and the franchisee's equity owner shares joint and several liability.
The franchisee must also provide Focus Cfo with immediate notice (within 24 hours) of any action, suit, demand, claim, investigation, or proceeding that may lead to a claim for indemnification. This requirement ensures that Focus Cfo is promptly informed of any potential issues and can take appropriate action to protect its interests.
This type of indemnification clause is relatively standard in franchise agreements, as it protects the franchisor from liabilities arising from the franchisee's misconduct. However, prospective franchisees should carefully consider the scope of this clause and understand the potential financial implications of their actions or omissions.