Is a Focus Cfo franchisee required to indemnify Focus Cfo for infringement of a third party's intellectual property?
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, costs, and expenses, including attorney's fees, arising from any claim of infringement or alleged infringement of a third party's intellectual property. This includes patents, copyrights, trademarks, trade names, trade secrets, or other intellectual property, as well as the misuse or disclosure of third-party confidential information. This obligation extends to the franchisee's equity owners, who are jointly and severally liable. This means that Focus Cfo can seek full recovery from either the franchisee or the equity owner, or both. The franchisee must also provide Focus Cfo with immediate notice (within 24 hours) of any action that may lead to a claim for indemnification.
This indemnification clause places a significant responsibility on the Focus Cfo franchisee to ensure their business operations do not infringe upon the intellectual property rights of others. This could include ensuring that all marketing materials, business processes, and client interactions are free from any potential infringement. The franchisee should exercise due diligence in these areas to mitigate the risk of such claims.
Focus Cfo also has the right to defend actions brought against the franchisee if the action is based on a claim that the Focus Cfo marks infringe upon a third party's rights. However, this protection is conditional. Focus Cfo will only defend the franchisee if the franchisee notifies Focus Cfo promptly in writing of any such claim and cooperates in the defense. Focus Cfo retains sole control over the defense and settlement negotiations. Focus Cfo has no obligation to the franchisee for infringement claims based on marks modified by someone other than Focus Cfo, the franchisee's use of marks with non-Focus Cfo products/services, or use of the marks in a manner prohibited by the agreement. The franchisee must modify or discontinue the use of a mark if Focus Cfo modifies or discontinues it and must not contest Focus Cfo's rights to the marks, trade secrets, or business techniques.
In summary, while Focus Cfo offers some protection regarding the use of its marks, the franchisee bears the responsibility to indemnify Focus Cfo against third-party intellectual property infringement claims arising from the franchisee's operations. This highlights the importance of franchisees understanding intellectual property law and taking proactive measures to avoid infringement.