If an Adverse Event occurs, is Focus Cfo still obligated to indemnify the Focus Cfo franchisee?
Focus_Cfo Franchise · 2025 FDDAnswer from 2025 FDD Document
Focus CFO will indemnify Franchisee for judgments, settlements, penalties, fines or expenses incurred in a proceeding to which Franchisee is a party because Franchisee is or was serving as an Area President of Focus CFO, unless the underlying claim is a result or related to an Adverse Event as defined below.
Any indemnification required or authorized under this Section will be recoverable only out of the assets of Focus CFO.
No Focus CFO affiliate will have any liability with respect thereto.
No member, director, manager, officer, franchisee or licensee of Focus CFO or any Focus CFO affiliate will have any personal liability with respect thereto.
- 10.4.
Adverse Event Defined.
For purposes of this Agreement, an Adverse Event is deemed to have occurred if Focus CFO determines, in its sole discretion after its review of the surrounding facts and circumstances, that one or more of the following circumstances or events applies or has occurred with respect to Franchisee: (i) Franchisee committed an act or omission constituting a felony or involving fraud, embezzlement or other criminal conduct;(ii) Franchisee failed to perform or observe any obligation or condition to be performed or observed by Franchisee under this Agreement or any other agreement with Focus CFO or a Focus CFO affiliate or the Professional Services Agreement with a Focus CFO client; (iii) Franchisee engaged in any act of dishonesty, misrepresentation, material neglect of duty, or any other act that is materially harmful to Focus CFO; (iv) Franchisee failed to perform, or was negligent in the performance of, the duties imposed on Franchisee by Focus CFO; (v) Franchisee failed to follow the policies or directives of Focus CFO or a Focus CFO client, as such policies or directives are established from time to time; or (vi) Franchisee engaged in any behavior that caused 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.
Source: Item 23 — Receipts (FDD pages 37–126)
What This Means (2025 FDD)
According to the 2025 Focus Cfo Franchise Disclosure Document, Focus Cfo's obligation to indemnify a franchisee does not extend to situations where an Adverse Event has occurred. Focus Cfo will indemnify a franchisee for expenses incurred as a result of serving as an Area President, but this protection is explicitly waived if the underlying claim is related to an Adverse Event. An Adverse Event is determined by Focus CFO, in its sole discretion, after reviewing the facts and circumstances.
An Adverse Event is defined as one or more of the following circumstances applying to the franchisee: committing a felony or an act involving fraud, embezzlement, or other criminal conduct; failing to perform obligations under the Franchise Agreement or Professional Services Agreement; engaging in dishonesty, misrepresentation, or neglect of duty that is materially harmful to Focus CFO; failing to perform duties or follow policies; or engaging in behavior causing physical harm or that is coercive, threatening, abusive, exploitive, harassing, or otherwise inappropriate.
This means that if a Focus Cfo franchisee is involved in a legal proceeding due to actions considered an Adverse Event, Focus Cfo is not obligated to cover judgments, settlements, penalties, fines, or expenses. The franchisee is responsible for these costs, potentially requiring them to have sufficient insurance coverage. This clause protects Focus Cfo from liabilities arising from franchisee misconduct or negligence, placing the financial burden of such events on the franchisee.