Does the indemnification provided by Focus Cfo cover all expenses incurred by the franchisee in a legal proceeding?
Focus_Cfo Franchise · 2025 FDDAnswer from 2025 FDD Document
- 10.3.
Indemnification.
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
Source: Item 23 — Receipts (FDD pages 37–126)
What This Means (2025 FDD)
According to the 2025 Focus Cfo Franchise Disclosure Document, Focus CFO provides indemnification to franchisees under specific circumstances, but it does not cover all expenses incurred in every legal proceeding. Focus CFO will indemnify a franchisee for judgments, settlements, penalties, fines, or expenses incurred in a proceeding where the franchisee is a party because they are or were serving as an Area President of Focus CFO. However, this indemnification does not apply if the underlying claim results from or is related to an Adverse Event, as defined in the agreement.
An Adverse Event is determined by Focus CFO, in its sole discretion, after reviewing the facts and circumstances. It includes instances where the franchisee committed a felony, fraud, embezzlement, or other criminal conduct. This means that if a legal proceeding arises from such actions, the franchisee will not be indemnified by Focus CFO.
Conversely, the franchisee is required to indemnify Focus CFO against all losses, damages, fines, costs, expenses, or liabilities (including attorney's fees, investigation costs, expert fees, and settlement amounts) arising from various actions. These include violations of laws, criminal acts, breaches of the franchise agreement, gross negligence, infringement of intellectual property, or any behavior causing physical harm or creating an inappropriate work environment. This obligation of the franchisee survives the termination of the agreement, highlighting a significant responsibility for the franchisee to manage their business operations in compliance with all applicable laws and the franchise agreement.