Process hazelnuts in a food processor until finely chopped.
In the top of a double boiler over simmering water melt chocolates and butter, stirring until smooth and butter is thoroughly incorporated.
In a saucepan heat cream until hot but not boiling. Stir into melted chocolate little by little, stirring until completely incorporated between additions. Stir in hazelnuts and Frangelico.
Serve in a fondue pot over a very low flame, with your choice of accompaniments.
Yield: about 3 1/2 cups fondue, serving 6 to 8