What action did Checkers take in response to Baby Buford, LLC's Demand for Arbitration?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
or the Southern District of Florida
Baby Buford, LLC, Baby Buford HP, LLC, Baby Buford Warren, LLC, Baby Buford 8 Mile, LLC, Baby Buford Southfield, LLC, Baby Buford 23 Mile Road, LLC, Baby Buford Livernois, LLC, Baby Buford Woodward, LLC, Baby Buford 14 Mile, LLC, Baby Buford Port Huron, LLC, Baby Buford Ypsilanti, LLC, Baby Buford Sylvan Lake, LLC, and Baby Buford Harper, LLC (collectively hereafter referred to as "Baby Buford") are former Checkers franchisees. On December 19, 2019, we terminated the franchise agreements based on failure
to pay required advertising contributions. On March 30, 2020, Baby Buford filed a single Demand for Arbitration against us seeking $299,999 in damages and alleging that (i) their franchise agreements had been wrongfully terminated in violation of the Michigan Franchise Investment Law, and (ii) we misappropriated and comingled advertising contributions made by Baby Buford. We deny any wrongdoing in this matter and all claims made by Baby Buford. On April 27, 2020, we filed a Petition to Compel Arbitration in Federal Court in which we asserted that the franchise agreements require a separate arbitration for each franchise entity. The Court agreed and, on January 6, 2021, the Court entered an Order staying the current arbitration and requiring separate arbitrations should Baby Buford wish to proceed. The claimants have taken no further action since the Court's January 6, 2021 order and do not appear to be actively pursuing their claims, although the arbitration action has not been withdrawn at this time.
Source: Item 3 — LITIGATION (FDD pages 15–17)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, after Baby Buford, LLC filed a Demand for Arbitration seeking $299,999 in damages, Checkers responded by filing a Petition to Compel Arbitration in Federal Court on April 27, 2020. Checkers asserted that the franchise agreements required separate arbitrations for each franchise entity. This action was based on Checkers' disagreement with Baby Buford's claim that their franchise agreements had been wrongfully terminated and that Checkers had misappropriated advertising contributions.
The court sided with Checkers on January 6, 2021, issuing an order that stayed the current arbitration and stipulated that separate arbitrations would be necessary if Baby Buford wished to continue pursuing their claims. As of the FDD's publication, Baby Buford had not taken any further action since the court's order, and while they do not appear to be actively pursuing their claims, the arbitration action has not been formally withdrawn.
This situation highlights the importance of understanding the arbitration clauses within the franchise agreement. The fact that Checkers pursued separate arbitrations for each franchise entity suggests that the agreements were structured in a way that required individual consideration for each location. For a prospective franchisee, this underscores the need to carefully review and understand the dispute resolution mechanisms outlined in the franchise agreement, as it can significantly impact the process and cost of resolving any potential conflicts with Checkers.