What action did Checkers take in response to Baby Buford's single 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6, 2021 order and do not appear to be actively pursuing their claims, although the arbitration action has not been withdrawn at this time.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's 2025 Franchise Disclosure Document, after Baby Buford filed a single 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 a separate arbitration for each franchise entity.
The court agreed with Checkers, and on January 6, 2021, it issued an order staying the current arbitration. The order stipulated that separate arbitrations would be required if Baby Buford wished to proceed with their claims. As of the FDD's publication, Baby Buford had not taken any further action since the court's order, and it appeared they were not actively pursuing their claims, although the arbitration action had not been formally withdrawn.
This situation highlights the importance of understanding the specific terms of the franchise agreement, particularly regarding dispute resolution. The fact that Checkers successfully compelled separate arbitrations could significantly increase the costs and complexity for the franchisee if they choose to pursue their claims. For a prospective franchisee, this case underscores the need to carefully review the arbitration clauses and understand the potential implications for resolving disputes with Checkers.