As of the FDD date, what is the status of the arbitration action between Checkers and Baby Buford, LLC?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
ITIGATION**
Pending Litigation:
Checkers Drive-In Restaurants, Inc., v. Baby Buford, LLC, et. al., (Case No. 20-21749- Civ-COOKE), U.S. District Court for 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6, 2021 order and do not appear to be actively pursuing their claims, although the arbitration action has not been withdrawn at this time.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, Checkers was involved in an arbitration action with Baby Buford, LLC, former Checkers franchisees. Baby Buford filed a Demand for Arbitration against Checkers on March 30, 2020, seeking $299,999 in damages. They alleged wrongful termination of their franchise agreements in violation of the Michigan Franchise Investment Law, and misappropriation of advertising contributions. Checkers denies any wrongdoing.
On April 27, 2020, Checkers filed a Petition to Compel Arbitration, asserting 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.
As of the FDD date, 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. This means that while the case is technically still open, there has been no activity for an extended period, which could be a positive sign for Checkers. However, the possibility remains that Baby Buford could revive the arbitration.