What was the outcome of Checkers' Petition to Compel Arbitration in Federal Court?
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6, 2021 order and do not appear to be actively pursuing their claims, although the arbitration action has not been withdrawn at this time.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, a dispute arose with former franchisees, Baby Buford, LLC, and related entities, after Checkers terminated their franchise agreements in December 2019 due to failure to pay required advertising contributions. In March 2020, Baby Buford filed a single Demand for Arbitration against Checkers, seeking $299,999 in damages, alleging wrongful termination and misappropriation of advertising contributions. Checkers denied any wrongdoing.
In response to Baby Buford's single Demand for Arbitration, Checkers filed a Petition to Compel Arbitration in Federal Court on April 27, 2020, arguing that each franchise entity should have a separate arbitration. The court agreed with Checkers, and on January 6, 2021, the Court entered an Order staying the current arbitration and requiring separate arbitrations if Baby Buford wished to proceed.
As of the FDD's publication, 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 outcome is favorable for Checkers, as it prevents the franchisees from consolidating their claims into a single arbitration, potentially increasing the cost and complexity of the legal proceedings for the franchisees if they choose to pursue the matter further.