What was the primary reason Checkers terminated the franchise agreements with Baby Buford, LLC?
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6, 2021 order and do not appear to be actively pursuing their claims, although the arbitration action has not been withdrawn at this time.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, the franchise agreements with Baby Buford, LLC, and its related entities were terminated on December 19, 2019, due to failure to pay required advertising contributions. This is according to Item 3 which discusses litigation involving Checkers.
Following the termination, Baby Buford filed a Demand for Arbitration against Checkers on March 30, 2020, seeking $299,999 in damages. Baby Buford alleged wrongful termination in violation of the Michigan Franchise Investment Law, and misappropriation and comingling of advertising contributions. Checkers denied any wrongdoing and filed a Petition to Compel Arbitration, asserting that each franchise entity required a separate arbitration. The Court agreed on January 6, 2021, staying the current arbitration and requiring separate arbitrations if Baby Buford wished to proceed. As of the FDD's publication, Baby Buford had not taken further action, though the arbitration action remained open.
This situation highlights the importance of franchisees meeting their financial obligations, specifically advertising contributions, as failure to do so can lead to termination of the franchise agreement. It also demonstrates the potential for legal disputes between Checkers and its franchisees, and the costs and time associated with such disputes. Prospective franchisees should carefully review the franchise agreement and understand their obligations regarding advertising contributions and the potential consequences of non-compliance.