What action did Checkersrallys take in response to Baby Buford's single Demand for Arbitration?
Checkersrallys 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
Source: Item 3 — LITIGATION (FDD pages 15–17)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, after Baby Buford filed a single Demand for Arbitration seeking $299,999 in damages, Checkersrallys responded by filing a Petition to Compel Arbitration in Federal Court on April 27, 2020. Checkersrallys asserted that the franchise agreements required a separate arbitration for each franchise entity.
The Court agreed with Checkersrallys, and on January 6, 2021, it entered 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 while they do not appear to be actively pursuing their claims, the arbitration action has not been withdrawn.
This legal maneuver by Checkersrallys could have significant implications for franchisees. By compelling separate arbitrations for each franchise agreement, Checkersrallys potentially increases the legal costs and administrative burden for the franchisee, Baby Buford, making it more difficult for them to pursue their claims effectively. This strategy is not uncommon in franchising, as franchisors often seek to manage legal disputes in a way that minimizes their overall risk and exposure.