What was the outcome of Checkersrallys' Petition to Compel Arbitration in Federal Court?
Checkersrallys 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
Source: Item 3 — LITIGATION (FDD pages 15–17)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, a dispute arose with former franchisees, Baby Buford, LLC, and related entities, after Checkersrallys terminated their franchise agreements in December 2019 due to failure to pay advertising contributions. In March 2020, Baby Buford filed a single Demand for Arbitration against Checkersrallys, seeking $299,999 in damages, alleging wrongful termination and misappropriation of advertising contributions. Checkersrallys denied any wrongdoing.
On April 27, 2020, Checkersrallys filed a Petition to Compel Arbitration in Federal Court, arguing that each franchise entity should have a separate arbitration. The Court agreed with Checkersrallys, and on January 6, 2021, the Court ordered a stay of the current arbitration, requiring separate arbitrations if Baby Buford wished to proceed.
As of the FDD's publication, Baby Buford had not taken further action since the Court's January 6, 2021 order, and it did not appear they were actively pursuing their claims, although the arbitration action had not been withdrawn. This outcome is favorable for Checkersrallys, as it prevents Baby Buford from pursuing a single, consolidated arbitration, potentially increasing the cost and complexity for the former franchisees if they choose to proceed with individual arbitrations.