What was the reason Checkersrallys terminated the franchise agreements with Baby Buford, LLC?
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, 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. Subsequently, Baby Buford filed a Demand for Arbitration against Checkersrallys, seeking $299,999 in damages, alleging wrongful termination and misappropriation of advertising contributions. Checkersrallys denied any wrongdoing.
Checkersrallys then filed a Petition to Compel Arbitration in Federal Court, asserting that each franchise entity required a separate arbitration. The Court agreed, issuing an order 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 since the court's order, and it did not appear that they were actively pursuing their claims, although the arbitration action had not been withdrawn.
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 Checkersrallys 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.