What were the two allegations made by Baby Buford against Checkersrallys in their 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, Baby Buford, LLC, a group of former Checkersrallys franchisees, filed a Demand for Arbitration against Checkersrallys on March 30, 2020, seeking $299,999 in damages. The filing contained two specific allegations against Checkersrallys.
First, Baby Buford alleged that Checkersrallys wrongfully terminated their franchise agreements, which they claimed was a violation of the Michigan Franchise Investment Law. Second, Baby Buford alleged that Checkersrallys misappropriated and commingled advertising contributions that Baby Buford had made. Checkersrallys denies any wrongdoing related to these allegations.
It is important to note that Checkersrallys filed a Petition to Compel Arbitration in Federal Court, asserting that each franchise entity should undergo a separate arbitration process. The Court agreed with Checkersrallys 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, and it appeared they were not actively pursuing their claims, although the arbitration action had not been formally withdrawn.