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The furniture retailer has invited Walker Media, BLM and incumbent ZenithOptimedia for further meetings, scheduled this week.
MFI kicked off a review of its media business in July, after appointing Walker Media's sister agency M&C Saatchi to its creative account last year.
The refined shortlist has been whittled down from an original shortlist of five agencies, including OMD UK and Universal McCann Manchester. A result is expected before the end of August.
The review, which is being handled by the AAR, is understood to be procurement driven. MFI sold its struggling retail arm to private equity firm Merchant Equity Partners for a nominal fee of £1 in September 2006.
The group agreed to pay Merchant £74m between then and April 2008 to invest in the stores, as well as a further £52m in customer deposits.
The remaining business, consisting of Howdens builders' merchants and a manufacturing business, was renamed Galiform.
MFI has courted controversy with its recent ad campaign featuring feuding families, which prompted a deluge of complaints to the Advertising Standards Authority.
The ads, devised by M&C Saatchi, portray families acting out at-home scenarios in MFI stores.