What was the amount of investments in unconsolidated entities for Camp Margaritaville as of December 31, 2022?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
027 as of December 31, 2022. After assessing the venue's earnings in 2023, the company updated their estimate of the purchase price, which is estimated to be nil. In addition to cash proceeds, the Company will also receive ongoing royalty payments based on each venue's monthly net sales.
The breakdown of components of the asset sale to IMC for the year ended December 31, 2023, is outlined in the table below:
| Total purchase price, net of adjustments | $ | – |
|---|---|---|
| Fixed assets | (2,847,174) | |
| Development costs | (2,100,000) | |
| Inventory | (126,279) | |
| Loss on disposal of venue | $ (5,073,453) |
Proceeds from the sale are reflected in the notes receivable balance. Notes accrue interest at a rate of 5.75% per annum and are payable quarterly ov
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
According to Camp Margaritaville's 2025 Franchise Disclosure Document, the company had $2,000,000 in investments in unconsolidated entities as of December 31, 2022. This investment primarily relates to a 3.2% interest in 560 MV Hotel LLC, a resort in New York.
Camp Margaritaville accounted for this investment at cost less impairment. However, in October 2023, the majority owner of the resort foreclosed on its loan agreement, and in December 2023, the lender assumed control of the property. As a result, Camp Margaritaville lost its ownership interest and fully impaired its investment in the property.
By the end of 2023, the investment account for 560 MV Hotel LLC was reduced to $0. This impairment loss is reflected in the net loss on investments in unconsolidated entities within the consolidated statements of operations. This situation highlights the risks associated with minority investments, particularly when the company does not have significant influence over the entity's operations.