What was the balance of the related-party note payable for Camp Margaritaville as of December 31, 2023 and 2022?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
sing date term loans, $50,000,000 in delayed draw term loans, and a $5,000,000 revolving credit loan. The closing date term loans and line of credit both expire in June 2027. The delayed draw is available to be withdrawn from the closing date through the first 27 months of the loan. The term loan agreement requires minimum principal of 1% to be paid each year beginning June 30, 2022. The debt issuance costs related to securing the debt facility approximate $449,152. These costs were amortized fully in 2022. The Company opted to amortize the debt issuance costs in the prior year as it was calculated immaterially different from the effective interest method over the remainder of the loan term. The interest rate associated with the debt is 4.75% plus Secured Overnight Fina
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
According to Camp Margaritaville's 2025 Franchise Disclosure Document, the balance of the related-party note payable was $9,805,332 as of December 31, 2023 and 2022. The FDD specifies that this subordinated note is owned by select equity holders of Camp Margaritaville, which is why it is classified as related-party notes payable.
This means that Camp Margaritaville had a significant debt obligation to its equity holders. These related-party transactions are common in franchise systems, especially during early stages, as they allow the company to secure funding from individuals with a vested interest in the brand's success.
For a prospective franchisee, this information highlights the financial structure of Camp Margaritaville and the importance of understanding related-party transactions. While not inherently negative, it's crucial to assess the terms of these notes, interest rates, and repayment schedules to gauge the company's financial health and potential impact on the franchise system's stability. It is also important to note that the company was in compliance with the financial covenants in effect as of those dates.