What entities must a Camp Margaritaville franchisee cause to provide comfort letters?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 2.11 Comfort Letters. Franchisee shall not pledge this Agreement as collateral for any financing. Franchisee must cause each lender, each ground lessor (if applicable), owner of fee simple title to the Resort's real property or building and improvements (if Franchisee is not that owner), and each other entity with an interest (or any power or right, conditional or otherwise, to acquire an interest) in the Resort's real property or building and improvements (each a "Comfort Letter Party") to sign a comfort letter or other agreement that Franchisor reasonably specifies under which such Comfort Letter Party agrees, among other things, to assume Franchisee's obligations under this Agreement (subject to Franchisor's rights herein) if the Comfort Letter Party or any of its Affiliates acquires title or otherwise assumes possession, or the right to sell or direct the disposition of, the Resort's real property or building and improvements. Franchisee shall pay Franchisor its then-current comfort letter fee for each comfort letter that Franchisor must provide relating to the Resort. In addition, upon Franchisor's request, Franchisee must cause each Comfort Letter Party to sign and deliver to Franchisor an estoppel in the form that Franchisor reasonably specifies concerning the status of Franchisee's contractual relationship with that Comfort Letter Party.
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
According to Camp Margaritaville's 2025 Franchise Disclosure Document, a franchisee is prohibited from using the Franchise Agreement as collateral for financing. Instead, the franchisee must ensure specific parties sign a comfort letter. These parties include any lender, ground lessor (if applicable), the owner of the real property if the franchisee is not the owner, and any other entity with an interest in the resort's real property or building. These entities are collectively referred to as "Comfort Letter Parties."
The comfort letter requires these Comfort Letter Parties to agree to assume the franchisee's obligations under the Franchise Agreement if they acquire the resort property. This is subject to Camp Margaritaville's rights as outlined in the agreement. The franchisee is also responsible for paying Camp Margaritaville's current comfort letter fee for each letter provided related to the resort.
Additionally, Camp Margaritaville may request the franchisee to have each Comfort Letter Party sign and deliver an estoppel certificate. This certificate, in a form specified by Camp Margaritaville, confirms the status of the contractual relationship between the franchisee and the Comfort Letter Party. This requirement ensures that Camp Margaritaville has a clear understanding of the various parties involved with the resort's property and their potential obligations.