What is the estimated equity volatility for both MEIP I and MEIP II investments related to Camp Margaritaville?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
| MEIP I | MEIP II | |
|---|---|---|
| Expected time to liquidity (in years) | 4 | 4 |
| Estimated equity volatility | 35.65% | 35.65% |
| Risk-free rate | 4.5% | 4.5% |
| Dividend rate | 0.00% | 0.00% |
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
According to Camp Margaritaville's 2025 Franchise Disclosure Document, the estimated equity volatility for both MEIP (Management Equity Incentive Plan) I and MEIP II is 35.65%. This figure is used in the Black-Scholes simulation model to value the Units, which are grants of profit interests intended to compensate employees of Camp Margaritaville and its subsidiaries. The model also incorporates assumptions such as the expected time to liquidity, risk-free rate, and dividend rate.
The MEIPs are designed to allow eligible participants to share in the fair value gain over the initial investment in the company, once certain benchmarks are met. MEIP I, also known as Class B shares, had an effective date of July 20, 2016, while MEIP II, or Class C shares, was established on May 11, 2022. The estimated equity volatility is a key input in determining the fair value of these units for compensation expense purposes.
For a prospective franchisee, understanding these equity volatility figures might not have a direct impact on their day-to-day operations. However, it provides insight into how Camp Margaritaville values its internal equity and compensates its employees. This can be an indicator of the company's overall financial planning and its approach to incentivizing its management team. The expected time to liquidity for both MEIP I and MEIP II is 4 years, with a dividend rate of 0.00% for both.