What could be the implications of the loss on investment in unconsolidated entities for Camp Margaritaville?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
e venue of $3,171,426. After assessing the venue's earnings and forecasts in 2023, the Company updated its estimate of the purchase price to nil, resulting in an additional loss on the sale of the venue in 2023. There was no change in the estimate regarding the purchase price of the venue in 2024. In addition to any 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 as of December 31, 2024, is outlined in the table below:
| Fixed assets (2,847,174) Development costs (2,100,000) Inventory | – |
|---|---|
| (126,279) | |
| Loss on disposal of venue | |
| $ (5,073,453) |
Notes to Consolidated Fina
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
According to Camp Margaritaville's 2025 Franchise Disclosure Document, the company experienced a loss on its investment in unconsolidated entities. Specifically, in October 2023, the majority owner of 560 MV Hotel LLC (a resort in New York), in which Camp Margaritaville held a 3.2% interest, foreclosed on its loan agreement. By December 2023, the lender assumed control of the property, resulting in Camp Margaritaville losing its ownership interest and fully impairing its investment in the property. The investment account for 560 MV Hotel LLC was $0 for the years ended December 31, 2024 and 2023. This impairment loss is reflected in the net loss on investments in unconsolidated entities within the company's consolidated statements of operations.
For a prospective Camp Margaritaville franchisee, this indicates that the parent company, Margaritaville Holdings LLC, engages in investments outside of its core franchising operations. The loss of investment in 560 MV Hotel LLC suggests that these investments carry risk, and their performance can impact the overall financial health of the company. While the resort remains open and continues to operate, Camp Margaritaville no longer benefits from any potential profits or asset value appreciation from that specific venture.
This situation highlights the importance of a franchisee thoroughly reviewing the financial statements of the franchisor to understand the scope and risk profile of its investment activities. Although the loss of investment in this particular instance may not directly affect the operations of a Camp Margaritaville franchise, it provides insight into the company's broader financial strategy and risk management practices. Prospective franchisees should consider this information as part of their due diligence process to assess the financial stability and long-term viability of the franchisor.