Is Camp Margaritaville required to maintain the Marketing Fee in a separate account?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
We currently do not, and are not required to, maintain the Marketing Fee in a separate account from our other money. We are not required to expend any specific funds from the Marketing Fee on the area or territory for your Resort. Other franchisees may not be required to pay the Marketing Fee, may be required to pay a different Marketing Fee, or may be required to contribute to a different advertising fund. We have no obligation to make expenditures from the Marketing Fee that are equivalent or proportionate to your Marketing Fee, ensure that you benefit directly or proportionately or in any amount from the placement of advertising, or ensure that any advertising impacts or penetrates your area. In the calendar year ended December 31, 2024, 18.36% of the Marketing Fees were used for digital media promotion, including websites, social, email marketing, and digital ads; 2.30% for creative services and content development, including graphic design, video production and podcast; 38.58% for events, including sweepstakes and contests, charitable events, and pickleball tournaments; 5.10% for public relations, 20.97% for resort performance support, including photoshoots, customer service email support, 13.53% for media support from Radio Margaritaville, and 1.15% for administration. The foregoing figures have been rounded to the second decimal place. If we do not spend all of the Marketing Fee in the calendar year which it accrues, then those funds will roll over to be expended in the following year. We may have the collections and expenditures audited, with the expenses of the audit being paid for out of the Marketing Fee, by an independent certified public accountant we select. We will provide you with an unaudited statement of the operations of Marketing Fee expenditures within 30 days of your written request. Any amounts that we or our affiliates contribute to the Marketing Fee will be considered a loan and we and/or our affiliates will have the right to be reimbursed from the Marketing Fee in any amounts that we advance to the Marketing Program. There are no advertising councils composed of franchisees. However, we may form these advertising councils. You are not required to participate in an advertising cooperative.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 46–55)
What This Means (2025 FDD)
According to Camp Margaritaville's 2025 Franchise Disclosure Document, Camp Margaritaville is not currently required to maintain the marketing fees it collects in a separate account. This means that the fees are not segregated from the company's other operating funds. Camp Margaritaville is also not required to expend any specific funds from the Marketing Fee on the area or territory for a franchisee's resort. Other franchisees may not be required to pay the Marketing Fee, may be required to pay a different Marketing Fee, or may be required to contribute to a different advertising fund.
For prospective franchisees, this indicates that the franchisor has significant discretion in how marketing fees are managed and spent. While 18.36% of the Marketing Fees were used for digital media promotion, 2.30% for creative services and content development, 38.58% for events, 5.10% for public relations, 20.97% for resort performance support, 13.53% for media support from Radio Margaritaville, and 1.15% for administration in the calendar year ended December 31, 2024, these allocations can change. The franchisor is not obligated to ensure that a franchisee benefits directly or proportionately from the placement of advertising, nor are they obligated to ensure that any advertising impacts or penetrates a franchisee's specific area.
Camp Margaritaville may have the collections and expenditures audited, with the expenses of the audit being paid for out of the Marketing Fee, by an independent certified public accountant they select. Franchisees are entitled to an unaudited statement of the operations of Marketing Fee expenditures within 30 days of a written request. Any amounts that Camp Margaritaville or its affiliates contribute to the Marketing Fee will be considered a loan and they will have the right to be reimbursed from the Marketing Fee in any amounts that they advance to the Marketing Program. There are no advertising councils composed of franchisees, but Camp Margaritaville may form these advertising councils. Franchisees are not required to participate in an advertising cooperative.
This arrangement is not uncommon in the franchise industry, where franchisors often have broad discretion over marketing fund usage. However, it's crucial for franchisees to understand that they may not see a direct or measurable return on their marketing fee contributions in their specific location. The franchisee should evaluate whether the franchisor's overall marketing strategy aligns with their business goals and expectations.