Explanation

This risk was not identified in the FDD. The tables in Item 20 show a young, growing system with no reported terminations, non-renewals, or outlets that ceased operation for other reasons over the past three years. While this is a positive indicator, high turnover in a franchise system can be a major red flag for systemic problems, such as a lack of franchisee profitability or poor franchisor support. The system's youth means this data has limited historical depth.

Potential Mitigations

• Speaking with a broad selection of current franchisees listed in Item 20 is essential for your due diligence; a business advisor can help you prepare questions.
• Your accountant should help you monitor future Item 20 disclosures to see if turnover rates increase as the system matures.
• It's advisable to ask your attorney about any state laws that provide protection regarding franchise termination or non-renewal.

Explanation

This risk was not identified. While the system is growing, adding a few locations per year, the total number of outlets remains small. The FDD does not indicate that this growth has outpaced the franchisor's ability to provide support. However, in any young system, it is important to verify that the support infrastructure, detailed in Item 11, is scaling appropriately to meet the needs of new franchisees and maintain quality standards across the brand.

Potential Mitigations

• Engaging a business advisor to assess the franchisor's support infrastructure in relation to its growth rate is a prudent step.
• Contacting both new and established franchisees from the list in Item 20 can provide valuable insight into the quality of support.
• Your accountant can review the franchisor's financial statements in Item 21 to assess if they are allocating sufficient resources to support functions.

Explanation

This risk was not identified in the FDD. The Camp Margaritaville concept is an extension of the broader Margaritaville brand, which has a long history and strong consumer recognition in the hospitality and leisure industry. While the RV resort concept is newer, its association with a well-established lifestyle brand suggests it is based on a durable consumer theme rather than a short-term trend or fad, reducing the risk of a sudden decline in consumer interest.

Potential Mitigations

• A business advisor can help you conduct independent market research to assess the long-term consumer demand for branded RV resorts.
• Reviewing the franchisor's plans for system evolution and innovation as described in Item 11 can provide insight into their long-term strategy.
• Consulting a financial advisor to evaluate the business model's resilience to economic shifts is a recommended step.

Explanation

This risk was not identified in the FDD. Item 2 shows that the management team consists of individuals with extensive, long-term experience within the parent company, Margaritaville Enterprises, in the hospitality industry. While the specific RV resort franchising entity is relatively new (since 2021), the leadership has a deep background in managing the overarching brand, which is a significant mitigating factor against inexperience.

Potential Mitigations

• A thorough review of the executive biographies in Item 2 with your business advisor can confirm their specific experience in franchising.
• It is wise to speak with current franchisees about the quality and effectiveness of the management team's support and guidance.
• Your attorney can help you formulate questions for the franchisor about how their past hospitality experience translates to supporting RV resort franchisees.

Explanation

The FDD discloses that Margaritaville Holdings LLC is a parent company and provides a guarantee of the franchisor's performance. The parent's audited financial statements are included in Exhibit G, which is appropriate. However, the financials reveal a significant negative equity (partners' deficit), which is a substantial risk in itself, but the disclosure of the parent and its financials appears to follow regulatory requirements. The risk lies in the financial weakness, not the lack of disclosure.

Potential Mitigations

• An accountant must review the parent company's financial statements to assess the substance and stability behind its guarantee.
• It's crucial for your attorney to examine the specific terms of the parent guarantee to understand its enforceability and any limitations.
• Asking the franchisor about its plans to address the parent company's financial position is a key due diligence step with your financial advisor.

Explanation

This risk was not identified in the FDD. Item 1 states that the franchisor has no predecessors. This means the entity, Margaritaville RV Resorts, LLC, did not acquire the system from a prior company. Therefore, there is no risk of hidden negative history from a predecessor, such as past litigation, bankruptcies, or high franchisee turnover under previous ownership. Your evaluation can focus solely on the history of the current franchisor and its affiliates.

Potential Mitigations

• Your attorney can confirm the franchisor's corporate history to ensure no predecessor entities have been omitted from the disclosure.
• A business advisor can help you research the history of the broader Margaritaville brand, as its reputation can still impact your franchise.
• Focusing your due diligence calls with franchisees on the performance of the current franchisor entity is an effective strategy.