Compass by Margaritaville Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$10,366,100 - $57,880,100
Franchise Fee
$159,700
Total US Locations
4
Business Summary
Compass by Margaritaville offers franchises for upscale, select-service hotel establishments. These hotels feature attractively designed rooms with upscale amenities, exceptional service, state-of-the-art technology, and diverse food and beverage options. Located primarily in urban and secondary cities, Compass by Margaritaville hotels provide complimentary hot breakfast, high-speed internet, fitness centers, swimming pools, and meeting spaces. Franchisees may also have the option to operate Margaritaville-branded restaurants, bars, retail stores, spas, water parks, marinas, family entertainment centers, golf courses, and vacation dwellings like condominiums within or adjacent to the hotel.
Corporate History
Compass Margaritaville, L.L.C. is a Delaware limited liability company. Its principal business address is 6900 Turkey Lake Road, Suite 200, Orlando, Florida 32819. The company has never operated Compass Hotels. As of December 31, 2024, there were 4 franchised Compass Hotels operating in the United States. Compass Margaritaville, L.L.C. has no predecessors and no business activities that are not described here. Its parent company, Margaritaville Holdings LLC, was formed in Delaware on September 5, 1997. Compass Margaritaville, L.L.C. began offering franchises for Compass Hotels in 2018 and has never offered franchises in any other line of business. Prior to offering franchises, it entered into trademark license agreements for Compass Hotels in some locations through affiliated entities. Other affiliates like Margaritaville Hotels & Resorts, LLC (MHR), Margaritaville Restaurants, LLC (MR), Margaritaville RV Resorts, LLC (MRVR), and Margaritaville Cottages, LLC (MC) also offer franchises or licenses under various Margaritaville brands.
Financial Overview
Investment Range
$10,366,100 - $57,880,100
Franchise Fee (Low)
$159,700
Franchise Fee (High)
$325,700
Royalty %
5%
Marketing %
1.5%
Equipment Costs (Low)
$3,270,000
Equipment Costs (High)
$4,580,000
Working Capital
$400,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Margaritaville Holdings LLC has received an unqualified audit opinion on its financial statements, indicating that they present fairly in all material respects. The company reported a net income from continuing operations of $19,891,345 in 2024 and $27,784,671 in 2023. Cash and cash equivalents increased from $17,701,723 in 2023 to $27,181,476 in 2024. The company's balance sheet shows a partners' deficit of $(113,444,304) in 2024. Despite this, the company was in compliance with its financial covenants as of December 31, 2024, and 2023.
Financing Details
Compass Margaritaville does not offer direct or indirect financing to its franchisees, nor does it guarantee any notes, leases, or obligations.
Performance Metrics
Total US Locations
4
Franchised Units
4
Corporate Units
0
Franchising Since
2018
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
3
Litigation Summary
Compass Margaritaville and its affiliates have been involved in three legal cases. The first case, Boss Investments Ltd. v. Margaritaville of Bahamas, LLC, was filed in October 2018. It involved a dispute over a trademark sub-license agreement related to a resort development in the Bahamas. This case was settled in December 2020 and dismissed in January 2021, with corporate defendants agreeing to pay a portion of future royalties from food and beverage and merchandise from the Bahamian Hotel. The second case, Stephen W. and Catherine C. Shultz v. Margaritaville Enterprises, LLC, involved plaintiffs who owned cottages at a Margaritaville Resort and alleged various torts including fraud. The initial complaints were dismissed, but a third amended complaint was filed in April 2021. Margaritaville Enterprises' motion to dismiss was denied in November 2021. The parties reached a settlement in April 2023, resulting in a mutual walk-away and dismissal of the case. The third case, The Commissioner of Financial Protection and Innovation v. Margaritaville Hotels & Resorts, LLC, involved an administrative proceeding in California. Margaritaville Hotels & Resorts, LLC voluntarily acknowledged failing to file a notice of exemption and pay a fee for three hotel sales between July 2019 and February 2020. In March 2020, a consent order was agreed upon, requiring payment of an administrative penalty of $7,500 and amendment or withdrawal of its franchise registration application.
Bankruptcy History
Compass Margaritaville has no bankruptcy history to report.
Agreement Terms
Initial Term
20 years
Renewal Term
10 years
Renewal Conditions
To renew a Compass by Margaritaville franchise, the franchisee must pay a $30,000 renewal fee and provide written notice of intent to renew 12 to 18 months before the current agreement expires. The franchisee must not be in default of their current agreement and must still own the operating site. Additionally, the franchisee agrees to remodel the hotel to meet Compass by Margaritaville's then-current brand and technological standards, and must sign the franchisor's then-current franchise agreement and a general release of claims against the franchisor and its affiliates.
Training & Support Program
Franchisor Assistance
Compass by Margaritaville provides extensive support both before and after the hotel opens. Before opening, the franchisor reviews and approves the selected site, the overall project scope, and detailed design plans, including those for any branded restaurants, bars, retail stores, or amenities. It also approves all furniture, fixtures, equipment, contractors, and technology systems. The franchisor provides initial training for management personnel, supplies branded marketing materials, and makes its operational Manual available. During operation, Compass by Margaritaville conducts regular inspections through its Quality Assurance Program, offers periodic additional training programs, and provides ongoing advice based on reports and evaluations. It also administers a comprehensive Marketing Program, grants continued use of the Compass Intellectual Property and confidential information, and may host annual conventions for franchisees.
Initial Training Hours
152
Training Location
Initial training takes place at a franchisor-selected Margaritaville-branded venue and also on-site at the franchisee's hotel.
Ongoing Support
Compass by Margaritaville provides various forms of ongoing support to its franchisees after the hotel opens. This includes periodic additional training programs, regular inspections through the Quality Assurance Program, and operational advice based on franchisee reports and franchisor evaluations. It also administers a system-wide Marketing Program, provides access to and updates for the operational Manual, and allows the continued use of its intellectual property and confidential information. Furthermore, Compass by Margaritaville may hold annual conventions and requires replacement Key Personnel to complete brand standard training, with other personnel potentially needing to attend regional and national meetings.
Franchise Requirements
Ideal Candidate Profile
Compass by Margaritaville primarily seeks business entities, rather than individuals, to acquire its franchises. These entities must either manage the hotel directly or engage an approved management company. The franchisee entity and its owners must meet Compass by Margaritaville's current standards for new franchisees, including criteria for creditworthiness, access to capital, and criminal history. The approved management personnel must attend and satisfactorily complete all required training programs.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Commercial
Owner Participation
Absentee Allowed
Territory Type
Non-Exclusive
Territory Size Requirements
Compass by Margaritaville Hotels may be granted an "Area of Protection" around the Hotel. This area is typically defined by geographic references such as streets or a radius in miles, with the size varying based on the Hotel's location. This Area of Protection, if granted, may be for a period shorter than the Franchise Agreement term (e.g., 5 years from opening). Within this Area of Protection and during its term, Compass Margaritaville will not open or authorize any third party to open another Compass by Margaritaville Hotel using the same or materially similar branding. However, this protection does not apply to other hotel brands or types of lodging properties licensed or franchised by Compass Margaritaville or its affiliates, such as residential/rental dwellings, condos, apartments, active adult living communities, timeshares, RV resorts, and/or student housing, even if these use "by Margaritaville" or similar sub-brands.
Staffing Notes
Compass by Margaritaville requires the hotel to be managed either directly by the franchisee, if approved, or by an approved management company. The franchisee or management company is responsible for hiring and training all hotel personnel, including Key Personnel such as the General Manager, food and beverage manager, and sales director. The General Manager's qualifications are subject to franchisor review and approval, and the franchisor may require a new General Manager if hotel standards are not maintained. All Key Personnel must dedicate their full working time to the hotel's operations and cannot hold concurrent positions at other lodging facilities. Mandatory training programs are provided for Key Personnel, along with on-site task force training for all staff before opening, and additional training may be required throughout the term, especially for new Key Personnel.