Captain D's, LLC Franchise Review (2026): Costs, Fees, Revenue Potential

• Category: Food & Beverage
• Initial Investment (range): $18,500 to $18,500, plus additional funds of $40,000 to $90,000
• Franchise Fee: $35,000
• Royalty: 4.5% of gross sales
• Marketing / Ad Fee: 1.0% of gross sales, subject to increase up to 2.0%
• Key additional recurring fees: Local restaurant marketing expenditure of 2.0% of gross sales is stated but currently suspended until further notice; advertising marketing contribution up to 0.75% or 1.25% depending on location; point-of-sale and training systems maintenance up to $236 per month
• Number of locations: 530 total at fiscal year-end 2024 (293 company-owned, 237 franchised)
• Best Fit: Owner-operator or franchisee with an approved supervisory person involved in direct operations

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The disclosure lists an estimated initial investment of $18,500, with additional funds of $40,000 to $90,000, and a standard initial franchise fee of $35,000. It also references opening team travel and lodging expenses above $8,000, depending on circumstances.

The main cost drivers identifiable from the disclosure are the franchise fee, working capital, restaurant opening support costs, and required systems. That said, the stated initial investment figure is unusually narrow relative to the rest of the restaurant-related information provided, so the disclosure does not clearly establish a full all-in opening budget from the figures extracted here. Based on the numbers shown, the upfront fee burden appears moderate, but the operating model itself looks more substantial than the headline startup figure alone would suggest.

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• Royalty: 4.5% of gross sales
• Advertising fee: 1.0% of gross sales, with the right to increase up to 2.0%
• Local restaurant marketing: 2.0% of gross sales, reduced by certain cooperative contributions; currently suspended until further notice
• Advertising marketing contribution: Maximum of 0.75% or 1.25% of gross sales depending on location
• POS and training systems maintenance/support: Up to $236 per month, plus repair and shipping costs
• Operating personnel fee: Costs incurred by the franchisor, estimated not to exceed $2,500 per month, if the franchisee fails to operate to standards
• Interest on overdue amounts: Up to 18%
• Transfer fee: $8,750 per restaurant plus other expenses
• Renewal fee: $8,750

Overall, the base royalty and ad fund structure is not especially heavy on its face, but total recurring burden can rise once advertising contributions, local marketing obligations, system costs, and compliance-related charges are included.

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Yes, the FDD includes Item 19 financial performance data.

For 214 franchised restaurants that were open continuously during the fiscal year ended December 29, 2024, the disclosure reports gross sales as follows:

• Average gross sales (total sample): $1,084,389
• Median gross sales (total sample): $1,016,889
• Range: $224,498 to $2,710,680

By third:

• Top third average: $1,556,436
• Top third median: $1,504,569
• Top third range: $1,196,068 to $2,710,680
• Middle third average: $1,015,843
• Middle third median: $1,016,889
• Middle third range: $847,215 to $1,181,124
• Bottom third average: $681,855
• Bottom third median: $716,455
• Bottom third range: $224,498 to $844,952

The spread is wide. The highest franchised unit reported more than 12 times the lowest unit, and the average gross sales gap between the top and bottom third is substantial. That suggests site quality, execution, local market conditions, and cost control may materially affect outcomes.

The FDD also includes company-owned restaurant sales and expense data for 278 comparable restaurants, grouped by thirds:

• Top third average sales: $1,373,379; median $1,276,396
• Middle third average sales: $992,148; median $998,975
• Bottom third average sales: $761,004; median $768,247

Selected expense ratios for company-owned restaurants:

• Total food & packaging: 29.94% to 31.48% of sales across thirds
• Labor, benefits, and related expenses: 22.19% to 32.41%
• Operating expenses: 14.40% to 20.92%
• Advertising expenses: about 2.00% to 2.12%
• Proforma restaurant contribution before occupancy (EBITDAR): 31.36% in the top third, 22.96% in the middle third, and 13.20% in the bottom third

These company-owned figures are useful for understanding cost structure, but they are not the same as franchisee profit. The EBITDAR measure is before occupancy costs and does not represent net income. Revenue does not equal profit.

The disclosure states that franchised restaurant gross sales are based on information provided by franchisees and are not audited, although the franchisor says those figures are used for royalty reporting. The sample also excludes restaurants not open for the full fiscal year and one company-owned non-traditional restaurant, so the results reflect a more established subset rather than all units.

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• Model: B2C restaurant business operated through franchised locations
• Revenue pattern: Primarily recurring sales from ongoing restaurant operations rather than one-time transactions
• Operational characteristics: Free-standing restaurant format, required point-of-sale and computer-based training systems, opening team support, and direct owner or approved supervisory participation in operations

This appears to be a hands-on restaurant model with meaningful staffing, food cost, labor management, and on-site execution requirements. The disclosure also indicates non-exclusive territory protection.

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Advantages

• The FDD provides actual gross sales data for 214 franchised restaurants and expense data for 278 company-owned restaurants open for the full fiscal year.
• The system is established, with 530 total restaurants at year-end 2024 across 24 states.
• Base recurring fees are clearly defined, including a 4.5% royalty and 1.0% advertising fee subject to increase.
• The disclosure includes company-owned expense ratios that help frame food, labor, operating, and advertising cost patterns.

Considerations

• Unit sales vary widely, from $224,498 to $2,710,680 among franchised comparable restaurants.
• The business appears operationally intensive, with direct participation required from the franchisee or an approved supervisory person with ownership interest.
• Territory is non-exclusive, which can limit geographic protection.
• Franchised sales figures in Item 19 are not audited.
• The startup cost figures shown here do not clearly establish a full restaurant opening budget despite the restaurant-based operating model.

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This franchise may fit someone prepared for active restaurant oversight, staffing management, and ongoing local execution, especially if they are comfortable working within a structured operating system.

It likely does not fit a passive investor seeking a clearly semi-absentee model, or someone who needs exclusive territory protection or highly predictable unit-level revenue outcomes.

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• The franchise agreement term is 20 years, which creates a long-duration commitment.
• Arbitration or litigation must take place in Tennessee, subject to applicable state law.
• Individuals and entities with a 10% or greater ownership interest must guarantee obligations.
• Some fees can arise only after operational issues, including operating personnel charges, audit expenses, enforcement costs, and interest on overdue amounts.
• The disclosure references development incentives tied to commitments for multiple restaurants, which can increase expansion obligations if a developer signs for several units.

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Captain D's presents a restaurant franchise model with meaningful historical sales disclosure and a large operating base, but outcomes vary considerably across units. The main tradeoff is between access to a mature restaurant system with defined fee terms and the realities of a hands-on, non-exclusive, execution-sensitive operating model where revenue does not necessarily translate into profit.

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