How to Finance a Captain D’s Franchise: Drive-Thru Seafood Builds
By Anthony Cornella
A Captain D’s franchise loan usually finances a freestanding quick-service seafood restaurant with a drive-thru, or the conversion of an existing restaurant building into one. That makes real estate, building costs and collateral structure as important as the franchise fee, and it explains why the brand’s SBA directory note focuses on lien positions.
This article covers the fees and owner requirements Captain D’s publishes, its building prototypes and conversion option, how the SBA Franchise Directory note affects loan structure, and how lenders evaluate new, converted and existing restaurants.
US Professional Funding is not affiliated with, sponsored by or endorsed by Captain D’s; the name is used only to describe the business. Figures from the franchisor’s disclosure document and website can change, loan programs and terms vary by lender and borrower, and every loan is subject to lender review and approval. Nothing here is legal, tax or investment advice, so review the current Franchise Disclosure Document (FDD) and franchise agreement with a qualified franchise attorney and accountant.
Captain D’s Franchise Loan at a Glance
- Initial franchise fee: $35,000 per restaurant, according to the franchisor’s franchising site, with half paid as a non-refundable development fee when the development agreement is signed.
- Veteran incentive: qualifying veterans may receive up to half off the initial franchise fee on their first restaurant.
- Royalty: 4.5% of sales.
- Advertising fee: 1.1% of gross sales, plus local marketing of 2% to 4% of gross sales.
- Net worth: a collective minimum of $1,500,000.
- Franchise term: agreements typically set a 20-year initial term.
- Prototype starting costs: the franchisor lists $1,325,000 for its 32-seat prototype, $1,453,000 for its 44-seat prototype and $550,000 for conversions.
- System size: the company reported more than 540 restaurants in 23 states in early 2023.
- SBA Franchise Directory: listed under code S0344, with a note on lien positions explained below.
What Is Captain D’s?
Captain D’s is a quick-service seafood chain founded in 1969 and based in Nashville, Tennessee. It serves fish and seafood meals through dine-in, carryout and drive-thru service.
Formats. The franchisor’s current prototypes include a 32-seat building with a drive-thru and dining room and a 44-seat building with a traditional dining room and drive-thru. It also offers a double drive-thru add-on where space allows, and says double-lane units serve 35% more cars per day on average than single-lane units. Its news materials describe an Express prototype with a drive-thru and walk-up window and no dining room. Conversions of existing restaurant buildings are a major part of its development strategy.
Multi-unit ownership. The franchisor says more than 56% of its franchise system is made up of multi-unit operators.
Why lenders view Captain D’s the way they do. Lenders generally see a long operating history and a drive-thru-heavy model as positives. Because most deals involve a freestanding building, often owned by the franchisee or a related real estate entity, lenders focus on site quality, construction or conversion costs, appraisal values and the borrower’s real estate experience.
Captain D’s Franchise Costs
Initial franchise fee. The franchise fee is $35,000 for each restaurant. Half is paid as a non-refundable development fee when you sign the development agreement. Qualifying veterans may receive a discount of up to half the fee on their first restaurant.
Real estate and building. The franchisor’s estimates exclude the cost of real estate, which varies by market. Land purchase, a ground lease or a building lease is a separate cost and often the largest single financing decision in the deal. Captain D’s notes that union labor can raise building costs significantly, while converting an existing building should keep costs toward the lower end.
Prototype starting costs. The franchisor’s flexible prototypes page lists these starting costs:
- 32-seat prototype with drive-thru and dining room: starting at $1,325,000
- 44-seat prototype with dining room and drive-thru: starting at $1,453,000
- Conversion of an existing building: starting at $550,000
The same page says conversions open on average 30 days faster than new builds, which shortens the period of construction interest and pre-opening expenses.
Equipment, technology and opening costs. A Captain D’s kitchen requires fryers, holding equipment, refrigeration and freezers, ventilation and fire suppression, drive-thru communication systems and point-of-sale technology. Training, insurance, opening inventory and additional funds for the first months round out the budget.
Total investment. The franchisor’s site has published more than one Item 7 estimate on different pages, so request the current FDD and use its Item 7 table as your budget baseline. Lenders will reconcile that table with your site-specific contractor bids, equipment quotes and real estate costs.
Ongoing Fees and How They Affect Your Loan
Royalty. Captain D’s charges a 4.5% royalty on restaurant sales.
Advertising and local marketing. The advertising fee is 1.1% of gross sales, and the franchisor asks franchisees to spend between 2% and 4% of gross sales on local marketing.
Occupancy. If you own the real estate, your occupancy cost is debt service on the property loan, plus taxes, insurance and maintenance. If you lease, rent replaces that debt service. Either way, it is a fixed cost that lenders weigh against restaurant cash flow.
How lenders factor these costs in. Royalty, advertising and local marketing together take a percentage of every sales dollar before food, labor and occupancy. Lenders build these into projections and measure debt service coverage across both the business loan and any real estate loan. A combined structure that looks fine at projected sales should still work under a slower ramp-up.
Franchisor Requirements for New Owners
- Net worth: a collective minimum of $1,500,000 for the ownership group.
- Liquidity: Captain D’s requires a minimum of liquid assets, but its FAQ and inquiry pages state the figure differently, so confirm the current requirement directly with the franchisor.
- Business experience: the inquiry form asks whether candidates have owned and operated a business and whether they have owned other franchises.
- Development agreement: a development agreement is required for each restaurant scheduled for development.
The approval process. Candidates submit an inquiry, qualify financially, review the FDD, identify a market and sign a development agreement before site selection and construction. Ask the franchisor about available markets, since it describes expansion in select markets nationally.
Ways to Own a Captain D’s
New construction. Building a new 32-seat or 44-seat restaurant requires land, site work, a building and a full equipment package. See our overview of franchise start-up financing.
Conversion. Converting a vacant restaurant building can reduce costs and speed opening, which the franchisor emphasizes. Lenders will review the building’s condition, the remodel scope and the appraisal. Our article on conversion franchise financing explains how these projects are structured.
Buying an existing restaurant. Acquiring a franchised Captain D’s lets lenders underwrite real sales history. The purchase may include the real estate or an assignment of the lease, plus franchisor transfer approval and possible upgrade requirements. Learn about franchise restaurant acquisition financing.
Multi-unit development. With more than half of the system run by multi-unit operators, many owners plan several restaurants from the start, each with its own development agreement.
Financing Options for a Captain D’s Franchise
SBA 7(a) loans. An SBA 7(a) loan can finance land, building, equipment, franchise fees and working capital in one loan for an owner-occupied restaurant. The SBA 7(a) program maximum is currently $5 million, and program rules can change.
SBA 504 loans. Because many Captain D’s projects include a freestanding building, the SBA 504 program can be a strong fit for the land and building, with equipment and working capital financed separately.
Conventional term loans. Established operators with strong financials and real estate equity may use conventional business loans for construction, acquisitions or refinancing. Our page on franchise real estate and expansion financing covers property-heavy growth.
Equipment financing. Fryers, holding cabinets, refrigeration, ventilation hoods, drive-thru timers and headsets, menu boards and POS systems can be financed or leased separately, preserving cash for opening. See restaurant equipment financing and leasing.
Working capital and lines of credit. New restaurants need cash for training, pre-opening labor and the first months of operation, and seafood costs can fluctuate. Explore restaurant working capital.
Seller financing on resales. A seller may carry part of the price when an existing restaurant is sold. Seller notes are typically subordinate to the senior loan, must be acceptable to the lender and may be limited by SBA rules.
SBA Loans for Captain D’s Franchisees
SBA lenders generally rely on the SBA Franchise Directory to confirm that a brand’s franchise documents have been reviewed for eligibility. A listing does not approve any borrower or project; it clears the franchise relationship for SBA review.
Captain D’s directory listing. Captain D’s is listed under code S0344. The listing carries this note: the lender or CDC must ensure they obtain the correct lien position on all collateral as required under the SBA’s standard operating procedures.
What the note means in plain English. SBA rules require lenders to take specific lien positions on the assets that secure a loan. Something in the franchise relationship or typical deal structure, such as franchisor rights, equipment leases, landlord liens or a related real estate entity, may affect those positions, so the lender has to confirm it can obtain the required priority. For borrowers, the practical step is to disclose every existing lien, lease and franchisor agreement early so the lender can structure collateral correctly.
SBA application tips. Prepare the FDD, development agreement, site plan or conversion scope, contractor bids, appraisal expectations, projections, a personal financial statement and recent tax returns for every owner. The SBA loan calculator can help with early payment estimates, which are for planning only and are not an offer or approval.
How Lenders Evaluate a Captain D’s Deal
Personal credit and financial history. Lenders review each owner’s credit, tax returns and personal financial statement, and owners with significant stakes generally sign personal guarantees.
Net worth and liquidity. The franchisor’s $1,500,000 collective net worth minimum is a starting point. Lenders also want an equity injection and reserves after closing, especially when construction is involved.
Industry and management experience. Restaurant or multi-unit management experience strengthens an application. Owners new to food service should show a plan for experienced general managers.
Business plan and projections. Projections should reflect the 4.5% royalty, the 1.1% advertising fee, local marketing, labor, seafood and other food costs, and occupancy or real estate debt service. If you reference the franchisor’s Item 19 figures, use them as context rather than a forecast.
The FDD and franchise agreement. Lenders review the 20-year term, renewal and transfer terms, the development agreement and default provisions, and they want the franchise term to extend beyond the loan.
Site and real estate. For new builds, lenders evaluate the site plan, traffic, access, drive-thru stacking, zoning, environmental reports and appraisal. For conversions, they look at the building’s condition and remodel scope.
Historical financials for existing restaurants. Expect to provide several years of profit and loss statements, sales reports and tax returns for the restaurant you are buying.
Kitchen, Drive-Thru and Building Equipment
Fried and grilled seafood depends on dependable fryers, oil management, holding equipment, freezers and strong ventilation and fire suppression. A drive-thru adds order points, headsets, timers and digital menu boards, and a double drive-thru adds a second lane of equipment. These assets are financeable collateral, and lenders will want equipment quotes as part of the loan package.
Conversions and equipment reuse. In a conversion, some existing hoods, walk-ins or plumbing may be reusable if they meet brand and code standards. Confirm what can stay before finalizing the budget, because a lower conversion cost depends on it.
Multi-Unit Growth and Development Agreements
Captain D’s requires a development agreement for each restaurant scheduled for development, and half of each franchise fee is paid when that agreement is signed. Operators planning several restaurants should match the development schedule to what they can finance and staff.
Financing additional restaurants. Lenders usually finance each restaurant as it is built or acquired. Once one restaurant has history, its cash flow and real estate equity can support the next. Owners often hold real estate in a separate entity, which lenders review alongside the operating company.
Real-World Scenarios
A conversion in a growth market. An operator buys a vacant former restaurant building and converts it to Captain D’s. An SBA loan finances the building purchase, remodel, equipment and working capital, and the lender confirms its first lien on the real estate and equipment as the SBA note requires.
A new 44-seat build. An experienced multi-unit restaurant owner buys land and builds a 44-seat restaurant with a double drive-thru. The land and building are financed with an SBA 504 loan, and equipment is financed separately.
A veteran’s first restaurant. A veteran uses the franchise fee discount, combines personal savings with SBA financing and leases a building rather than buying it. Read about franchise financing for veterans.
An acquisition from a retiring franchisee. A buyer acquires an existing restaurant and its real estate. The lender underwrites the restaurant’s history and the appraisal, and the seller carries a small subordinate note.
Common Mistakes to Avoid
- Budgeting only from prototype starting costs without land, site work and soft costs
- Assuming a conversion will be cheap before inspecting the building
- Overlooking existing liens or equipment leases that affect SBA lien positions
- Signing a development agreement without lining up financing for each restaurant
- Underestimating working capital for training and the first months
- Ignoring union labor or local construction costs in your market
For more pitfalls, read the restaurant loan mistakes that cost owners the most.
Next Steps to Finance Your Captain D’s Franchise
Step 1: Confirm the requirements. Verify the $1,500,000 collective net worth minimum and the current liquidity requirement with the franchisor.
Step 2: Review the FDD with advisors. Study Items 5, 6, 7 and 17 and the development agreement with a franchise attorney and accountant.
Step 3: Talk with a financing specialist. Discuss your Captain D’s franchise loan before you sign a development agreement, so the schedule matches your financing.
Step 4: Choose new build, conversion or acquisition. Compare sites, costs and timelines, and get contractor bids and equipment quotes.
Step 5: Build projections. Include royalty, advertising, local marketing, labor, food costs and real estate debt service or rent.
Step 6: Apply and close. Submit your loan package with real estate, construction and franchise documents, and disclose all existing liens.
Step 7: Fund the opening. Keep working capital in place for training, pre-opening labor and the first months.
Captain D’s Franchise Loan FAQs
How much does it cost to open a Captain D’s?
The franchisor lists starting costs of $1,325,000 for its 32-seat prototype, $1,453,000 for its 44-seat prototype and $550,000 for conversions, with real estate costs varying by area. Use the current FDD’s Item 7 for the full estimate.
What is the Captain D’s franchise fee?
The initial franchise fee is $35,000 per restaurant, with half paid as a development fee when the development agreement is signed.
What royalty does Captain D’s charge?
The royalty is 4.5% of sales. Franchisees also pay a 1.1% advertising fee and spend 2% to 4% of gross sales on local marketing.
How much net worth do I need?
Captain D’s requires a collective minimum net worth of $1,500,000. Confirm the current liquid asset requirement with the franchisor.
Is Captain D’s eligible for SBA loans?
Yes. It is listed on the SBA Franchise Directory under code S0344, with a note requiring lenders to obtain the correct lien position on all collateral.
Does Captain D’s offer financing?
No. The franchisor says it does not offer financing but can provide a list of banks and financing institutions.
Can I convert an existing restaurant?
Yes. Conversions start at $550,000 according to the franchisor and open on average 30 days faster than new builds.
Is there a veteran discount?
Qualifying veterans may receive up to half off the initial franchise fee on their first restaurant.
How long is the franchise term?
Franchise agreements typically establish a 20-year initial term.
Can a first-time owner get a Captain D’s franchise loan?
It is possible if the franchisor approves the candidate and the borrower meets lender requirements. Business ownership experience, restaurant management support and strong reserves help.
Does the FDD include financial performance information?
The franchisor’s site refers to figures reported in Item 19 of its FDD. Review the current Item 19 and speak with existing franchisees.
Final Thoughts
A Captain D’s franchise loan is often as much a real estate loan as a restaurant loan. Owners who choose the right format, budget the full project including land, clear up lien questions early and plan financing for each restaurant in their development agreement give themselves the best chance at a smooth opening.
US Professional Funding helps franchise owners finance start-ups, conversions, acquisitions, equipment and working capital. Learn more about our franchise financing and restaurant financing solutions.
