Sample data — illustrative, not for citation
Red Lobster
seafood · Red Lobster Hospitality · est. 1968
Red Lobster is a casual-dining seafood restaurant chain serving shrimp, lobster, crab, and fish entrees. A franchisee operates a full-service restaurant with kitchen and dining room staff, serving families and seafood-focused diners.
Red Lobster net unit count declined -7.1% from 2023–2025 per its FDD Item 20.
New to franchising? Start here
A franchise is a business where you (the franchisee) pay a company (the franchisor) for the right to open and run a location using their brand and system — think a local Anytime Fitness or Taco John's owned by a small-business owner, not the corporation.
Before you can buy in, U.S. law requires the franchisor to give you a Franchise Disclosure Document (FDD) — a long legal filing covering its fees, finances, and history. The numbers on this page come straight from that document:
- Franchise fee — the one-time cost to buy in.
- Royalty — the ongoing cut of your sales you pay the franchisor.
- Item 20 — how many locations opened and closed, the basis for our verdict (from Proven & strong down to Distressed — or Too new to judge).
The verdict
Not enough disclosure
Distress
No verified FDD extraction to judge from. Any figures shown are labelled sample data or independent federal records.
Behind the verdict
the record, factor by factor · Item 20
3-yr trend · Item 20 Table 1
terminations + ceased-ops vs. all exits · Table 3
transfers vs. base · Table 3
actual vs. projected openings · Table 5
Item 19 disclosure + completeness
Systemwide units
2023–2025
Survival record
FDD Item 20 · outlet status by year
Show the outlet tables ↓Hide the evidence ↑
| Status (FTC) | 2023 | 2024 | 2025 |
|---|---|---|---|
| Outlets at start | 59 | 56 | 54 |
| Opened | 1 | 1 | 1 |
| Transfers | 1 | 1 | 1 |
| Terminations | 2 | 2 | 2 |
| Non-renewals | 1 | 0 | 0 |
| Reacquired by franchisor | 0 | 0 | 0 |
| Ceased — other reasons | 2 | 2 | 2 |
| Outlets at end | 56 | 54 | 52 |
| Net change | -3 | -2 | -2 |
What it costs — and what it drags
FDD Items 5–7 · fees, investment, royalty
To open (Item 7)
$2M–$5M
all-in investment range
Franchise fee (Item 5)
$50K
upfront, one-time
Royalty (Item 6)
4%
of sales, ongoing
Your figure — this brand discloses no Item 19 earnings; validate with current & former owners.
Royalty you'd pay / yr
$40K
4% of sales, before profit
Over a 10-yr term
$400K
royalties alone, excl. ad fund
This is not profit. It's the only money the FDD actually pins down — what you put in, and the royalty you owe on every dollar of sales. Your real take-home depends on labor, rent, food cost, and ramp-to-breakeven, none of which any FDD discloses.
Build a real pro-forma for Red Lobster with an independent CPALabor record
US Dept. of Labor enforcement · franchisee-level · FY2005–present
Federal investigators have concluded 11 wage cases against operators of this system, recovering $49K in back wages for 194 workers, including 1 child-labor case. Some of these cases are recent, not ancient history. These cases name franchisee-owned locations, not the franchisor itself.
Concluded cases
11
Back wages owed
$49K
Employees affected
194
Since 2020
3
1 of these cases involved child-labor violations, covering 3 minors across the system's franchised locations.
Read this carefully. The employers in these cases are individual Red Lobster franchisees — separately owned businesses operating under the brand name — not Red Lobster itself. The franchisor is not the respondent and in most cases is not a party. What the record shows is how this system's operators run their payrolls, which is worth knowing before you become one of them. Counts rise with system size and with age: a 20-year-old, 10,000-unit system will out-count a young one regardless of conduct. Source: DOL Wage and Hour Division concluded compliance actions, FY2005–present, most recent finding 2025.
Distress signals
news-sourced · bankruptcies, closures, lawsuits
Red Lobster closing Times Square location after 23 years: ‘This was a difficult decision’
news:New York Post · 2mo ago
Red Lobster in Times Square to close June 14 due to significant building construction impacts
news:ABC7 New York · 2mo ago
Longest-running Red Lobster location in America is closing after 56 years
news:Fox News · 2mo ago
A broker is paid by the franchisor to place you. An independent CPA is paid by you — and the job is pressure-testing Red Lobster's numbers, including talking you out of a bad deal.
Talk to an independent CPA before you buy →