UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

~~December~~February 2215, ~~2004~~2005 (Date of earliest event reported)

CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III

(Exact Name of Registrant as Specified in Its Charter)

Delaware	~~333~~33-~~9371~~77510-C	38-3160141
(State or Other Jurisdiction	(Commission File Number)	(IRS Employer Identification No.)
of Incorporation)
24 Frank Lloyd Wright Drive
Lobby L, 4th Floor
Ann Arbor, Michigan		48106
(Address of Principal Executive Offices)		(Zip Code)

(734) 994-5505
(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d- 2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e- 4(c))

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d- 2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e- 4(c))

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Item 1.0201. ~~Termination~~Entry ofinto a Material Definitive Agreement Item 9.01. ~~Forward-Looking~~Financial Statements and Exhibits SIGNATURES Exhibit Index Agreement of Sale

~~Section~~ Item 1.01. —Entry ~~Registrant’s~~into ~~Business~~a ~~and~~Material ~~Operations~~ Definitive Agreement.

~~Item~~ On 1February 15, 2005, Captec Franchise Capital Partners L.02P. ~~Termination~~III (the “Partnership”) and Gibraltar 1031 Restaurants, LLC (“Gibraltar”) executed an Agreement of aSale ~~Material~~(the ~~Definitive~~“Agreement”) pursuant to which the Partnership has agreed to sell to Gibraltar ten of the Partnership’s properties and certain real property leases related to such properties for an aggregate purchase price of $17,125,000. Under the Agreement, the purchase price may be adjusted if, among other things, less than all the properties set forth in the Agreement are sold to Gibraltar due to the exercise by tenants of certain rights of first refusal contained in the property leases.

OnThe ~~December 22,~~closing ~~2004,~~of GEthe ~~Franchise~~transactions ~~Finance~~contemplated ~~Corporation~~by ~~(“GE~~the ~~Capital”)~~Agreement ~~elected~~is tocontingent ~~terminate~~upon athe satisfaction of certain ~~Agreement~~customary ofconditions ~~Sale~~set (forth more fully in the “Agreement”), ~~dated~~including satisfactory ~~November 19,~~completion ~~2004,~~of due diligence review by ~~and~~Gibraltar. In addition, the closing is further contingent upon the contemporaneous closing of a separate agreement of sale between ~~Captec~~Gibraltar and Captec Franchise Capital Partners, L.P. ~~III~~IV (~~the~~ “~~Partnership~~LP IV”), ~~and~~an GEaffiliate ~~Capital.~~of ~~There~~the isPartnership, ~~no material~~governing ~~relationship~~the ~~between~~sale ~~the~~of ~~Partnership~~twelve orproperties ~~its~~owned ~~affiliates~~by ~~and~~LP GEIV. ~~Capital,~~The ~~other~~parties ~~than~~to inthe ~~respect~~Agreement ofanticipate that the ~~Agreement~~closing will occur on or before June 15, 2005.

~~Under~~There ~~the~~is ~~Agreement,~~no ~~the~~material ~~Partnership~~relationship ~~agreed~~between ~~to sell to GE Capital twelve of~~ the Partnership~~’s properties,~~ ~~and~~or ~~certain~~its ~~real~~affiliates ~~property leases, equipment~~ and ~~equipment leases related to such properties~~Gibraltar, ~~for an aggregate purchase price of $20,565,000. The Agreement provided that the~~ ~~purchase price could be adjusted if, among~~ other ~~things, less~~ than ~~all the properties set forth~~ in ~~the~~ ~~Agreement~~respect ~~were sold to GE Capital due to the exercise by tenants~~ of ~~certain rights of first refusal contained in~~ the ~~property leases or for certain changes in the 10 Year U.S. Swap Interest Rate Index. The~~ Agreement also provided that GE Capital’s obligations under the Agreement were contingent upon the satisfaction of certain conditions, which included, among other things, the condition that GE Capital obtain all necessary board of directors’ and related investment approvals for the transactions contemplated by the Agreement.

OnItem ~~December 22,~~9.01. ~~2004,~~Financial GEStatements ~~Capital informed the Partnership that it was electing to terminate the Agreement on the basis that GE Capital was unable to obtain the necessary board of directors’~~ and ~~related investment approvals for the transactions contemplated by the Agreement~~Exhibits. ~~The Partnership did not incur any material early termination penalties in connection with the termination of the Agreement.~~

~~Forward~~(a) No financial statements are required to be filed as part of this Form 8-~~Looking~~K. ~~Statements~~ (b) No pro forma financial information is required to be filed as part of this Form 8-K. (c) The following exhibit is filed as part of this Form 8-K:

~~This~~99 ~~Form~~Agreement ~~8-K contains forward-looking statements, which are any statements other than statements~~ of ~~historical~~Sale ~~fact.~~between AsGibraltar ~~utilized~~1031 ~~in this document~~Restaurants, ~~words~~LLC ~~such as “intends,” “anticipates,” “expects,” “will,” “could,” “estimate”~~ and ~~similar~~Captec ~~expressions~~Franchise ~~are~~Capital ~~intended~~Partners ~~to identify such forward-looking statements~~L. These forward-looking statements, including statements concerning anticipated future revenues, by their nature involve substantial risks and uncertainties, many of which are beyond the Partnership’s control and the Partnership’s actual results may differ materially depending on a variety of important factorsP. ~~You should not place undue reliance on these forward-looking statements~~III, ~~which~~dated ~~speak~~February only as of the date of this Form 8-K. The Partnership disclaims any obligation to update or revise these forward-looking statements to reflect events or circumstances after the date of this Form 8-K or to reflect the occurrence of unanticipated events15, ~~except as may be required by law~~2005.

~~Table~~Forward-Looking ~~of Contents~~Statements

~~SIGNATURES~~ This Form 8-K contains forward-looking statements, which are any statements other than statements of historical fact. As utilized in this document, words such as “intends,” “anticipates,” “expects,” “will,” “could,” “estimate” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements, including statements concerning anticipated future revenues, by their nature involve substantial risks and uncertainties, many of which are beyond the Partnership’s control and the Partnership’s actual results may differ materially depending on a variety of important factors. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this Form 8-K. The Partnership disclaims any obligation to update or revise these forward-looking statements to reflect events or circumstances after the date of this Form 8-K or to reflect the occurrence of unanticipated events, except as may be required by law.

PursuantTable to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Contents

~~CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III~~SIGNATURES

By:		GP3 Asset Acquisition, LLC
		General Partner of Captec Franchise Capital Partners L.P. III
By:		/s/ Patrick L. Beach
		Patrick L. Beach
		President
Date:		December 28, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III


By:		GP3 Asset Acquisition, LLC
		General Partner of Captec Franchise Capital Partners L.P. III

By:		/s/ Patrick L. Beach

		Patrick L. Beach
		President

Date:		February 18, 2005

Exhibit Index


Exhibit No.		Description
99		Agreement of Sale between Gibraltar 1031 Restaurants, LLC and Captec Franchise Capital Partners L.P. III, dated February 15, 2005.

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PursuantTable to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Contents

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