Why do fast food companies usually franchise their restaurants instead of operating the locations themselves?

Question

Why do fast food companies usually franchise their restaurants instead of operating the locations themselves?

In: 101

Answer 1

People work harder when they’ve got skin in the game. A huge part of owning a franchise for a major company like McDonald’s is making sure you meet their standards and reflect positively on their brand at all times. If you had to pay $1million in licensing fees to open a McDonalds and they can pull it if you don’t measure up, you’re going to work hard to measure up.

If you try to run a major franchising operation with manager employees, you have to have a lot of oversight or you tend to suffer from complacency when people are only showing up for the paycheck.