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

Because franchisees pay the franchisor anywhere from 5% to 10% of their gross or net sales. It is a great way for the parent company to have consistent cash flow and expand quickly, without taking on the capital costs themselves. It is brilliant.