Regardless, corporate is always incentivized to help their franchisees succeed; they wouldn't really have a business without them, and of course they want their cut of sales/profits to be a higher absolute value.
Also a common area of abuse. There was a sandwich shop chain in the US where this got very ugly a few years ago...
https://www.restaurantbusinessonline.com/financing/brief-his...
Even for a more "traditional" franchise, where the franchisee is responsible for all the start-up costs, even $50k is small peanuts compared to the full cost to bring the restaurant up from scratch. Calling that "predatory" feels like a gross exaggeration.
Also Quiznos collapsed and was blamed for one franchisees eventual suicide due to their predatory tactics that locked franchise owners into paying high ingredient costs that they could not make a profit on.
Also, bear in mind that the franchise's corporate brand reputationsuffers when a franchise fails, so there's inherently some risk sharing.
[Agreeing] There are massive costs (relatively speaking) for an independent involved in just learning/optimising the supply chain. With a franchise you, presumably, can skip this which gives a huge head start.
Also if it's a brand chain then you have the benefit of brand level advertising (which works at a different psychological level to shop/activity/product advertising) which should be more efficient per "lead".
They tend to target unemployed middle-aged managers, since that audience is often driven by ego to "be the boss" and has the disposable funds to pony up a large setup fee. I was aggressively targeted when I was laid off last year.
What they didn't know - until we got on the phone - is I'm the target prospect from hell. I certainly have the funds; however, I got them via two decades of finance and strategy work. Old habits die hard. Due Diligence? Don't mind if I do...
I was polite but I laid out my expectations in financial terms based on investments in businesses of similar size. Actual deals which I had managed. Made it clear I had the funds to deliver if they could meet my goals in writing.
They ran like hell.
However, in the meantime, I wound up speaking with a diverse assortment of scum, villainy, and ineptitude.
Independent restaurants, if they hit their market, run into the same problem with landlords, who want to take the profit from exorbitant rents after the the lease expires.
This naturally means it's very hard to qualify for one.
As such, it is necessary to vet the potential franchisee to ensure they're going to support and improve your brand image rather than damage it. Requiring a "deposit" as such is part of this, as the franchisee will need to at least recover the amount invested by providing good service.
It is fried chicken after all - hardly a challenging item to cook, but to perfect it as a recipe, scale and process for "Nextgrid's artisan non franchised fried chicken" will take probably more than $10k and worse of all will take a lot of time in which you will be paying rent and salaries.
International agreement?
The franchise brand owner had no incentive, so while it's possible to abolish them through government. It's not clear why we'd go that direction. Given the franchise brand owner takes on additional risk it's not clear why they'd move to take on risk without gain
He had managers on every shift running day to day so he never really needed to visit the store, but he did a couple times a week anyway to show face with the staff and even step onto the line and bag orders if it got swamped while he was there, simply to lighten the load on the staff.
If this had been an independent restaurant, he might have been doing things like cooking in the back 12 hours a day to lower his payroll. Predatory is not the word I would use for most franchises these days; passive income is the word I would use.
What incentivizes the new location to do due-diligence in picking a good location? If this is placed into the chain owner: What's the difference between a franchise vs single owner?
Even for a Subway. Earning back $350,000 takes a lot of sandwiches.
Apparently too many subways has caused bully by Subway the corporation of franchisees over good locations.
The parent company has no interest in that location ever closing. They're not house flippers or day traders. They rely on stable long-term income, not random tiny spikes a few times a year. Franchise fees are barely even a blip on the radar of a company like McDonald's.