What are you giving up? Food quality, for one. In all my years of working fast-food and the few years I spent in buffet and casual dining environments, I have yet to come across anything that was pre-cooked and frozen that tastes as good as fresh prepared (if you've ever bought those Wan-Chai Ferry, P.F. Chang, or Romano's Macaroni Grill frozen meals, you'll know what I'm talking about). Sure it takes longer, but there is a noticable enough difference in the quality. If you start out that way, or go to that really quickly before you grow too big, the loss in customers won't be as great so there is no worry and it's just what people will expect already. Also, staff training is another issue. By franchising out, you cannot take as personal an interest in the training regimen or in the quality of the new hires as you would normally do if say you had a small to medium sized chain, I imagine large, non-franchise chains have a training quality issue as wekk, but they have corrective issues they can take directly that would include escalating the issue right up into corporate headquarters. With a franchise you have a customer service line that gets in touch with the licensor who gets in touch with the particular liscensee. The level of care there will vary widely.
Who should franchise? Those who want to expand quickly, have basic training guidelines (including customer care aspects), and can afford to hope for the best. Who shouldn't franchise? Anyone who cares more then a little as to the look, feel, and quality of each restaurant. If you want to maintain that level of concern, don't franchise. Chain out, open up corporate headquarters and work diligently to set in place policies that will satisfactorily handle not only inter-employee disputes but employee-customer issues (while customer-only issues will still be a high priority and should remain a top priority). If you've been watching undercover boss, I would strongly encourage all business owners to do something similar. Good practices need to be pointed out and rewarded and bad practices need to be ferreted out and, if the people who are the source do not want to change, the source needs to be cut out without a second thought. This is your business, after all. It is your name and your companies image that is at stake here. It's not all about profit-vs-loss. There are no acceptable risks when you can mitigate or even out right eliminate behavior that would lead to loss.
This means a reform in union thinking, too. Yes, people need to work and deserve fair wages, but not if they are doing a bad job and will not unlearn those behaviors leading to bad performance. Reward those who are performing about expectations, keep them and those who are performing at level. Get rid of anyone and everyone else without a second thought.