[JamesBarney]

My interpretation of what he says was basically McD's has more leverage. Part of establishing a restaurant is establishing enough return clientele at a certain location. And a large portion of the clientele might stay with the owner if it turned into a Jack in the Box. But this number drops off a cliff if it's also across the street. So the BATNA for a non-McDonalds franchisee is just switching franchises, and taking a hit to their business. But the BATNA for a McDonald's franchise is starting all over again.

[fraserharris]

Actually, the book expands on that. Originally, McDonald's franchise agreements had exclusive territories (in fact, a franchise agreement could be for an entire region/state/country). McDonald's franchise agreements eventually specified a particular address (own by McDonald's) without any exclusive territory. If you lose the rental of that property, you lose the ability to run the franchise.

[greedo]

Yup, our owner/operator didn't always like to follow the company line, and was rewarded by a new franchisee an exit north of his highest volume location. Of course his agreement gave him right of refusal for the new location, but the numbers didn't add up; so Oak Brook found a willing franchisee who ended up spending a fortune for a relatively low performing store. Eventually that location paid off (20 years of growth will do that), but for the original owner/operator, he saw a 25% yoy decline in sales. Oak Brook has a huge amount of leverage to keep franchisees in line and quiet.