The franchisor gains fast and well-controlled distribution of its products without incurring the high cost of constructing and operating its own outlets. The franchisor thus has more capital available to expand production and to use for advertising. At the same time, it can ensure, through the franchise agreement, that outlets are maintained and operated according to its own standards.
The franchisor also benefits from the fact that the franchisee -a sole proprietor in most cases - is likely to be very highly motivated to succeed. The success of the franchise means more sales, which translate into higher royalties for the franchisor.