Jersey Mike's requires 70% less capital than McDonald's to open. By eliminating drive-thrus and complex equipment, it offers franchisees a rapid 2.5-year payback. This low-cost, simple-to-operate model is the key to its rapid expansion and attractive IPO valuation.

Challenging the 'founder-led is best' mantra, Domino's has successfully compounded shareholder value for nearly 30 years after its founder sold his stake. This demonstrates that a strong business model and capital allocation strategy can be more important than a founder's continued presence for long-term success.

Instead of traditional corporate loans, Domino's finances itself by pledging its royalty streams and IP as collateral for asset-backed notes. This "whole business securitization" model allows it to secure lower interest rates, providing a cost of capital advantage to fund its share buybacks.

Despite paying fees to delivery aggregators, Domino's EBITDA margins have climbed. This is primarily due to a strategic shift away from lower-margin corporate-owned stores toward the higher-margin franchise royalty model, alongside benefits from supply chain scale and operating leverage.

The potential scale for a multi-unit franchisee is enormous. The Flynn Group, a family-run franchisee operator, generated over $6.3 billion in revenue, surpassing the total revenue of entire franchisor brands like KFC, Domino's, and Popeyes. This demonstrates that top operators can build empires larger than the parent companies.

To avoid the conflicts that sank competitors like Quiznos, Domino's offers franchisees a 50% share of operating income from its supply chain. This brilliantly turns a potential point of contention (forced purchasing of ingredients) into a mutual incentive for growth and quality control.

For two decades, Domino's translated modest top-line growth into impressive earnings-per-share growth through aggressive share buybacks. This highlights how effective capital allocation can be a primary value driver in a mature, cash-generative business, even more so than revenue growth itself.

Domino's operates a small number of its own stores not primarily for revenue, but to better understand the operational challenges its franchisees face. This "skin in the game" approach helps mitigate the natural tension between franchisor and franchisee, fostering a healthier system-wide culture.

The power of franchising lies not just in a popular product, but in a system that is incredibly simple, focused, and repeatable. Wingstop's success shows how this allows others to easily replicate the business, funding growth and brand expansion without sacrificing quality.