Why do some franchise systems survive when others fail?

In a talk about why Howard Johnson’s Restaurants failed, advertising executive Lou Carbone spoke of working for the franchise system late in its lifecycle, when discussions focused on “taking a quarter of an inch off a straw” or “switching from four-ply napkins to two-ply” to save money for the system.  “It was all about value extraction,” he said.  “No one was thinking about value creation for the customer.  No one understood what these clues and signals meant.”   Customers do understand, however, and when quality disappears from the system, customers will disappear as well.