Excellent post. I have some experience with the franchise...

Excellent post. I have some experience with the franchise industry, not rfg in particular, your post certainly rings true from what I've seen in this sector.
McDonalds as an example is in a completely different league to most of the outlets in rfg.
My research is at least a few years old, so these numbers will have moved and are just indicative. At the time average revenue for a McDonalds store in Aus was around $2m, with the franchisee taking home on average around 15% of that or $300k. I think the average investment amount was also around $2m but this is from memory so not sure if that number is solid. May not sound like a huge return given the time commitment, but consider that banks will usually lend around 70% for a McDonalds (such a good reputation) so capital injection required by the franchisee would be around $600k. Plus McDonalds requires the franchisee to have additional liquidity, I can't remember how much but it was significant, lets say $500k.
You can see in this scenario all parties get a good return on their investment. The franchisee does well, the franchisor does well (through franchise fees and rent), and the lender also does well. Risk is minimised through careful selection and training of the franchisees, who are required to be well capitalised and can't have any other business interests to distract them. The proven model means despite the hurdles there's plenty of demand to be a franchisee.
Compare this to the many small franchises operating in the fast food and coffee space. Shopping centres have housed many failed franchise stores in this space. The franchisors in their quest to expand entice franchisees into leases where rent is often 20-30% of revenue, leaving little opportunity to profit. The franchise unfortunately is incentivised by the upfront franchise fee it collects (often around $40k), and the income stream. The franchise has very little negotiating power with the shopping centre, and the shopping centre is also incentivised in a way that is detrimental to the franchisee, they want to maximise rent and have as many retail outlets as they can fit. The sugar hit of income for the franchise when they sign up a new franchisee unfortunately attracts unscrupulous operators with good sales skills.
Not saying rfg are still in this category (I don't know), but I can't see much competitive strength in their business model. Their stores by and large are leased, giving reduced security of long term tenure and lower negotiating power compared to McDonalds, which owns many of its locations. The stores don't have a strong history of profitability, with many closing in the last few years. This leads to lower demand for their stores, which in turn reduces the quality and balance sheet position, on average, of the franchisees they bring into the business.
Share price has dropped which is why I'm looking at it, but at this stage I'm still not tempted to buy.