How do franchises affect retirement plan coverage issues? As I understand franchises, the main company serves as a supplier, with certain expectations of levels of quality from the stores or restaurants.

The franchisee is a separate business entity from the franchisor. Example - Joe runs 5 franchises that sell "ACME" cartoon props. Joe's employees are NOT considered employees of ACME.

I agree with JanetM's statement, but it might be worth mentioning that Joe's 5 franchises will, indeed, form a controlled group.