For one thing, it enables careers instead of just jobs - In'n'Out employees are promoted all the way up the corporate chain, moved to launch new locations, and generally signals to employees that if they want to spend next 40 years working for the company, they will not be seen as failures by their peers, parents, significant others, children and people at high school reunion.
With franchised restaurants the promotion ladder looks like employee -> manager -> dead-end.
With franchised restaurants the promotion ladder looks like employee -> manager -> dead-end.