This study investigates the configurations that promote the performance of franchise systems. Drawing on the dynamic capabilities perspective, we describe franchise capabilities and propose a model that consistently articulates dynamic capabilities, operational capabilities (know-how), franchise ownership strategy (plural form versus “turnkey” franchisors), and franchise system performance. Using a configurational (fsQCA) approach on a sample of 119 France-based franchisors, we investigate the interplay of sensing and adaptive capabilities, business know-how and organizational know-how, and franchise ownership strategy that potentially drive franchise system performance. We contribute to the franchising literature by providing a nuanced understanding of how franchise systems should manage their capabilities, depending on their development strategies.