This paper develops an agent-based model to examine the creation of reputation and the problem of free riding within franchising networks. In the model, individual heterogeneous franchisees as agents operate their unit on a profit and loss basis. Each seeks to attract customers, who are autonomous and floating through the marketplace. The franchisees must choose whether to free ride, at some cost, or to contribute to the overall reputation by upholding quality standards even when it is costly to do so. We allow the franchisor to select incentives (royalties) and inspection probabilities. The model provides a tool and a methodology for examining questions of the aggregation of individual behavior into chain performance. Our analysis, methods, and results have general implications for designing and operating franchise chains and other distributed networks of service providers where reputation is shared across multiple service units.