"So is the main concept behind a franchise that of a compromise between setting up on your own and working for a company." == So, is [the main concept [behind a franchise]] [*the concept* of [a compromise between [setting up on your own] and [working for a company]]? "that" is a pronoun here. It refers to a word that has appeared before, "concept" in this case, to mean "the same thing as that". You can think of a simpler example like this: - The population of China is much greater than that of Russia.