This study attempts to clarify how the chain and franchising systems create the knowledge via dual embeddedness (i.e., market embeddedness and system embeddedness) to improve their performance. This research targets the headquarters of plural-form chain and franchising systems as the respondents to conduct the empirical survey. Results from the 66-observation survey indicate the following evidences. Firstly, network connection, trust relations, shared cognition, competitors' involvement, and inter-branch coordination are beneficial for the knowledge integration between the franchisor and their franchisees; shared cognition and competitor's involvement are helpful to improve their knowledge sharing. Secondly, market embeddedness contributes to improve system embeddedness. Thirdly, knowledge integration presents positive effects on business- and customer-related performance; knowledge sharing raises customer-related performance. This study also provides some discussions, suggestions, and managerial implications for the future academic and practical efforts.