I like the franchise idea. I know British Airways has done some of that in South Africa and the UK, but I don't know if it works well or not.
As for the labor situation, that's why I eliminated telephone res sales. A travel agent is much more efficient if the agent doesn't have to use a GDS to access inventory. Southwest doesn't participate in any except Sabre. And a travel agent who doesn't sell doesn't cost the company in salar/benefits. "DuxfanAir" could even use it to their advantage.
2X2 seating? I don't know.... That business model doesn't seem to work well for Midwest Express, because you need the higher yield to offset the loss of seats. MRTC seems to have worked at AA. The customers like the increased legroom, and it has allowed AA to reduce the number of seats sold at fire sale prices, thereby increasing yields. But maybe a 3X2 seating config, like the old Air Canada domestic FC product could work?