What I believe shops should be (and do) anno 2013 is to offer facilities. Gear rentals, agreements with pools for rental times, sales and consumables (air etc).
Shops should *charge* instructors for organising these services and allow instructors to offer their own courses based on hiring these services from the shop. Discounts and agency interfacing can also be organized by the shop, for minimal overhead.
This way individual instructors can pull as hard as they want on any of the three corners of the time-quality-money triangle and the shop can offer an variety of options for students with different needs.
However, this is a serious paradigm shift for many shops (and instructors) and although I see this happening around me, we haven't navigated this corner yet.
R..
I feel particularly fortunate to have stumbled upon an independent operation (two guys) which A. does not retail any equipment and has no retail store front to keep afloat Ha! pun. I have to admit I really really like their whole approach and will be doing my AOW and Nitrox through them.
I've read this thread with interest, and since we've had significant input from Europe and North America, let me weigh in from Asia and describe my own approach, which, while perhaps not the most typical model here, is far from uncommon.
What I do is very much like what Rob outlines and what Kev appreciates. Although by law I have a fully-registered dive business so in one sense I'm a "shop," I don't have a shopfront or a retail store, so in another I'm "independent." I have cooperative arrangements with a variety of dive-related businesses to support my teaching. I don't have to have a stock of student manuals since I can just go pick them up at trade price as I need them; I have only the smallest inventory of equipment for sale (at the moment 5 masks, 2 pairs of fins, and one dive computer) since I can just walk into the distributors' showrooms here with my divers, talk them through their options, and earn a commission on the sale; I don't have a large classroom with a video theatre since I teach one-on-one and I can just pop the DVD into a personal viewer and hand it to the student, but if I do get a group, I can just reserve a classroom from a number of different places for a small fee; I don't have an enormous pool--mine will fit two or three divers--but if I need a bigger one, I can easily just pay a daily rate at a huge pool affiliated with a hotel near here; I take the five tanks I use for pool and shore dives to a local filling station whose sole business is filling tanks (yes, they make a profit) rather than running/maintaining a compressor myself; I book space on local boats at student rates and go aboard at no additional cost along with my students.
It works. Each element of the dive industry here relies on the other, from the tank filling guy to the boat operators to the equipment sales places. Very few try to do it all--the equipment stores don't offer courses for the most part, the training places don't stock much major gear, the boats don't have retail equipment outlets (though they might have a few things on display, particularly dive computers, masks, and fins), and so on. One big umbrella company here--one that was a scuba pioneer on the island back in the day and started out with a grass shack on the beach--has evolved in much the way I presume that Rob envisions, and is actually a corporation with training facilities under one brand, retail and wholesale outlets under separate brands, a liveaboard (originally in Thailand, but now in Indonesia) under a fourth brand, a day boat under a fifth brand, and a hotel on top of it all. Each one of these subsidiary businesses cooperates with any other dive business on the island--their dayboat will accept divers from other training facilities, their wholesale shop sells to any retail operation or independent at trade prices, their hotel takes in non-divers (!), and so on.
What I do need, as an independent, is a stock of rental gear, a library of instructor materials like all the DVDs, extras like dive lights for night diving training, compasses for nav, emergency oxygen and the reg set next to my pool, etc. that some of my colleagues who teach only through bigger training facilities don't have to provide on their own. I can recall being shocked at how much initial capital expenditure it took for me to get the basics for those things, but now it's just a matter of replacement and maintenance for equipment and updated materials for teaching (e.g., I have to budget for the new EFR stuff that has just come in here).
I will say, though, that from a prospective student's perspective, it's harder to sell a course as an independent than it is as a shop. Somehow students are wary that if we're not formal employees of a brick-and-mortar store we're somehow unreliable, fly-by-night instructors. I've been glad to be able to reassure some of my divers that my business here, though in some sense "independent" is actually a formally registered dive operation according to the Ministry of Commerce and that my banks have enough confidence in my business to award me with a credit card merchant number. Sometimes it takes a lot of convincing to keep a student interested in working with me rather than going to the shop that by dint of having a store appears to be more legitimate.