For example, there are some custodians out there that do not cooperate in processing the transfer out of the IRA LLC as direct-rollover to another IRA or a 401k even though they are required to do so.

To do so, you will need to find a custodian allowing alternative investments, open new account with them and fund it with the rollover from your existing IRA.The income from the property owned by the IRA belongs to the IRA.

You can also set up a self-directed Traditional IRA and fund it with a rollover from your 401k (if eligible for rollover). 

If your goal is to open a franchise, specifically, and aren't just looking for an investment for your IRA and your IRA is not a ROTH, you might research doing a different arrangement known as ROBS (RollOver as a Business Startup). 

I know I can switch or roll over to my current employer 401K (which I'm currently investing the minimum match). 

Account ClosedIt depends on what you mean by investing in a business.To invest in your own business, you must use a Rollover as Business Startup (ROBS) plan. 

Find a lender willing to be in 2nd position or find family or friends willing to invest in your project---if they have IRAs, they can roll over into a self-directed and invest in your project. 

This will give them ability to rollover other retirement accounts and make new contributions.

Should he just rollover and die?

In fact, I was able to rollover my 401k into a self-direct IRA which I use for RE.