When you generate a layout, as you have seen, the layout follows suit with what the Single Source Layout name is. So you may see a different response by creating a new layout and naming it appropriately.
Additionally, all the files inside the folder should work independently of the actual folder name. So even if you didn't know you could rename the layout, you could rename the folder without issues.
There's no reason for the franksTest folder to be a "part of the final project that goes with the software product."
Whether this is WebHelp or HtmlHelp (you didn't say), it's what is [i]inside[/i] that output folder that gets shipped.
In addition, you can change the folder location to anything you want, in the first field of the first page of the Generate wizard.
Finally, your Release Engineering peeps are in charge of naming the folder in which the help will reside (ours is cleverly called docs), whether it's distributed on a CD or hosted on your own web server.