Because the oil is cheaper per bottle/jug than the big brands right next to it on the shelf. So the more they sell, the more money they likely make, compared to Mobil, Castrol, Valvoline, etc.
Now instead of choosing between $9.95/qt for Mobil 1 and "Carquest" oil, consumers can choose between Mobil 1 and Fram. Fram is a recognizable brand in it's own right - not just a house brand.
Same reason AutoZone started selling "STP" oil. Same reason Wal-Mart oil is branded as SuperTech instead of Sam's Choice.