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Real-World Example

Consider the case of a hiring manager. It is impossible for one person to interview for each of the positions. Based on the job opening, she has to decide and delegate the interview steps to different people.

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In Plain Words

It provides a way to delegate the instantiation logic to child classes.

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Wikipedia Says

In class-based programming, the factory method pattern is a creational pattern that uses factory methods to deal with the problem of creating objects without having to specify the exact class of the object that will be created. This is done by creating objects by calling a factory method—either specified in an interface and implemented by child classes, or implemented in a base class and optionally overridden by derived classes—rather than by calling a constructor.

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Programmatic Example

Taking our hiring manager example above. First of all we have an interviewer interface and some implementations for it: 
interface Interviewer
{
    public function askQuestions();
}

class Developer implements Interviewer
{
    public function askQuestions()
    {
        echo 'Asking about design patterns!';
    }
}

class CommunityExecutive implements Interviewer
{
    public function askQuestions()
    {
        echo 'Asking about community building';
    }
}
Now let us create our HiringManager: 
abstract class HiringManager
{
    // Factory method
    abstract protected function makeInterviewer(): Interviewer;

    public function takeInterview()
    {
        $interviewer = $this->makeInterviewer();
        $interviewer->askQuestions();
    }
}
Now any child can extend it and provide the required interviewer: 
class DevelopmentManager extends HiringManager
{
    protected function makeInterviewer(): Interviewer
    {
        return new Developer();
    }
}

class MarketingManager extends HiringManager
{
    protected function makeInterviewer(): Interviewer
    {
        return new CommunityExecutive();
    }
}
And then it can be used as: 
$devManager = new DevelopmentManager();
$devManager->takeInterview(); // Output: Asking about design patterns

$marketingManager = new MarketingManager();
$marketingManager->takeInterview(); // Output: Asking about community building.

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When to Use?

Useful when there is some generic processing in a class but the required sub-class is dynamically decided at runtime. Or putting it in other words, when the client doesn’t know what exact sub-class it might need.
The Factory Method pattern is ideal when the exact type of object to be created is determined by subclasses at runtime, allowing for greater flexibility and extensibility.
The key difference between Simple Factory and Factory Method is that Factory Method delegates the creation logic to subclasses, while Simple Factory keeps it centralized in one place.

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