By Jonathan Maze
Restaurant Business

The franchising industry is expected to outpace broader economic growth for the second straight year in 2025, according to an annual economic outlook from the International Franchise Association (IFA) on Wednesday, as franchises add more units and hire more workers.

The trade group expects economic output to increase 4.4% this year to $936 billion. The study, done with the franchising research firm Frandata, expects the number of franchise locations to grow by 2.5%, or 851,000 in total. Franchises are expected to account for more than 9 million jobs, which would be up 2.4%.

In each case, the IFA said, the franchise sector’s growth is expected to outpace the overall economy. For instance, the Congressional Budget Office expects the domestic economy to grow 1.9% this year.

That would also make the second straight year that franchising outpaced overall economic performance. The data also reflects some optimism that this year will be better for many of the industries that use franchising to fuel growth.

“A more favorable economic and regulatory climate created new optimism and confidence for the year ahead,” IFA CEO Matt Haller said in a statement.

Fast-food restaurants are expected to help lead franchising growth this year. That’s key, because that industry accounts for more than a third of franchising economic output. The IFA expects that quick-service restaurant franchises will account for $322 billion in economic output this year, up 5.4% compared with last year.

Employment at fast-food restaurants—which accounts for 45% of the franchise workforce—is expected to top 4 million this year, up 2.6%. The number of fast-food franchise establishments is expected to grow 2.2% to 204,366.

Full-service restaurants, where franchising is less popular, are expected to generate $81.9 billion in economic output this year, up 2.4%.

Persistent inflation and higher costs ultimately hurt sales in restaurants and drove down traffic and helped lead to closures and bankruptcy filings and ultimately a big value push by summer.

But the report suggests lower inflation, stabilizing interest rates and improving consumer confidence could increase discretionary spending.

It also suggested that a return-to-office culture could boost breakfast and lunch sales this year.

Much of the growth in franchising is taking place along the East Coast. Eight of the 10 states where franchising is expected to grow the most this year are along the Atlantic Ocean, including every state from Pennsylvania to Florida.

Georgia is expected to be the leading state for franchising this year, with Frandata citing the state’s “business-friendly environment and economic and workforce development initiatives.” The number of franchise locations in the state is expected to grow 6.7% this year, according to the report.

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