Mary Vinnedge, FranchiseWire

With More Than 20,000 New Units and 210,000 jobs, Franchising Keeps Expanding

Franchising will continue its steady growth in the United States, adding 20,000-plus units this year, according to the 2025 Economic Outlook report released Wednesday by the International Franchise Association. That level of unit growth would reflect a 2.5% expansion of the franchising sector and an increase to 851,000 total units operating around the country.

The new report, produced annually by the IFA, also forecasts that franchising will add some 210,000 jobs across the nation, a 2.4% hike. The 2025 Economic Outlook also looked back at what franchising accomplished in recent years to chart its overall growth trajectory. For instance, employment increased 2.2% in 2024, with 189,000 people landing newly created jobs in franchising.

The report was prepared for the IFA by FRANdata, which provides a thorough and independent analysis of anticipated performance and challenges. The FRANdata team draws on franchising’s largest database of the business model’s operations to deliver its insights and predictions.

Franchising Statistics

Following are additional noteworthy statistics from the report:

• Total franchise output is projected to exceed $936.4 billion in 2025, rising by 4.4%, from $896.9 billion in 2024. Franchise output is defined as the total value of sales of goods and services.
• Spurred by business-friendly policies and a lower cost of living, growth in the Southeast and Southwest is expected to outperform other regions, with output rising 6.2% and 8.5%, respectively. The 10 states where franchising will experience the greatest expansion will be Georgia (with the most growth), followed by North Carolina, Virginia, Arizona, South Carolina, Pennsylvania, Tennessee, Florida, Colorado and Maryland.
• Franchise gross domestic product, or GDP, will rise 5% to a total of $578 billion.
• Franchising’s growth will outpace that of the overall U.S. economy. A forecast by the nonpartisan Congressional Budget Office indicates that the nation’s GDP will increase by just 1.9% in 2025.

Other 2025 Economic Outlook Findings and Predictions

The 2025 Economic Outlook states that the fastest-growing segment within franchising will be personal services, at 4.3%. The personal-services franchise category runs the gamut from beauty, health and fitness to moving and storage, education, childcare, sports/recreation, pets, and travel.

Second in growth this year will be the retail food, products and services segment, at 3.5%. Retail food, products and services encompasses food and beverage stores; convenience stores; food-service contractors; caterers; retail bakeries; beer, wine and liquor stores; gas stations with convenience stores; motor-vehicle parts and supply stores; home furnishings stores; electronics and appliance stores; building material and garden equipment sellers; drugstores and health supplement stores; beauty supplies; optical goods; clothing; office supplies; florists; gift shops; bookstores; photographic services; rental services; and various other retailers of consumer goods and services.

FRANdata analysts took a deep dive into forces propelling the growth in personal services. Researchers found that emerging and established brands in niche markets are flourishing, especially the ones serving Americans born in or after 1996. Those highly specialized companies provide consumers with, for instance, cold plunges, mental health therapy, intravenous vitamins, sauna services, physical therapy (especially needed by older Americans), sports-related services, and children’s enrichment and general childcare. The report notes that demand within the sector “remains robust,” although one area – traditional fitness centers – faces stiff competition.

Conclusions and Concerns

“The resilience of the franchise business model not only helped the sector survive the uncertainty of recent years, but thrive in the face of challenging economic conditions,” IFA President and CEO Matt Haller said in announcing the report’s availability. “A more favorable economic and regulatory climate have created new optimism and confidence for the year ahead.”

One big help for businesses has been the stabilizing labor market, which experienced a big gap between job openings and job seekers in 2022-2023. Wages jumped during that time, but that seems to be in the rearview mirror. Paychecks rose just 3.9% during the third quarter of 2024 as compared to 4.5% during the same period in 2023, according to FRANdata. This reflects a cooling labor market, although employers hiring for lower-wage jobs may still need to go above the minimum wage to fill positions, analysts speculated in the report.

While franchisors and franchisees are less worried about labor shortages at present, labor costs do remain concerning. The FRANdata report points out that 21 states will boost minimum wages this year, posing an additional burden for low-wage businesses such as fast-food restaurants. The data analysts said companies may get relief from labor costs by tapping advances in automation and technology, including the use of artificial intelligence (AI).

To read the full report, click here.