Following a year of macroeconomic headwinds, franchise businesses remain resilient & poised for continued growth; Child services and commercial and residential services among the fastest-growing industries; Southeast and Southwest remain fastest-growing regions

WASHINGTON D.C.  – The International Franchise Association (IFA) today released its annual Franchising Economic Outlook showing that franchise businesses enter 2026 positioned for a year of growth after 2025 was marked by macroeconomic turbulence. The 2026 Franchising Economic Outlook projects over 12,000 new franchised businesses in 2026, with economic output rising by 1.6%, exceeding $920 billion dollars, and the creation of nearly 8.9 million jobs.

The full report is available here.

“The resilience of franchising has enabled our model to adapt, endure and thrive in the face of challenging macroeconomic headwinds,” said Matt Haller, IFA President and CEO. “After a year of recalibration, franchising is better positioned to navigate an improving economic environment than independent businesses due to tax certainty, lower interest rates and investments in AI that will propel brand growth, franchisee unit level economics and wage growth for the franchise workforce.”

Key findings from the 2026 Franchising Economic Outlook include:

  • The number of franchise establishments will grow from 832,521to 845,000 units – an increase of 1.5%.
  • Franchise employment is anticipated to increase by more than 150,000 jobs (1.8%) to nearly 8.9 million jobs.
  • Franchise output is expected to rise from $907.3 billion to $921.4 billion – an increase of 1.6%.
  • Total franchise GDP is estimated to grow by 1.8% from $549.9 to $558.4 billion.
  • Fueled by business-friendly policies, lower cost of living, and population growth, the Southeast and Southwest regions are expected to maintain their positions as the top regions for franchised business expansion in the United States, growing at rates of 1.7% and 2.5%, respectively.
  • The top 10 fastest-growing states for franchising in 2026 are: Texas, Florida, Georgia, Arizona, North Carolina, Colorado, Michigan, Utah, Ohio, and Maryland.
  • Michigan, Ohio, and Utah have emerged as new entrants among the top 10 states due to their comparative affordability, expansion potential, and meaningful opportunities for market leadership.

Child services and commercial and residential services are expected to be the fastest growing industries at a year‑over‑year rate of 3.2%. Other notable trends among industries include:

  • For the first time since the pandemic, full-service restaurants are expected to outpace quick service restaurants (QSR) in output growth. At QSR, consumer preferences are shifting toward “experiential dining” rather than purely value-driven offerings.
  • With youth unemployment at 10.4% in 2025, franchise establishments play an increasingly important role in creating labor demand for young people entering the workforce and supporting overall labor market resilience.
  • In the lodging industry, high-income consumers continuing to spend on personalized and “experiential luxury travel,” while value consumers are expected to scale back their spending.
  • Since the pandemic, rising awareness of preventive healthcare has propelled the sector to become the third-largest franchised industry.
  • Successful single-unit franchisees are increasingly reinvesting in additional locations, transitioning into multi-unit operators, seeking scale, and leveraging operational expertise.

“After a challenging operating environment in 2025, the economic outlook for franchising remains strong,” said Darrell Johnson, CEO of FRANdata. “While persistent macroeconomic factors remain, the economic outlook for franchising in 2026 is poised for continued growth and expansion across various sectors.”

Conducted by FRANdata, an industry-leading research and analytical firm, the 2026 Franchising Economic Outlook is IFA’s annual study detailing the franchise sector’s performance for the past year and projected economic outlook for the year ahead, as well as an in-depth state outlook for all 50 states and Washington, D.C.

The report comes on the heels of IFA’s Value of Franchising report showing that franchises have stronger wage growth, better benefits, greater business ownership opportunities, and more generous community contributions than non-franchise businesses.

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About the International Franchise Association:

 Celebrating over 60 years of excellence, education, and advocacy, the International Franchise Association (IFA) is the world’s oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations, and educational programs to protect, enhance and promote franchising and the 832,000 franchise establishments that support nearly 8.8 million direct jobs, $907.3 billion of economic output for the U.S. economy, and almost 3 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees, and companies that support the industry in marketing, law, technology, and business development.

Press Contact

Katherine Knight Patterson
Katherine Knight Patterson

VP, Communications

202.662.0783

kpatterson@franchise.org

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