By Michael Layman, International Franchise Association (IFA)

The franchise sector continues to demonstrate resilience, adaptability, and strength as we move deeper into 2025.

IFA’s 2025 Franchising Economic Outlook, released in February, along with our 2025 IFA Franchisor Survey, paints a cautiously optimistic picture for the business model — one that shows another year of record growth, while highlighting the need for permanent policy solutions that enable, rather than hinder, the success of Main Street franchise businesses.

According to this year’s Economic Outlook, franchises are projected to add over 221,000 jobs and grow by more than 15,000 establishments nationwide, with total output expected to reach $893.9 billion. This is the second year in a row where the growth of franchising has exceeded the growth of the broader economy. These numbers represent not just an economic rebound, but a sector moving full speed ahead — creating opportunities in local communities, offering pathways to entrepreneurship, and fueling the American economy.

Franchises are projected to:

• ADD OVER 221,000 JOBS
• GROW BY MORE THAN 15,000 ESTABLISHMENTS
• REACH $893.9 billion TOTAL OUTPUT

But our optimism is tempered by the clear message we’ve heard from franchisors and franchisees alike: growth is not guaranteed. The 2025 IFA Franchisor Survey revealed several pressing challenges on the horizon. Chief among them are inflation-driven cost pressures, persistent labor shortages, and an increasingly complex regulatory environment. Nearly 70 percent of franchisors reported difficulty finding qualified workers, and more than half cited concern over regulatory uncertainty impacting expansion plans.

The reality is that while franchising continues to outperform other small business sectors, it does so in spite of, not because of, shifting policy dynamics. Franchising depends on a clear, stable framework that supports the independence of franchisees and encourages investment in new businesses. We’re seeing real momentum across industries — from restaurants to health services to education — but that momentum is at risk without supportive, pro-growth policies.

For example, franchise businesses have faced four different versions of the joint employer standard over the last decade. While business owners have learned to adapt, it has come at the expense of the franchisor-franchisee relationship, harming their employees and consumers in the process. Further, without congressional action, all small businesses could face a tax increase at the end of 2025.

Now is the time for lawmakers to double down on what works. That means protecting the franchise model, resisting one-size-fits-all regulations that blur the lines between franchisors and franchisees, and promoting legislation that will support small businesses and help entrepreneurs get started and grow.

Franchising represents more than just business growth — it’s about local impact. Franchise businesses support veterans, open doors for underserved communities, and offer upward mobility in communities across the country. At IFA, we remain committed to working with leaders at every level to ensure this business model continues to thrive – and reach even new heights into the next year.

The 2025 outlook confirms what we’ve always known: franchising is strong, resilient, and filled with potential. But to fully unlock that potential, we need smart policies that reflect the realities of today’s economy and the promise of tomorrow’s entrepreneurs.

Let’s keep franchising growing — for our communities, our workforce, and our future.

Michael Layman is the chief advocacy officer for the International Franchise Association.