Franchising Set for Positive Growth in 2026 Despite Previous Economic Challenges

A Positive Economic Outlook for Franchising in 2026

The International Franchise Association (IFA) has released its annual Franchising Economic Outlook for 2026, painting a promising picture for the franchise sector after enduring the challenges of the previous year. Despite facing macroeconomic headwinds in 2025, the franchising model has showcased its resilience, adapting well to changing conditions and positioning itself for robust growth in the coming year.

Key Predictions for 2026

The report anticipates the establishment of over 12,000 new franchised entities in 2026, an encouraging indication that business owners are optimistic about the economic landscape. The total economic output from franchise businesses is expected to increase by 1.6%, potentially hitting over $920 billion. Furthermore, the growth in jobs linked to the franchise sector is forecasted to approach 8.9 million, contributing to a much-needed boost in employment.

Positive Economic Factors

"The resilience of franchising has allowed it to navigate through challenging times and emerge stronger," remarked Matt Haller, IFA President and CEO. He noted that favorable economic conditions such as stable tax policies, reduced interest rates, and advancements in technology, particularly artificial intelligence, are driving brand growth and enhancing economic metrics at the unit level.

Growing Franchise Landscape

The number of franchise establishments is projected to rise from 832,521 to 845,000 units, reflecting a 1.5% increase. With employment in franchising estimated to surpass 8.9 million, representing a 1.8% growth, the franchise model continues to play a significant role in the job market.

The GDP contribution from franchises is set to increase as well, growing by 1.8% from $549.9 billion to $558.4 billion. This positive growth trajectory is particularly pronounced in regions such as the Southeast and Southwest, where the franchise sector is expected to expand at rates of 1.7% and 2.5%, respectively.

Fastest Growing States and Industries

The IFA identifies Texas, Florida, Georgia, Arizona, North Carolina, Colorado, Michigan, Utah, Ohio, and Maryland as the top ten fastest-growing states for franchises in 2026. Notably, states like Michigan and Utah have made their debut in the top tier, driven by their affordability and favorable business conditions.

Among the industries leading this growth, child services along with commercial and residential services are anticipated to emerge as the quickest growing segments, with a yearly growth rate of 3.2%. Moreover, full-service restaurants are expected to outgrow quick service restaurants, reflecting a shift in consumer preferences towards dining experiences rather than just value-oriented options.

Youth Employment and the Franchise Sector

As youth unemployment reached 10.4% in 2025, franchises have increasingly stepped up to create job opportunities for younger workers. This sector not only fosters job creation but also strengthens the overall labor market, proving its vital role in economic recovery and development.

In the lodging and luxury travel sectors, high-income consumers are looking for personalized experiences, while lower-income brackets are cautious about their spending. Since the pandemic, there has been a noticeable increase in demand for preventive healthcare, propelling it to become the third-largest franchised industry, reflecting changing consumer priorities.

A Strong Future for Franchising

Darrell Johnson, CEO of FRANdata, emphasized that despite ongoing economic uncertainties, the sector is poised for continued growth across multiple industries in the year ahead. The 2026 Franchising Economic Outlook serves as a comprehensive analysis of the franchise system's past performance and projected success, underscoring its robustness even in volatile times.

As sectors align with a favorable economic backdrop, the franchising model remains not just a career path for many but a cornerstone for job creation and economic stability in the U.S. market. Celebrating its 60 years, IFA continues to advocate for franchising, representing hundreds of thousands of franchise establishments that collectively support millions of American jobs and boost the national economy.