Franchising Sector Continues to Thrive with Strong Growth in 2025, Defying Economic Trends
The recent report from the International Franchise Association (IFA) reveals that the franchise industry has surpassed economic expectations for the second consecutive year. For 2025, the IFA forecasts a robust growth of 2.4% in franchise establishments, building on a 2.2% increase from the previous year. While the broader economy is projected to grow at a slower 1.9%, franchises are positioned to continue leading the way in economic recovery.
The IFA's annual Franchising Economic Outlook highlights several crucial trends that indicate a strong trajectory for the franchise sector. One key finding is that the number of franchise locations is expected to grow by over 20,000 units, reaching a total of 851,000. This growth is a positive sign for an industry that has shown resilience amid economic challenges.
Furthermore, it is estimated that franchising will add approximately 210,000 jobs in 2025, which marks a 2.4% increase in employment opportunities within the sector. In total, franchising employment should surpass 9 million positions, reinforcing its role as a significant job creator in the economy. In 2024 alone, the sector contributed over 189,000 new jobs, showcasing the ongoing demand for services and products offered by franchises.
Looking at financial projections, total franchise output is anticipated to exceed $936.4 billion in 2025, reflecting a 4.4% increase from 2024. This economic activity translates into a growth in Franchise GDP, which is expected to rise by 5%, amounting to $578 billion. These figures underscore the franchise industry's capacity to stimulate economic performance even in uncertain times.
According to the report, personal services and retail food and products are forecasted to be the fastest-growing segments, with expected increases of 4.3% and 3.5%, respectively, in 2025. This trend highlights the changing preferences of consumers, who are increasingly favoring personalized services and accessible food options.
In terms of geographical distribution, the Southeast and Southwest regions of the United States are forecasted to experience the most substantial growth. Business-friendly policies combined with a lower cost of living are drawing franchise investments, with output in these areas expected to grow by 6.2% and 8.5%. Notably, states like Georgia, North Carolina, Virginia, and Florida are listed among the top ten for franchise growth, signaling vibrant local economies that are conducive to business expansion.
Matt Haller, President and CEO of the IFA, points to the resilience of the franchise business model as a key factor in overcoming the uncertainties of recent years. The ability of franchises to adapt to economic fluctuations is boosting confidence among potential investors and entrepreneurs, making 2025 a promising year for those looking to enter or expand within the franchise market.
Meanwhile, Darrell Johnson, CEO of FRANdata, reiterates the optimism surrounding the franchise economy, particularly as inflation eases and interest rates decline. These favorable conditions present a backdrop for further growth and diversification across various sectors, reflecting an era of renewed enthusiasm for franchising's potential.
In summary, the 2025 Franchising Economic Outlook paints a compelling picture of an industry poised to thrive despite broader economic challenges. As the sector expands and adapts, it continues to play a pivotal role in job creation and economic growth, suggesting that franchising will remain a major contributor to the U.S. economy in the years to come.
Key Insights from the Report
The IFA's annual Franchising Economic Outlook highlights several crucial trends that indicate a strong trajectory for the franchise sector. One key finding is that the number of franchise locations is expected to grow by over 20,000 units, reaching a total of 851,000. This growth is a positive sign for an industry that has shown resilience amid economic challenges.
Furthermore, it is estimated that franchising will add approximately 210,000 jobs in 2025, which marks a 2.4% increase in employment opportunities within the sector. In total, franchising employment should surpass 9 million positions, reinforcing its role as a significant job creator in the economy. In 2024 alone, the sector contributed over 189,000 new jobs, showcasing the ongoing demand for services and products offered by franchises.
Looking at financial projections, total franchise output is anticipated to exceed $936.4 billion in 2025, reflecting a 4.4% increase from 2024. This economic activity translates into a growth in Franchise GDP, which is expected to rise by 5%, amounting to $578 billion. These figures underscore the franchise industry's capacity to stimulate economic performance even in uncertain times.
Sector-Specific Growth
According to the report, personal services and retail food and products are forecasted to be the fastest-growing segments, with expected increases of 4.3% and 3.5%, respectively, in 2025. This trend highlights the changing preferences of consumers, who are increasingly favoring personalized services and accessible food options.
In terms of geographical distribution, the Southeast and Southwest regions of the United States are forecasted to experience the most substantial growth. Business-friendly policies combined with a lower cost of living are drawing franchise investments, with output in these areas expected to grow by 6.2% and 8.5%. Notably, states like Georgia, North Carolina, Virginia, and Florida are listed among the top ten for franchise growth, signaling vibrant local economies that are conducive to business expansion.
Industry Confidence and Outlook
Matt Haller, President and CEO of the IFA, points to the resilience of the franchise business model as a key factor in overcoming the uncertainties of recent years. The ability of franchises to adapt to economic fluctuations is boosting confidence among potential investors and entrepreneurs, making 2025 a promising year for those looking to enter or expand within the franchise market.
Meanwhile, Darrell Johnson, CEO of FRANdata, reiterates the optimism surrounding the franchise economy, particularly as inflation eases and interest rates decline. These favorable conditions present a backdrop for further growth and diversification across various sectors, reflecting an era of renewed enthusiasm for franchising's potential.
In summary, the 2025 Franchising Economic Outlook paints a compelling picture of an industry poised to thrive despite broader economic challenges. As the sector expands and adapts, it continues to play a pivotal role in job creation and economic growth, suggesting that franchising will remain a major contributor to the U.S. economy in the years to come.
Topics General Business）
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