Franchising Outpaces Broader Economy for Second Consecutive Year

WASHINGTON — Franchising continued to exceed economic expectations in 2024 and is set for another strong year in 2025, according to a press release from the International Franchise Association (IFA). Despite economic uncertainties and policy challenges, the franchise sector outperformed projections last year and is expected to grow at an even faster pace in the coming months.

The IFA’s 2025 Franchising Economic Outlook highlights that franchise growth in 2024 reached 2.2%, surpassing the 1.9% projection. For 2025, the report forecasts 2.4% growth, outpacing the 1.9% economic growth projected for the broader U.S. economy by the Congressional Budget Office (CBO). This continued expansion underscores the resilience and adaptability of the franchise business model.

Key Growth Projections for 2025

• The number of franchise establishments is expected to increase by more than 20,000 units (2.5%), bringing the total to 851,000.
• Franchise employment is projected to grow by 2.4%, adding approximately 210,000 jobs for a total of over 9 million franchise jobs.
• Total franchise output is expected to reach $936.4 billion, a 4.4% increase from 2024.
• Franchise GDP (gross domestic product) will grow 5% to reach $578 billion.

Strongest Sectors and Regions

Personal services and retail food, products and services are expected to be the fastest-growing franchise industries in 2025, with projected increases of 4.3% and 3.5%, respectively.

Regionally, the Southeast and Southwest are forecasted to see the highest franchise growth, with franchise output expected to rise by 6.2% and 8.5%, respectively. Business-friendly policies and lower costs of living in these areas are fueling expansion.

The top 10 fastest-growing states for franchises in 2025 include Georgia, North Carolina, Virginia, Arizona, South Carolina, Pennsylvania, Tennessee, Florida, Colorado and Maryland.

Optimistic Industry Outlook

Matt Haller, president and CEO of IFA, emphasized the resilience of franchising in challenging economic conditions. “A more favorable economic and regulatory climate has created new optimism and confidence for the year ahead,” Haller said.

Darrell Johnson, CEO of FRANdata, echoed this sentiment, noting that franchising surpassed projections despite labor concerns. “With inflation easing and interest rates declining, the economic outlook for franchising in 2025 is strong,” he said.

The 2025 Franchising Economic Outlook was conducted by FRANdata, an industry-leading research firm, and provides an in-depth analysis of franchise performance across all 50 states and Washington, D.C.

As franchising continues to drive job creation and economic growth, the IFA’s latest report suggests a promising year ahead for franchise investors, operators, and employees alike.

Read the original press release here.

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