The U.S. franchise industry is projected to expand in 2026 after a challenging 2025, according to the 2026 Franchising Economic Outlook released this month by the International Franchise Association (IFA). The annual forecast predicts that franchise businesses will add more than 12,000 new units next year, support nearly 8.9 million jobs, and push total economic output above $920 billion.
“The resilience of franchising has enabled our model to adapt, endure and thrive in the face of challenging macroeconomic headwinds,” said Matt Haller, President and CEO of IFA. “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.”
The IFA forecast shows that the number of franchised establishments is expected to rise from about 832,521 to roughly 845,000 units, an increase of around 1.5 percent. Employment across franchise operations is also predicted to grow by roughly 150,000 jobs, while total output climbs 1.6 percent, and franchise‑generated GDP increases 1.8 percent.
Geographic and Sector Dynamics
Industry analysts expect the Southeast and Southwest to remain the fastest‑expanding regions for franchise development in 2026, driven by lower living costs, favourable business policies, and robust population growth. States topping the growth list include Texas, Florida, Georgia, Arizona, North Carolina, Colorado, Michigan, Utah, Ohio, and Maryland.
Certain franchise sectors are also poised for above‑average growth. Child services and commercial and residential service businesses are projected to grow at more than 3 percent year‑over‑year. For the first time since the COVID‑19 pandemic, full‑service restaurants are anticipated to outpace quick‑service restaurants in output growth as customer preferences shift toward experiential dining.
Darrell Johnson, CEO of FRANdata, the research firm that conducted the study for IFA, said the overall outlook remains positive despite lingering economic pressures: “After a challenging operating environment in 2025, the economic outlook for franchising remains strong. While persistent macroeconomic factors remain, the economic outlook for franchising in 2026 is poised for continued growth and expansion across various sectors.”
Leaders within the broader franchise community have also highlighted franchising’s role in supporting economic stability and opportunity. In recent IFA statements, executives pointed to franchising as a major engine of job creation and economic mobility that helps young workers enter the labour market and supports small business ownership nationwide.
