Steady growth in franchising predicted for 2026; fastest-growing states are...
Franchise businesses enter 2026 positioned for a year of growth following a year of macroeconomic turbulence.
More than 12,000 new franchised businesses are expected to open this year, according to the International Franchise Association’s (IFA) annual Franchising Economic Outlook. The report projects the economic output of franchise businesses rising by 1.6%, exceeding $920 billion dollars.
Fueled by business-friendly policies, lower cost of living and population growth, the Southeast and Southwest regions are expected to maintain their positions as the top regions for franchised business expansion in the United States, growing at rates of 1.7% and 2.5%, respectively, the report found.
The top 10 fastest-growing states for franchising in 2026 are: Texas, Florida, Georgia, Arizona, North Carolina, Colorado, Michigan, Utah, Ohio and Maryland. Michigan, Ohio and Utah have emerged as new entrants among the top 10 states due to their comparative affordability, expansion potential and meaningful opportunities for market leadership.
Other insights from the IFA report are below.
•The number of franchise establishments will grow from 832,521 to 845,000 units, an increase of 1.5%.
•Franchise output is expected to rise from $907.3 billion to $921.4 billion – an increase of 1.6%.
•Total franchise GDP is estimated to grow by 1.8% from $549.9 to $558.4 billion.
•Since the pandemic, rising awareness of preventive healthcare has propelled the sector to become the third-largest franchised industry.
•Successful single-unit franchisees are increasingly reinvesting in additional locations, transitioning into multi-unit operators, seeking scale, and leveraging operational expertise.
•Franchise employment is anticipated to increase by more than 150,000 jobs (1.8%) to nearly 8.9 million jobs.
“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,” said Matt Haller, IFA president and CEO.
Conducted by FRANdata, an industry-leading research and analytical firm, the 2026 Franchising Economic Outlook is IFA's annual study detailing the franchise sector's performance for the past year and projected economic outlook for the year ahead, as well as an in-depth state outlook for all 50 states and Washington, D.C.
"After a challenging operating environment in 2025, the economic outlook for franchising remains strong," said Darrell Johnson, CEO of FRANdata. "While persistent macroeconomic factors remain, the economic outlook for franchising in 2026 is poised for continued growth and expansion across various sectors."
