Franchise Industry Projects Growth for 2025 Despite Economic Uncertainty
Amid uncertainty in the economy—from stock market declines to inflation and tariff worries—the franchise industry remains poised for growth in 2025 according to the latest economic projections from industry leaders IFA (International Franchise Association) and FRANdata. Despite ongoing market fluctuations, franchising options remain appealing to entrepreneurs and business buyers due to their proven business model, brand recognition, favorable financing, and reduced risk.
Franchise Growth Outpacing the Broader Economy
The resilience of the franchise model is evident in the numbers, with franchises expected to expand by 2.5% to 851,402 units in 2025 according the IFA and FRANdata’s annual franchisor survey. This growth is accompanied by a projected 2.4% increase in employment, creating jobs for over 9 million Americans. Most notably, total franchise output is projected to reach $936.4 billion—representing a 4.4% increase over the previous year.
Franchise industry growth is projected to outpace the U.S. economy growth this year. A franchise GDP growth rate of 5%—reaching $578 billion—outperforms the projected U.S. economy growth of 1.55%. This differential highlights the continued appeal of the franchise business model as a vehicle for economic expansion even during periods of broader market uncertainty.
Factors Driving Franchise Growth
The modest yet steady growth projected for the franchise sector stems from several key factors. In today's economic climate, franchising offers entrepreneurs and business buyers a proven business model with established brand recognition. The training and support provided by franchisors helps to reduce some of the risks of business ownership, making franchising particularly attractive during periods of economic uncertainty.
As customer preferences and market demands continue to evolve, franchises are well-positioned to adapt quickly. Service-focused franchises in particular are capitalizing on consumers' desire for convenience and quality, while still accommodating budget-conscious spending habits.
Regional Growth Leaders
Franchise growth in 2025 will vary across different geographic regions, with the Southeast and Southwest continuing to outpace the rest of the country. The Southeast region is projected to see 6.2% output growth, while the Southwest is forecasting an impressive 8.5% output increase.
This regional disparity reflects ongoing population shifts, with many Americans continuing to relocate to southern states. Seven of the top 10 states for franchise growth are located in these regions.
These top 10 states benefit from favorable business climates, growing consumer bases, and relatively strong labor markets, creating opportunities for franchise expansion.
Industry Sector Outlook
Despite economic headwinds, the service industry continues to demonstrate resilience. Personal services franchises are leading the pack with a projected 4.3% growth, reaching 132,045 units. This sector—encompassing fitness centers, beauty services, and personal care businesses—reflects consumers' ongoing prioritization of self-care and wellness services even during periods of economic uncertainty.
The food sector remains a franchise powerhouse, with retail food, products, and services growing 3.5% to reach 185,408 units. Meanwhile, Quick Service Restaurants continue their steady expansion at 2.2%, bringing their total to 204,366 establishments nationwide.
Opportunities for Business Owners and Entrepreneurs
For business owners contemplating their next move, and for entrepreneurs looking to enter the market, franchising continues to offer advantages in 2025. The combination of proven business models, brand recognition, and operational support helps mitigate the risks associated with business ownership during uncertain economic times.
As we navigate through 2025, the franchise industry's ability to outperform general economic growth demonstrates its value as a business strategy that combines entrepreneurial initiative with systematic support and proven business models. Search BizBuySell's directory of hundreds of franchise opportunities for sale and find the franchise that's best for you.