The number of franchises in the U.S. is expected to grow this year, with the Southwest and Southeast regions holding their positions as the top areas for business expansion, according to recent data.

The number of franchise establishments is expected to grow by 1.5 percent this year over last, from 832,521 to 845,000, reports the 2026 Franchising Economic Outlook, published by the International Franchise Association (IFA) and FRANdata.

The top 10 fastest-growing states for franchising in 2026, according to the report, are Texas, Florida, Georgia, Arizona, North Carolina, Colorado, Michigan, Utah, Ohio and Maryland.

Is Franchising Still a Good Business Model?

The franchising model remains a viable option in 2026, primarily because many of the benefits and opportunities for entrepreneurs and business owners are present.

“Owning a franchise is, in some respects, a classic example of the American dream,” writes Kevin Williams in a CNBC story. “Business textbooks and websites are packed with case studies of bootstrap-pulling businessmen and women who have prospered through franchising.”

Franchising offers a unique blend of independence and support, explains the International Franchise Association.

“Franchisees own and manage their business, but they don’t have to start from scratch,” says a post on the group’s website.

The 2026 Franchising Economic Outlook predicts continued growth in the U.S. franchise sector, despite a challenging macroeconomic environment, notes Christina Niu, director of research at FRANdata, on the company’s website.

Franchised businesses, she says, continue to outperform many independent small businesses during periods of economic stress. 

“Centralized purchasing, brand recognition, franchisor support, and scale-driven efficiencies have helped franchise systems manage input costs and preserve pricing flexibility,” Niu writes.

“These advantages remain a primary reason franchising has been able to sustain growth even as consumer demand softens and credit conditions remain tight.”

The U.S. franchise sector will add 12,000 new units and exceed $921 billion in economic output, reaching a total of 845,000 establishments and supporting 8.9 million jobs, according to the outlook report.

Why Franchises Work

Joining an established and proven business model offers many benefits, including immediate brand recognition and consumer trust, as well as a path to a faster launch, says the International Franchise Association.

“Within established brands, franchisees can avoid many of the trial-and-error challenges faced by independent business owners,” the group says.

According to the IFA, 64 percent of franchisees are first-time business owners.

Franchisee benefits include access to the franchisor’s broader marketing and advertising initiatives, and a built-in network of other franchisees who can provide invaluable support and shared experiences.

Franchised business expansion in the Southeast and Southwest is growing at rates of 1.7 percent and 2.5 percent, respectively, says the report. The growth is attributed to the regions’ business-friendly policies, lower cost of living, and population growth, the outlook report said.

“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,” it says.

The fastest growing sectors for franchises this year, according to the forecast, are in the child services and commercial and residential services industries.

A franchising trend in recent years involves “mobile-first businesses that leverage smartphones and apps to deliver services directly to customers,” according to the CNBC article.

“These franchises often center around filling in the gaps in a customer’s life whether it be dog poop scooping, mobile car detailing, cleaning dryer vents or, fueling up your car,” Williams writes.

In the CNBC story, Brian Luciani, chief growth officer at SMB Franchise Advisors, says this type of franchise opportunity is built on the premise and promise of leveraging the flexibility and low overhead of a lean model while still providing a solid franchise support system behind them.

For more about franchises, see 3 Ideas to Help You Find Your Own Niche Franchise and What You Should Know About Buying a Franchise.