A report by Oxford Economics, commissioned by the International Franchise Association, found the franchise model contributed $550 billion to the national gross domestic product
From 2021 to 2024, franchise employment grew by an estimated 7.3 percent, higher than the average growth rate of 6.7 percent across similar sectors during the same time.
One survey cited found franchise businesses on average reported sales 1.4 times as large as non-franchised businesses.
With the aim of educating legislators and encouraging entrepreneurs to consider the franchise model, the International Franchise Association released its “Value of Franchising” report this week.
In partnership with Oxford Economics, the IFA’s report includes a survey of more than 2,900 franchisees representing 13,000 franchised establishments, as well as an economic analysis comparing franchises with non-franchise employers and empirical evidence related to the model.
Michael Layman is chief advocacy officer for the International Franchise Association.
Michael Layman, chief advocacy officer for the IFA, said the reports have been released to coincide with start of the last two presidential administrations.
“It’s so we have new data on the economic and community contributions of franchising for whomever is in charge of Washington,” Layman said. “The 2021 report was extremely helpful for policymakers over the last four or five years, and we’re optimistic this will help market the franchise model in the years to come.”
At a macro level, the new paper notes the franchise model contributed $550 billion to the national gross domestic product and employed 8.8 million people in 2024. Additionally, between 2021 and 2024, franchise employment grew by an estimated 7.3 percent, higher than the average growth rate of 6.7 percent across similar sectors of the economy during the same period.
The report also cited an article from the Journal of Industrial Organization from 2024, which found that franchising a restaurant increased revenues by 7 percent. Another piece referenced was a 2018 article from the Journal of Economics and Management Strategy with data on the survival and growth prospects of franchised and non-franchised business. That article noted slightly higher rates of survival for franchised businesses, compared to non-franchised concepts.
The 2023 Annual Business Survey from the U.S. Census Bureau was cited in the report, too. Based on that survey, franchise businesses on average reported sales 1.4 times as large as non-franchised businesses.
“Franchising is at its peak economic footprint right now,” Layman said. “It has grown steadily and made up all of the losses since the pandemic. We’re expecting another favorable year in 2026. The reality of franchising is its still small businesses, predominantly, too, with 82 percent of franchisees owning one location. So, it’s a Main Street dominated business community.”
The entrepreneurial path for small businesses was highlighted in the document, with the report noting a strong community presence. Of the franchisees surveyed, 85 percent live and work in the community they’re in, and of the 830,000 franchise establishments, 52 percent are local brands, while just 15 percent have major, nationwide status.
Additionally, nearly half of franchises, 47 percent, have 25 units or fewer. Brands with more than 500 locations, meanwhile, represent just 7 percent, and concepts with between 101 and 500 represent 20 percent. Plus, on average, franchisees surveyed contribute to regional economies, as 40 percent of their input comes from local suppliers.
Of those surveyed, a sizable 30 percent also said they would not own a business if the franchise model wasn’t available. Applied across all franchising, that would translate to the loss of 80,000 businesses.
The report goes on to examine how franchising opens doors to entrepreneurs. Of those surveyed, just 32 percent said they were already a business owner. The paper also found franchising led to a higher rate of business ownership for people of color. In a 2023 business ownership survey, an estimated 19 percent of non-franchised businesses were owned by people of color, whereas around 26 percent of franchises were owned by people of color.
Another segment of the IFA’s report digs into franchising’s relation to the American job market, with data from a random sample of about 10,000 employers, half franchised and half non-franchised. The analytics found that among full-time, hourly workers at small businesses, there was no difference in wage rates between franchise and non-franchise employees overall, showing franchises offered pay on par with comparable, non-franchise firms.
However, the paper’s model suggests that, among those workers, wages tended to grow faster for franchise employees than for non-franchise employers by a small, but statistically significant amount. The data also found that retention rates for franchise businesses were better than their counterparts.
In the second month after initial employment, non-franchise workers were 16 percent more likely to leave their franchise counterparts. Workers at franchised establishments also switched from part-time to full-time faster than non-franchised businesses, on average.
“I think regardless of political party, in our current era of populism, there’s a real interest in worker outcomes,” Layman said. “What this report showed is that employees at franchised businesses experience faster wage growth, there was less turnover and more upward mobility. There’s also a higher likelihood of receiving benefits than non-franchised businesses.”