The franchise sector demonstrated significant resilience and growth through the first quarter of 2026, driven by a surge in mergers, acquisitions, and private equity investment. According to data released by the International Franchise Association (IFA) and research firm FRANdata, the total economic output of franchised businesses in the United States is projected to reach $921.4 billion by the end of 2026. This represents a 1.6% increase over the $907.3 billion recorded in 2025, signaling a steady recovery following a period of macroeconomic volatility and high interest rates that characterized the previous year.
The first quarter saw a notable acceleration in deal-making as franchisors and multi-unit operators sought to capitalize on stabilizing market conditions and improved consumer sentiment. Industry analysts noted that M&A activity has become a primary engine for expansion, with many brands using acquisitions to enter new markets or diversify their service offerings. This trend is reflected in the projected growth of franchise establishments, which is expected to rise by 1.5% to approximately 845,000 units nationwide by year-end. This expansion includes the anticipated launch of more than 12,000 new franchised businesses throughout the 2026 calendar year.
Employment within the sector also remains on an upward trajectory, providing a significant contribution to the broader labor market. The IFA report forecasts that the franchise industry will support nearly 8.9 million direct jobs by the close of 2026, an increase of more than 150,000 positions or 1.8% compared to 2025. This growth in the workforce is particularly evident in high-demand segments such as personal services and healthcare, where the franchise model has proven effective at scaling specialized labor and meeting localized demand.
Regional performance has been led by the Southeast and Southwest, which continue to attract the highest volume of new franchise development. Texas, Florida, and Georgia remain the top states for expansion, fueled by business-friendly regulatory environments and consistent population growth. Additionally, states like Michigan, Ohio, and Utah have emerged as top-ten growth markets in 2026, as operators seek out lower-cost regions with untapped market potential and favorable unit-level economics.
Matt Haller, President and CEO of the IFA, stated that the resilience of the franchise model has allowed it to thrive despite the headwinds faced in 2025. He attributed the current momentum to increased tax certainty and strategic investments in technology, particularly artificial intelligence, which have improved operational efficiency. Darrell Johnson, CEO of FRANdata, added that the uptick in private equity activity during the latter half of 2025 has carried over into 2026, providing the capital necessary for large-scale consolidations and the rise of sophisticated multi-unit ownership groups.
From a sector perspective, child services and commercial and residential services are anticipated to be the fastest-growing categories, with a projected year-over-year growth rate of 3.2%. Meanwhile, full-service restaurants are expected to outpace quick-service brands in output growth as consumer preferences shift toward experiential dining rather than purely value-driven offerings. Total franchise GDP is estimated to grow by 1.8% to $558.4 billion, further cementing the sector's role as a cornerstone of the U.S. economy.