A look back at the franchise industry, exploring the year’s challenges, successes, and trends, while anticipating what is on the horizon for 2025.
The franchise industry in 2024 experienced a mix of ups and downs, shaped by economic fluctuations, technological innovation, and evolving consumer demands. As we look back, the trends and developments that defined the year will set the stage for what lies ahead in 2025.
According to the International Franchise Association’s (IFA) 2024 Economic Outlook, the franchise sector was projected to grow to over 821,000 establishments, contributing approximately $890 billion to the U.S. economy, with a 4.1% increase in sales. This growth was fueled by several thriving segments, showcasing the industry’s resilience and adaptability to market trends.
Home services, child-focused concepts, and the pet industry were standout performers in 2024. The food sector, a long-time staple of the industry, saw fast-casual and quick-service restaurants leading the charge, driven by their focus on convenience and affordability. At the same time, personal services like health and wellness, fitness, and educational programs saw impressive growth, focused on well-being and self-improvement.
Still, the year wasn’t without its challenges. Inflation and the uncertainty surrounding the election added pressure to the franchise industry. Rising costs strained operations, while some held off on big decisions during the election season. With that chapter behind us, people are now moving forward with plans to grow as franchisees or franchisors. There is hope that easing inflation will bring more stability in the year ahead.
One of the brightest signs of confidence in franchising was the continued surge in multi-unit expansion. While single-unit franchises remain popular, more entrepreneurs are recognizing the advantages of scaling with multiple locations or territories. Multi-unit ownership has become a key growth model, allowing franchisees to maximize opportunities and franchisors to expand their networks faster. This trend shows the growing confidence in franchising as a scalable and profitable business model, positioning the industry for continued growth and success in 2025.
This year more young entrepreneurs are entering the industry right out of school, eager to take advantage of franchising’s potential for success. Alongside this, there is a rise in women pursuing franchise opportunities, adding new and fresh perspectives to the industry. Some of these newcomers are opting for a semi-absentee model, where they manage their franchise while still maintaining income from other sources. This flexibility makes franchising accessible to a broader range of individuals fueling industry growth.
The confidence in franchising is also evident in the year’s most recently announced acquisition of Blackstone’s purchase of a majority stake in Jersey Mike’s. These acquisitions are expected to accelerate growth, leveraging the acquiring companies’ resources and expertise in scaling franchise businesses. They also foster innovation by providing franchises with access to advanced technologies and best practices in business management.
With all the technological waves in 2024, artificial intelligence and automation are playing a bigger role in franchise operations. Franchisors are using these tools to simplify processes, enhance customer experiences, and improve efficiency.
Looking ahead to 2025, the franchise industry is positioned for continued growth, with these key trends shaping the path forward. The resilience demonstrated across various segments, from home services to fast-casual restaurants, highlights how adaptable the industry is to shifting consumer demands and that adaptability will remain in the year ahead.
Excitement is building as more young entrepreneurs and women join the franchising world, bringing fresh perspectives and energy to the sector. At the same time, technological advancements, particularly in AI, will continue to evolve the industry. The trend of high-profile acquisitions will continue, as investors seek opportunities to capitalize on the growth potential of franchise businesses. These strategic partnerships will likely drive further expansion and innovation, positioning franchises for success in an increasingly competitive marketplace.
More and more franchisors and franchisees will integrate AI solutions to streamline their operations, enhance customer experiences, and unlock valuable insights. This technological shift will not only improve efficiency but also create more personalized and responsive interactions, setting the stage for even greater success in the coming year.
As we transition from 2024 to 2025, the franchise industry is positioned for another strong year. With a focus on adaptability, technology, and innovative strategies, franchises that embrace these practices will stand out in the market. The year ahead promises even more opportunities for success, making it an exciting time for both new and experienced franchisees and franchisors to thrive in the evolving industry.
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