Most people still picture fast-food when they hear the word “franchise.” Yet fast-food accounts for only about a quarter of U.S. franchise establishments today. Three-quarters of the sector now spans business services, residential services, lodging, personal services, retail and more. And these businesses are quietly shaping how Americans work, start companies and build local communities.
A new 2026 report by Oxford Economics for the International Franchise Association Foundation puts hard numbers behind something industry insiders have known for years. Franchising is one of the most powerful and misunderstood engines of opportunity in the U.S. economy.
Exploring 5 Unique Superpowers of Franchising
Franchising is a massive but underappreciated economic engine.
Franchising is no niche model. In 2024, U.S. franchise establishments generated about 550 billion in GDP and employed nearly 8.8 million people—roughly 5.5% of all U.S. employment. There were more than 830,000 franchise establishments nationwide, cutting across almost every sector of the economy.
And it’s growing faster than the broader market. Between 2021 and 2024, franchise employment grew 7.3%, outpacing similar sectors of the economy at 6.7%. Franchise GDP is projected to grow 5% annually, versus about 1.4% for the U.S. GDP.
Franchising offers better jobs, faster progression and stronger retention.
One of the most striking findings in the report is about job quality. Using anonymized data from Paychex payroll records, researchers compared franchises with similar non-franchise small businesses, controlling for industry, location, firm size, tenure and more.
Key findings:
Wages at franchised and non-franchised businesses are essentially on par once you control for comparable characteristics, but wages tend to grow faster over time for franchise employees.
Retention is materially better in franchising. In the second month after hire, non-franchise employees were 16% more likely to leave than franchise employees, rising to 34% in month six and 49% by month twelve.
Part-time workers at franchises move up faster. In the second month after initial employment, part-time franchise employees were about 20% more likely to switch to full-time roles than similar non-franchise workers, with that effect persisting over the first year (even if later estimates lose statistical significance).
Benefits are where the gap really shows up. Working at a franchised business was associated with a 37% point higher likelihood of receiving key benefits compared to working at a comparable non-franchised business. Franchise employees were:
6.5% points more likely to receive paid sick leave
5.7% points more likely to receive health insurance
Survey data from franchisees echo this too. An estimated 58% of franchise workers have access to employer health insurance and around 73% receive paid vacation, holiday and sick leave—meeting or beating coverage rates at small establishments more broadly.
In other words, the “fissured workplace” critique doesn’t hold up cleanly when you look at the data. Franchises look a lot like (and often better than) comparable local independent businesses on pay—and they outperform them on upward mobility and benefits.
Franchising offers a powerful on-ramp for first-time, diverse entrepreneurs.
Franchising also serves as a founder factory, especially for people who might otherwise never start a business. In an Oxford Economics survey of nearly 3,000 franchisees (covering more than 13,000 establishments):
64% said their franchise is the first business they have ever owned.
30% said they would not own a business at all if they were not franchisees.
When you scale that out to the full U.S. franchise population, the researchers estimate that without the franchise model, the U.S. would have roughly:
80,000 fewer businesses
215,500 fewer local franchise establishments
4 million fewer jobs
That “I wouldn’t be a business owner without franchising” sentiment is especially concentrated among women, first-time owners and single-unit operators.
The model is also meaningfully more diverse than the independent small-business universe. Using the Census’ 2023 Annual Business Survey, the report finds:
About 26% of franchise businesses are owned by people of color, versus about 19% of non-franchised businesses.
Franchise firms tend to be larger. Overall, franchises report sales about 1.4X higher and employment about 2.1X higher than non-franchised businesses.
For Black American owners, franchise firms earned about 2.3X as much in sales as Black-owned non-franchise firms.
Among veteran owners, franchise firms earned 2.7X as much as veteran-owned non-franchise businesses.
Why? Franchisees plug into an existing brand, playbook and peer network. In the survey, the most valuable types of franchisor support cited were:
Access to a network of other franchisees (65% said it’s “very important”)
Franchisee training (64% said that’s “very important”)
Technology platforms for marketing, operations and data (64% also said “very important”)
For first-time owners and women, access to the brand’s franchisee network was even more critical. This combination of brand, training and systems effectively lowers the barrier to entry for capable operators who don’t have deep capital, connections or time to invent a concept from scratch.
Franchises are locally owned, locally embedded and locally generous.
Despite the national brands on the sign, the report underscores that most franchisees are deeply local operators. About 85% of franchisees surveyed own and operate businesses in the town or region where they live. They hire local workers, buy from local suppliers and give to local causes.
Some standout numbers are as follows:
On average, franchisees purchase about 40% of their inputs from local suppliers. And over half purchase at least 25% locally.
About 83% of franchisees donated to local charities in the prior year.
Aggregated nationally, U.S. franchisees donated an estimated $2.3 billion to charity, raised $2.6 billion and sponsored roughly 34 million hours of volunteer activity in the last financial year.
The average franchise business donated over 12,000, raised about 14,000 more and sponsored around 190 hours of staff volunteering in a single year.
The report cites research on brands like McDonald’s showing that franchise systems are often deliberately structured to leave a meaningful share of profits in the hands of local owner-operators, keeping income and wealth in the communities where those businesses operate, rather than fully centralizing it at headquarters.
Franchising is an evergreen, 300-year-old growth hack.
The report traces the model all the way back to an early franchise agreement in 1731 between Benjamin Franklin and Thomas Whitmarsh for a printing shop. The core logic hasn’t changed. An anchor brand pairs its IP and systems with local owner-operators who have skin in the game and know their markets intimately.
Modern research backs this structure. Brands often franchise units that are geographically distant or in unfamiliar markets because local knowledge and owner incentives matter more there. Franchise and company-owned units often coexist in “plural” systems, balancing standardization with local experimentation.
In practice, franchising has become a way to scale trusted experiences—whether quick service, education, professional services, fitness or home services—while still harnessing local entrepreneurial energy.
What does the future of franchising look like?
Taken together, the evidence in this report is hard to ignore:
For workers, franchises offer similar pay, stronger retention, faster progression from part-time to full-time and better access to benefits than comparable non-franchise small businesses.
For founders, franchising is a critical on-ramp—especially for first-time owners, women, veterans and entrepreneurs of color—unlocking higher sales and headcount than typical independent peers.
For communities, franchisees behave like local small businesses, as they hire locally, buy locally and give locally at a serious scale.
As policymakers debate labor standards, small-business support and how to expand entrepreneurship to underrepresented groups, this report suggests that protecting and strengthening the franchise model is less about defending “big brands” and more about backing a distributed network of local employers and owners.
As we look ahead at 2026’s mobility, inclusion and resilient local economies, franchising deserves to be part of the conversation.
