Franchise Strategies
Jul 28, 2025
Explore the Midwest franchise market's steady growth in 2025, highlighting key industries, challenges, and emerging opportunities for investors.
The Midwest franchise market is growing steadily in 2025, with a projected 4% output growth and an anticipated 5% increase in franchise GDP to reach $578 billion. While this growth lags behind regions like the Southeast (6.2%) and Southwest (8.5%), the Midwest remains attractive due to its low operating costs, abundant resources, and stable economic environment.
Key insights:
Job Growth: Franchises will add 210,000 jobs nationwide, with quick-service restaurants (QSRs) leading employment growth at 5.1%.
Top Industries: Personal services (4.3% growth), retail (3.5% growth), and QSRs dominate the Midwest franchise landscape.
Challenges: Labor shortages (87% of franchisors affected), slow population growth (0.3%-0.6% in key cities), and supply chain disruptions impact expansion.
Opportunities: Rising demand for health, wellness, senior care, and pet services offers new growth avenues.
The region's affordability and strong consumer confidence make it a reliable choice for franchise investment, but businesses must navigate workforce challenges and leverage emerging trends to succeed.
Must-Know Franchise Trends Shaping 2025 Market
Current Trends in Midwest Franchise Development
The Midwest franchise market is steadily evolving, shaped by shifting regional factors and broader economic trends. While the region remains competitive, several important developments are expected to influence its growth through 2025.
Franchise Business Growth Rates
Franchise businesses in the Midwest are growing at a rate of 4%, placing the region in the middle of the pack nationally. For comparison, the Southeast is projected to grow at 6.2%, while the Southwest leads with 8.5%. On a national scale, franchise growth is exceeding expectations, climbing from 2.2% in 2024 to a projected 2.4% in 2025. This surpasses the overall U.S. economic growth rate, which is forecasted at 1.9%. However, some states in the Midwest are experiencing slight declines.
Job Creation in Midwest Franchises
Franchise job growth is another key indicator of economic activity in the region. Nationwide, franchise employment is expected to grow by 4.7% between 2023 and 2025, significantly outpacing the overall employment growth rate of 2.4%. By 2025, franchises are projected to add around 210,000 jobs, bringing total franchise employment to over 9 million workers. This will account for 5.8% of all U.S. jobs and 11% of total job growth during that period. Quick-service restaurants (QSRs) remain a cornerstone of franchise employment, predicted to employ over 4 million workers in 2025 with a growth rate of 5.1%.
Franchise Sector | Projected Employment Growth (2023-2025) |
|---|---|
Personal Services | 7.8% |
Retail | 6.9% |
Quick-Service Restaurants | 5.1% |
Factors Affecting Growth Patterns
Several factors are shaping these growth patterns in the Midwest. The region is facing increasing competition from the Southeast and Southwest, where business-friendly policies, lower taxes, and reduced operating costs are fueling faster franchise growth. Despite this, the Midwest's franchise GDP is forecast to grow by 5%, reaching $578 billion in 2025. Among the industries driving this growth, personal services and retail food, products, and services are expected to see the largest increases, with projected growth rates of 4.3% and 3.5%, respectively.
Leading Franchise Industries in the Midwest
In the Midwest, three industries have emerged as leaders, driving both economic growth and job creation. These sectors have shown remarkable strength and adaptability, becoming key pillars of the region's franchise economy.
Food Service and Quick-Service Restaurants
Quick-service restaurants (QSRs) dominate the Midwest's franchise scene, contributing the most to franchise employment and economic activity. By 2025, the QSR industry is expected to grow franchise units by 2.5% and increase franchise employment by 3.5%. Their success is largely fueled by strong consumer demand for affordable dining options and the operational advantages of the franchise model. Fast-casual dining, a subset of QSRs, is projected to expand by 10% annually. A standout example is Hawaiian Bros Island Grill, based in Missouri, which achieved an impressive 116% growth. Beyond food service, personal services are rapidly gaining traction in the Midwest.
Personal Services Sector
The personal services sector, encompassing areas like beauty, health, education, and pet care, is poised for 4.3% growth in 2025. Within this category, health and wellness services stand out, with an annual growth rate of 8% projected through 2025. Growing consumer interest in self-care, preventative health, and longevity is driving this demand. Additionally, the aging population is creating opportunities in senior care, a market expected to reach $15.5 billion by 2025, growing at 7% annually. Pet services are also flourishing, with an anticipated 9% annual growth fueled by increased spending on premium pet care. For instance, Goldfish Swim School Franchising, a Michigan-based company offering swim lessons and water safety instruction, reported a 61% growth rate. Alongside personal services, retail franchises continue to play a vital role in the Midwest's economy.
Retail Franchise Growth
Retail franchises, which include food and beverage stores, convenience outlets, specialty retailers, and other consumer goods businesses, are projected to grow by 3.5% in 2025. These businesses benefit from a reliable customer base, efficient distribution networks, and evolving consumer preferences. Advances in technology and a growing interest in sustainability are further boosting this sector. Additionally, the rising popularity of home improvement and smart home installations is driving growth in home renovation services.
Franchise Sector | 2025 Growth Projection | Key Growth Drivers |
|---|---|---|
Health & Wellness | 8% annually | Self-care trends, aging population |
Fast-Casual Dining | 10% annually | Healthier dining preferences |
Senior Care | 7% annually ($15.5B) | Aging demographics |
Pet Services | 9% annually | Increased pet spending |
These thriving industries mirror broader economic and consumer trends, highlighting the importance of convenience, technology, and sustainability in shaping franchise success. As Matt Haller, President and CEO of the International Franchise Association (IFA), observed:
"The resilience of the franchise business model not only helped the sector survive the uncertainty of recent years, but thrive in the face of challenging economic conditions. A more favorable economic and regulatory climate have created new optimism and confidence for the year ahead."
Together, these industries are expected to contribute significantly to the Midwest's franchise landscape, which is projected to see a 5% increase in franchise GDP, reaching $578 billion by 2025. Their success not only supports regional employment and economic growth but also underscores the strength and diversity of franchising in the Midwest.
What Drives and Limits Midwest Franchise Growth
The Midwest's franchise scene is a mix of opportunities and hurdles, creating a unique environment for steady, if not explosive, growth. By understanding the factors at play, we can see why the region continues to attract franchise investments while facing challenges that require careful navigation.
Main Drivers of Midwest Franchise Success
One of the Midwest's biggest draws is its lower operational costs. Franchisees in this region enjoy more affordable commercial real estate and reduced overhead compared to pricier markets. In contrast, regions with high operating costs and stricter regulations are seeing franchise employment decline.
The stable economic environment in the Midwest is another strong foundation for franchise success. Consumer confidence remains high, and small business confidence has hit its highest level in nearly four years. This stability makes the region appealing for long-term investments.
Local government incentives also play a role. Policies that reduce taxes and regulations make it easier for franchises to thrive. For example, the Southeast has shown how such measures can boost franchise employment by cutting costs and relaxing labor regulations. The Midwest is following a similar path.
The region’s blend of traditional manufacturing with new technologies is another advantage. Franchises here are tapping into advancements like automation, robotics, and AI, creating opportunities to merge hardware and software capabilities.
Finally, market demographics in cities like Columbus and Minneapolis are promising. Rising household incomes in these areas provide a solid customer base for franchises to grow.
While these factors create a favorable environment, there are hurdles that franchises in the Midwest must address.
Challenges Facing Midwest Franchises
One of the most pressing issues is the labor shortage. Last year, 87% of franchisors reported struggling to find workers for both skilled and unskilled roles. This shortage has ripple effects: 54% of businesses facing hiring challenges have employees working extra hours, and 32% report drops in productivity and sales.
The competition for talent adds to the problem. Franchise owners, often operating on tight margins, find it hard to match the salaries and benefits offered by larger companies. The growing preference for remote work and flexible schedules further complicates hiring for on-site roles in industries like manufacturing and transportation.
Supply chain disruptions are another significant challenge. Nearly half (47%) of middle-market firms in the Midwest have been affected by supply chain issues, impacting inventory management and customer satisfaction.
Finally, slower population growth limits market expansion. Cities like Columbus and Indianapolis are seeing annual growth rates of just 0.4% and 0.3%, respectively. Unlike the Southeast and Southwest, which benefit from rapid population increases, Midwest franchises must work harder to grow within relatively stable populations.
Comparison Table: Midwest Franchise Pros and Cons
Advantages | Disadvantages |
|---|---|
Lower costs & affordable real estate | Labor shortages affecting 87% of franchisors |
Stable economic environment with high consumer confidence | Slower population growth (0.3–0.4% in major cities) |
Business-friendly government policies | Supply chain disruptions impacting 47% of firms |
Opportunities in technology (automation, AI, robotics) | Competition from larger employers for skilled workers |
Rising household incomes in key cities | Productivity challenges due to overworked employees |
The Midwest offers a compelling mix of affordability, stability, and innovation opportunities. However, its labor and demographic challenges mean franchisees need a clear strategy to succeed. Those who can balance these factors are well-positioned to thrive in this evolving market.
2025 Forecasts for Midwest Franchising
In 2025, franchises in the Midwest will navigate a mix of strong national trends and unique regional hurdles. While national growth projections are promising, the Midwest's distinct characteristics will influence how these trends unfold locally.
Midwest Franchise Market Predictions
Across the U.S., franchises are expected to outpace the overall 1.9% economic growth rate in 2025. The industry is set to add over 20,000 new units - a 2.5% increase - and create roughly 210,000 jobs, pushing total franchise employment past 9 million. Franchise output is projected to exceed $936.4 billion, reflecting a 4.4% increase, while franchise GDP is anticipated to grow by 5%, reaching $578 billion.
However, the Midwest may not benefit equally from this growth. The region is grappling with slower or even negative trends in franchise employment compared to other parts of the country. For example, while states like South Carolina and Maine are contributing significantly to franchise job growth - 87.5% and 73.4%, respectively, between 2023 and 2025 - Midwestern states such as Illinois are seeing a decline in franchise employment.
Industry Changes and New Opportunities
Shifting consumer demands and emerging sectors are opening new doors for Midwest franchisees. Personal services are expected to lead the way in franchise growth nationally, with a projected increase of 4.3%. Retail food, products, and services are also on the rise, with a forecasted growth rate of 3.5%.
The surge in personal services highlights evolving consumer priorities. Demand is growing for specialized offerings like cold plunges, mental health therapy, intravenous vitamins, sauna services, physical therapy, sports-related services, and childcare programs, including children's enrichment activities.
Several broader trends are shaping franchise opportunities in 2025:
Health and Wellness: Franchises focused on healthier lifestyles are becoming more popular as consumer interest in well-being continues to grow.
Sustainability: Environmental awareness is pushing franchises to adopt greener practices.
Tech Integration: Advances in technology and automation are transforming franchise operations, making them more efficient and scalable.
Home-based franchises are also gaining traction, appealing to entrepreneurs with their lower costs and flexibility. Meanwhile, new industries like pet services, EV charging stations, and senior care are presenting fresh opportunities for franchise expansion.
Economic factors are expected to support this growth. Rising disposable incomes and easing inflation are likely to boost demand, with high-income consumers - who are less impacted by inflation - playing a key role in sustaining momentum.
For Midwest franchisees to thrive, they’ll need to balance national trends with local realities. Success will depend on choosing franchise concepts that align with broader growth patterns while addressing the unique demographic and labor market challenges of the region. By tailoring strategies to local needs, Midwest franchisees can position themselves for success in 2025 and beyond.
Franchise Ki: Supporting Midwest Entrepreneurs
Building a successful franchise in the Midwest requires more than just ambition - it demands a deep understanding of the local market and a strategy tailored to fit the region's unique dynamics. Franchise Ki steps in to bridge this gap, offering free consulting services designed for both budding entrepreneurs and seasoned business owners eager to establish or grow their franchises in the Midwest. Here's how Franchise Ki adapts its approach to meet the region's needs.
Franchise Ki focuses on personalized franchise matching, catering to the distinct goals and resources of each entrepreneur. By working closely with clients, their consultants craft strategies that align with individual circumstances, financial capabilities, and business aspirations. This custom approach is crucial in the Midwest, where local market conditions often dictate the success of a franchise.
"We help clients structure a franchise strategy based on the uniqueness of their situation and what they find most compelling as to brand, culture and operating models in order to attain their goals."
Their process unfolds in four key steps: evaluating client needs, identifying suitable franchise opportunities, facilitating meetings with franchise owners, and assisting with the legal documentation required to seal the deal.
Another standout service is their funding guidance. Navigating franchise financing can be tricky, but Franchise Ki's consultants provide expert advice on available options, factoring in the unique economic conditions of the Midwest to make the process smoother.
Clients often praise the impact of Franchise Ki's expertise. One client shared:
"Without their guidance and expertise over the past year navigating the various opportunities, we would have given up this dream and gone back to our corporate life."
Franchise Ki also ensures entrepreneurs are equipped with ongoing due diligence support, enabling them to make well-informed decisions tailored to their local market.
Conclusion: Main Findings from the 2025 Midwest Franchise Market Study
The 2025 Midwest franchise market study paints a picture of steady, reliable growth, positioning the region as a solid choice for franchise expansion. While the Midwest's 4% growth in output trails behind the Southeast's 6.2% and the Southwest's 8.5%, it provides a stable environment for businesses looking to establish or expand their footprint.
Among the standout sectors, personal services show the most promise, with a projected growth rate of 4.3% in 2025. Retail food, products, and services are also expected to grow by 3.5%. These numbers align with the broader national franchising outlook, which anticipates over 851,000 franchise units, a total output of $936.4 billion, and the creation of approximately 210,000 new jobs in 2025.
The study emphasizes that business owners who can adapt to changes and embrace strategic planning are most likely to thrive. While the Midwest faces challenges such as competition from faster-growing regions and economic uncertainties, it also offers new opportunities. Secondary cities, suburban hubs, and even rural areas are emerging as prime markets for growth. Additionally, multi-unit and area development models are gaining traction in sectors with strong growth potential.
For aspiring franchisees, the data suggests focusing on high-growth sectors like personal services and retail. Although the region's 4% growth rate may seem modest, it provides a dependable foundation for entrepreneurs who position themselves strategically. Franchise Ki’s personalized consulting services can play a key role in helping entrepreneurs navigate the Midwest's unique market dynamics and seize opportunities that align with both market trends and their individual goals.
Ultimately, success in Midwest franchising depends on understanding the region's specific characteristics, selecting the right sectors, and seeking expert guidance to make informed decisions.
FAQs
Why is the Midwest considered a stable region for franchise investments, even with slower growth compared to other areas?
The Midwest stands out as a prime location for franchise investments thanks to its steady economy, reliable market demand, and supportive policies. While the pace of growth might not match other regions, the Midwest claims the second-highest number of franchise establishments in the U.S. - a testament to its enduring business appeal.
Franchise owners here enjoy dependable operational frameworks, effective brand strategies, and strong backing from franchisors. Paired with the region's economic stability, these qualities make the Midwest a promising choice for entrepreneurs looking for long-term, dependable investment opportunities.
How are labor shortages and supply chain issues affecting franchise growth in the Midwest, and what steps can businesses take to address these challenges?
Labor shortages and supply chain disruptions are posing serious challenges for franchise growth across the Midwest. Companies are grappling with delays in getting products, higher operational expenses, and ongoing struggles to hire and keep employees. These obstacles can put the brakes on expansion plans and cut into profits.
To tackle these problems, franchises can explore a few practical strategies. For instance, diversifying suppliers and sourcing locally can reduce reliance on global supply chains. Building stronger partnerships with vendors can also help ensure smoother operations. Planning ahead by keeping larger inventory reserves is another way to minimize delays. On top of that, using digital tools and automation can streamline supply chain management and daily operations, helping franchises become better prepared for future disruptions.
What industries and trends should Midwest franchisees focus on to seize growth opportunities in 2025?
Franchisees in the Midwest should keep a close eye on sectors like health and wellness, fast-casual dining, senior care, pet services, and education. These industries are predicted to see notable growth as we move into 2025, making them key areas of interest for entrepreneurs.
Some trends worth noting include the growing demand for eco-friendly and sustainable choices, customized services, and technology-driven solutions. These shifts reflect changing consumer priorities and offer exciting possibilities for business owners ready to adapt. By staying aligned with these trends, franchisees can better position themselves for steady growth and success.
