Looking to start or expand a franchise in 2025? Here's what you need to know:

The franchise industry is projected to grow by 4.4% this year, reaching a total economic output of $936.4 billion. Key drivers include population growth, favorable tax policies, and booming sectors like personal services (+4.3%) and retail food (+3.5%). The Southeast and Southwest regions lead the way, with economic output growth of 6.2% and 8.5%, respectively.

Top 10 franchise-friendly states for 2025:

1. Georgia: 6.7% growth, $37.4B output, 2,152 new franchises.

2. Texas: No state income tax, $89.2B contribution, 82,463 establishments.

3. Florida: 2.4% unit growth, $73B output, driven by tourism and population influx.

4. Arizona: 7.2% growth, $22.6B output, low 2.5% flat tax rate.

5. North Carolina: 4.5% growth, $35.5B output, lowest corporate tax rate of 2.25%.

6. South Carolina: 7% growth, $19.5B output, strong manufacturing base.

7. Tennessee: 7.8% growth, $425.4B GDP, no state income tax.

8. Colorado: 5.4% franchise job growth, $87.6K median household income.

9. Virginia: 8% franchise job growth, $26.8B output, strong infrastructure.

10. Maryland: $108.2K median income, thriving small business ecosystem.

Quick Comparison Table:

With these states offering tax incentives, growing populations, and strong economies, 2025 is shaping up to be a banner year for franchising. Ready to explore your options? Start with a region that aligns with your goals.

The BEST Franchise Opportunities in Texas for 2025!

1. Georgia

Georgia is leading the charge in franchise growth for 2025, with an anticipated 6.7% increase, bringing the total number of franchise businesses to 34,156. This thriving sector is expected to generate an impressive $37.4 billion in economic output while creating 361,287 direct jobs.

A key driver of this growth is Georgia's reduced corporate tax rate, which was lowered to 5.75% in January 2019. This tax-friendly environment, combined with Atlanta's bustling metropolitan area, makes the state a magnet for franchise opportunities. Atlanta's extensive transportation network further supports business accessibility and visibility, giving franchises a significant advantage. As a testament to the state's infrastructure, NY Engineers has completed over 100 projects in Georgia.

Georgia's franchise sector shows strong employment numbers:

Matt Haller, President and CEO of the International Franchise Association (IFA), emphasizes Georgia's franchise potential:

"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. Franchising in Georgia remains a major driver of growth and upward economic mobility."

With the Southeast region projecting a 6.2% growth rate, Georgia stands out as a leader in franchise expansion. This momentum highlights the state's competitive edge in the franchise industry. As Georgia continues to build on its success, Texas offers its own unique opportunities in the franchise landscape.

2. Texas

Texas stands as a powerhouse in the franchise sector, boasting an economy that exceeds $2.6 trillion - making it comparable to the world's eighth-largest economy if it were an independent country. With a solid 3.9% economic growth rate in 2024, outpacing the national average, the state continues to prove its strength as a hub for business opportunities.

Here’s a snapshot of Texas's franchise sector performance in 2024:

These numbers highlight the state's thriving franchise environment, driven by policies and infrastructure that make it a magnet for business.

One of Texas's standout advantages is its absence of state income taxes, which creates a favorable setting for franchise operations. Beyond tax benefits, the state boasts a robust infrastructure, including:

• 23 seaports and 12 deep-water ports

• 380 airports

• 10,400 miles of rail

• The largest roadway and freight network in the nation

Ray Perryman, Founder and CEO of the Perryman Group, underscores Texas's dominance in attracting businesses:

"Texas has been a growth leader for a number of years, attracting more expansions than any other state for well over a decade."

The state's appeal is evident in success stories like Shipley Do-Nuts, which added 14 new locations and secured 11 multi-unit agreements in 2023. Additionally, Texas saw the formation of 125,000 new business entities in 2024, bringing the total to nearly 2.93 million.

Texas also offers a range of financing options and incentives to support business growth. Its strategic location, bolstered by 35 foreign trade zones and over $240 million in port investments, provides franchises with unmatched access to global markets.

Jennifer Rabb, President of TTARA, highlights a key area for improvement:

"Texas has a well-earned reputation as a business-friendly state, but our property taxes are 10th highest in the nation. Exempting business personal property would provide needed tax relief to Texas employers while also making Texas more attractive for business investment."

Looking ahead, Texas's commitment to economic stability is clear. With a rainy-day fund exceeding $28 billion and a budget surplus nearing $24 billion, the state offers a strong foundation for franchise investors. Combined with its growing population and diverse demographics, Texas is well-positioned to remain a top choice for franchise expansion in 2025.

3. Florida

Florida's franchise sector is set to surpass national growth trends in 2025. The number of franchise establishments is projected to grow by 2.4%, increasing from 64,800 in 2024 to 66,400 in 2025. This expansion is expected to create around 14,600 new jobs, reflecting the state's robust business environment. Let's dive deeper into Florida's franchise performance metrics.

Here’s a snapshot of Florida’s key franchise statistics:

With a population of 22.61 million and an influx of 131 million visitors annually, Florida provides franchise owners with a vast and varied customer base. The state’s tax-friendly policies further enhance its appeal, creating fertile ground for business growth.

Matt Haller, President of the International Franchise Association (IFA), emphasizes Florida's thriving franchise landscape:

"Franchising in Florida remains a major driver of growth and upward economic mobility. A more favorable economic and regulatory climate have created new optimism and confidence for the year ahead. For those considering a franchise investment or IFA members growing their brands, 2025 is poised to be a banner year."

Large franchise operators, such as RBI with its diverse portfolio, underscore the strength of Florida’s franchise market.

Among franchise categories, personal services are expected to lead the way with a 4.3% growth rate. Segments like retail food, products, and services are also gaining traction, fueled by Florida's booming tourism industry and expanding population.

The state’s solid economic foundation is another key driver. Franchise economic output is forecast to grow by 5.6%, reaching $73 billion in 2025. This growth is bolstered by continued migration, particularly of high-net-worth individuals relocating from the Northeast.

However, challenges such as rising property prices, higher interest rates, and moderated growth require franchisees to carefully evaluate location options.

The Southeast region, including Florida, is projected to achieve 6.2% growth in 2025, significantly outpacing the U.S. economy’s 2.8% growth rate in 2024. Up next, we’ll take a closer look at Arizona’s franchise market as part of our regional analysis.

4. Arizona

Arizona's franchise industry is on a strong upward trajectory, with forecasts predicting a 7.2% increase, reaching 20,434 franchise businesses by 2025. The state's thriving economy and business-friendly environment provide fertile ground for this growth. Here's a snapshot of the key metrics:

Arizona's tax policies stand out as a major advantage. The state boasts a flat tax rate of just 2.5% - the lowest in the nation - along with a corporate income tax of 4.9%. Additionally, there are no corporate franchise or inventory taxes, making it an attractive destination for franchise operations.

Darrell Johnson, CEO of FRANdata, highlights the positive momentum:

"Even amid concerns about labor requirements, franchising outpaced our projections last year. With inflation easing and interest rates declining, the economic outlook for franchising in 2025 is strong, with favorable conditions and supportive policies paving the way for continued growth and expansion across various sectors."

Phoenix, Arizona's largest city, has been a magnet for growth, recognized as the fastest-growing major city between 2010 and 2020. Its diverse population - 30% of whom identify as Hispanic or Latino - has drawn prominent franchises such as Pollo Campero and Paris Baguette. Blas Escarcega, director of franchise development at Pollo Campero, shares his enthusiasm:

"Arizona is a wonderful market and is one of the fastest-growing states in the U.S."

The state's franchise sector is expected to create 13,441 new jobs in 2025, bringing total franchise employment to 216,138. This growth is particularly pronounced in personal services and retail food, reflecting the state's increasing population.

The broader Southwest region, which includes Arizona, is set to outperform the national franchise market with an 8.5% rise in economic output by 2025. When paired with Arizona's gross state product of $445.0 billion, these figures underscore the state's appeal as a hub for franchise investment and expansion.

While population growth is expected to moderate and payroll growth to level off from 4.2% in 2022 to 1% as the economy stabilizes, Arizona's franchise sector remains poised for steady progress.

5. North Carolina

North Carolina is gearing up for notable franchise growth in 2025. Projections indicate the state will host 32,395 franchise businesses, marking a 4.5% increase compared to previous years. Its prime East Coast location and tech-driven economy make it an attractive hub for franchise development.

One of North Carolina's standout advantages is its tax-friendly environment. The state boasts the lowest corporate income tax rate in the nation at 2.5%, with plans to phase it out entirely by 2030. Additionally, its franchise tax - set at $1.50 per $1,000 of a corporation's net worth apportioned to the state (minimum $200) - offers simplicity and affordability for businesses.

Matt Haller, President and CEO of the International Franchise Association (IFA), highlights the state's positive trajectory:

"A more favorable economic and regulatory climate have created new optimism and confidence for the year ahead. For those considering a franchise investment or IFA members growing their brands, 2025 is poised to be a banner year. Franchising in North Carolina remains a major driver of growth and upward economic mobility."

The state's economic momentum extends beyond tax policies. Industries like personal services and retail are experiencing notable growth, while the Southeast region's projected 6.2% increase in economic output further underscores North Carolina's market potential.

With a population of 10.84 million, North Carolina offers a substantial consumer base for franchises. The success of Worried Bird, a brand under Phoenix Franchise Brands, serves as a prime example of the opportunities available in the state. Its mix of urban and rural markets, coupled with a resilient and skilled workforce, continues to make North Carolina a magnet for franchise investments.

6. South Carolina

By 2025, South Carolina is expected to host 18,484 franchise businesses, representing a solid 7% growth from 2024. This growth reflects the state's appeal, driven by business-friendly policies, a strong manufacturing base, and thriving new industries.

Manufacturing plays a huge role in South Carolina's economy, making it an attractive location for franchises. The state leads the U.S. in key export sectors, holding the #1 spot in completed passenger vehicles with $10.9 billion in sales (18.4% market share) and dominating tire exports with $1.8 billion (36.5% market share).

In March 2025, South Carolina added 10,200 jobs, marking a 0.4% increase in payroll employment, while the unemployment rate dropped to 4.1%. The life sciences sector is also booming, with 42% growth since 2017. This industry now contributes an impressive $25 billion annually, placing South Carolina among the fastest-growing states in this field.

"South Carolina is positioned for growth, and as we think about the impact that we can have across the state, it's to ensure that patients have healthier lives, that we create thriving and healthier workforces, which ultimately can lead to greater growth."

The state’s housing market is equally dynamic. Permitting activity jumped 11.6% from February to March 2025 and 12.2% year-over-year, while home values in Q4 2024 climbed 5.6% compared to Q4 2023. This robust real estate market creates a promising environment for home services franchises.

With its strong manufacturing sector, expanding industries like life sciences, and steady economic growth, South Carolina is shaping up as a prime location for franchise opportunities in 2025. Next, we’ll take a closer look at Tennessee.

7. Tennessee

Tennessee’s franchise sector is on a steady upward trajectory. With 19,770 franchise establishments currently employing 213,367 people, this number is expected to climb to 230,001 jobs by 2025 - a projected growth rate of 7.8% between 2023 and 2025.

The state’s economy has been performing exceptionally well. In Q1 of FY 2024, Tennessee’s real GDP hit $425.4 billion, with manufacturing contributing $57.71 billion and tourism revenue jumping 25% to reach $30.6 billion.

Tennessee’s no state income tax policy and light regulatory framework make it a magnet for businesses. The Tennessee Works Tax Act of 2023 further boosted this business-friendly atmosphere by cutting Franchise and Excise tax collections by $158 million in FY 2024. These policies offer a solid foundation for franchise expansion.

A great example of this growth is Color Me Mine, which is planning to expand into Nashville, complementing its existing Murfreesboro location. CEO Teresa Johnson highlighted Tennessee’s appeal:

"As Color Me Mine continues its nationwide expansion, Tennessee stands out as a prime market for franchise growth. With the state projected to be among the top in the nation for franchise development in 2025, we're excited to partner with passionate entrepreneurs to bring our creative, community-driven experiences to more families. Together, we're spreading 'The Art of Having Fun' to new regions and inspiring artistic expression across the state of Tennessee." - Teresa Johnson, CEO of Color Me Mine

Tennessee’s strategic advantages extend across various sectors. Nashville has become a major healthcare hub, home to over 500 companies, while Memphis plays a pivotal role in logistics with one of the world’s busiest cargo airports. The state also ranks 6th in hydroelectric power production and has secured $7 billion in clean energy investments.

To further entice businesses, Tennessee offers a $4,500 job tax credit per employee and a 1% tax credit on capital equipment. The franchise tax rate is set at 0.25% of a business’s net worth or property value, with a minimum annual tax of $100.

With its balanced tax policies, thriving economy, and strategic location, Tennessee is positioned to attract diverse franchise opportunities. Sectors such as personal services, retail food, and healthcare services are especially well-suited for growth in the state by 2025.

8. Colorado

Colorado's franchise sector is on a growth trajectory, with 199,914 franchise jobs projected to increase by 5.4% between 2023 and 2025. That’s more than double the state’s overall employment growth rate of 2.8%. This expansion is expected to generate 10,208 new franchise jobs, further boosting the state’s economy. The growth is driven by strong business activity statewide.

Recent data highlights Colorado's dynamic business environment. In Q1 2025, 48,629 new business filings were recorded - an increase from 40,863 in the previous quarter. Business renewals also saw a jump, climbing 11.2% to reach 206,826.

Colorado’s appeal as a hub for franchises stems from its strong economic fundamentals. The state boasts a median household income of $87,598, a low unemployment rate of 3.3%, a population of 5.878 million, and a median age of 36.9 years.

Franchise Investment Costs

Investment requirements vary by franchise type:

• Fast-food franchises: $25,000–$50,000 in fees

• Retail franchises: $10,000–$75,000

• Service-based franchises: $5,000–$30,000

Richard Wobbekind, a senior economist at CU's Leeds School of Business, praised the state’s business growth:

"The results of this quarter's new business formation is very encouraging, especially in light of the current uncertain economic environment."

Colorado also offers business-friendly policies like the Advanced Industry Investment Tax Credit, which benefits qualified small businesses with annual revenues of up to $5 million.

Matt Haller, President and CEO of the International Franchise Association (IFA), emphasized the strength of Colorado's franchise market:

"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."

Beyond its economic benefits, Colorado’s reputation as a hub for eco-conscious and active lifestyle businesses creates unique opportunities for franchises. The state’s combination of urban amenities and outdoor recreation helps attract top talent, while its central location - linking major cities in the Midwest and West - provides logistical advantages. As Colorado solidifies its standing in the national franchise market, next, we’ll take a closer look at Virginia’s franchise landscape.

9. Virginia

Virginia stands out as a prime location for franchise growth, with projections showing the state will add 1,447 new franchise businesses in 2025. These businesses are expected to contribute $26.8 billion to the economy and create 270,173 direct jobs.

Franchise employment in Virginia is forecasted to grow by 8.0% between 2023 and 2025, outpacing the overall state employment growth of 1.7%. This means franchise jobs will make up 28.7% of Virginia's total employment growth during this period.

Virginia's robust infrastructure plays a key role in attracting businesses. The state boasts 3,037 miles of active rail lines, which move over 127 million tons of freight annually. Investments like Amazon's new 3.1 million-square-foot robotics fulfillment center in Goochland County - set to create over 1,000 jobs - highlight the state's appeal.

Holly Sullivan, Amazon's Vice President of Worldwide Economic Development and Public Policy, praised Virginia's strengths:

"Virginia continues to be a great home for Amazon thanks to its robust infrastructure, talented workforce, and supportive business environment."

Among franchise sectors, personal services - such as fitness centers, beauty salons, and childcare services - are leading the way, with employment in this category projected to grow by 7.8% between 2023 and 2025. Meanwhile, quick-service restaurants remain the largest employer within the franchise industry, providing jobs for over 4 million workers nationwide.

Matt Haller, President and CEO of the International Franchise Association (IFA), expressed optimism about the industry's future:

"A more favorable economic and regulatory climate have created new optimism and confidence for the year ahead. For those considering a franchise investment or IFA members growing their brands, 2025 is poised to be a banner year."

Virginia's pro-business policies, such as the Made in Virginia Investment Accelerator, and its strategic location in the Southeast, further enhance its appeal. With a projected 6.2% growth in economic output, the state exemplifies how tax incentives and infrastructure can drive franchise growth on a national scale.

10. Maryland

Maryland's thriving economy and proximity to Washington, D.C., make it a prime spot for franchise growth in 2025. With a median household income of $108,200 and about 604,176 small businesses, the state offers a wealth of opportunities for expansion. Let’s take a closer look at the numbers and success stories that highlight Maryland’s appeal for franchises.

Key Economic Metrics

Maryland's economy is packed with potential, as shown by these indicators:

The state’s tax structure is another draw for franchises. Maryland doesn’t impose a general franchise tax, and businesses can choose between a corporate tax rate of 8.25% or personal income tax based on their structure. On top of that, Governor Wes Moore's administration has set aside over $750 million in the FY 2026 budget for economic and workforce development.

Franchise Success Stories

Maryland has proven to be fertile ground for franchise growth. For instance, Marriott's Fairfield Inn, which originated in the state, has expanded to 1,141 locations nationwide, adding 141 new units in just three years. Other local franchise success stories include:

• Monster Tree Service: 250 locations, with 98 new units in three years

• Kiddie Academy: 306 locations, with 59 new units in three years

• America's Swimming Pool Company: 361 locations, with 65 new units in three years

Leadership and Vision

Governor Wes Moore has a bold vision for Maryland’s economic future, emphasizing its leadership in cutting-edge industries:

"I want Maryland to be the capital of quantum. I want Maryland to be the capital of AI. I want Maryland to be the capital of cyber security. I want us to make sure that we are leading in aerospace and defense."

Maryland Chamber President & CEO Mary Kane also underscores the importance of growth:

"Growth is the only path forward. It's how we'll address our budget deficit, create jobs, and build a stronger economy. But growth doesn't happen by chance - it requires intentional action."

Economic Impact

Targeted investments in Maryland are projected to generate $515.6 million in economic activity, support 2,599 jobs, and contribute $210.2 million in labor income. Combined with its business-friendly policies and strategic location, Maryland is well-positioned to rank as one of the top states for franchise expansion in 2025.

This wraps up our review of the top 10 states for franchises. Next, we’ll dive into broader performance metrics across these states.

State Performance Data

This performance snapshot sheds light on the factors driving franchise growth and competitiveness across several states, expanding on the earlier profiles.

Tax Environment and Business Climate

Corporate tax rates vary widely from state to state, shaping the business climate significantly. North Carolina currently boasts the lowest rate at 2.25%, with plans to eliminate corporate tax by 2030. Here's how the states compare:

These tax policies play a pivotal role in fostering economic growth and attracting franchise businesses.

Economic Growth Indicators

Franchise growth has been particularly strong in the Southeast and Southwest regions. According to FRANdata CEO Darrell Johnson:

"Once again, franchising continues to exceed economic expectations. Even amid concerns about labor requirements, franchising outpaced our projections last year. With inflation easing and interest rates declining, the economic outlook for franchising in 2025 is strong, with favorable conditions and supportive policies paving the way for continued growth and expansion across various sectors."

While tax incentives are a key driver, the broader economic impact, including industry-specific growth and employment, further underscores the strength of these markets.

Industry Distribution and Employment Impact

The franchise sector's contribution to employment and economic activity varies by state, with notable highlights:

IFA President and CEO Matt Haller adds:

"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."

Growth Projections

Franchising is on track to outpace overall economic growth in 2025, with impressive projections:

• 851,000 total units (+2.5%)

• 210,000 new jobs (+2.4%)

• $936.4B total output (+4.4%)

• $578B franchise GDP (+5%)

Personal services and retail food are expected to lead the way, with growth rates of 4.3% and 3.5%, respectively. The Southeast continues to dominate in franchise employment share.

Key Findings

Franchise market trends for 2025 point to promising opportunities, especially in the Southeast and Southwest regions, based on detailed state analyses and industry performance data.

Regional Performance Highlights

The Southeast and Southwest are leading the charge in franchise growth, with output increases of 6.2% and 8.5%, respectively. This growth is fueled by several key factors:

• Business-Friendly Policies: States like Georgia and Texas stand out with competitive tax rates and streamlined regulations.

• Population Expansion: Rapidly growing metro areas in Florida and Arizona are creating new consumer markets.

• Economic Impact: The top 10 states are expected to add 285,000 new franchise units, contributing over $300 billion to the economy.

Industry Growth Leaders

Georgia is setting an example with strong performance in personal services and retail franchising sectors:

Investment Considerations

These trends highlight where the momentum lies for entrepreneurs looking to enter or expand in the franchise market. Key strategies to consider include:

• Market Analysis: Assess competition and demand in high-growth regions to identify the best opportunities.

• Sector Focus: Concentrate on thriving sectors like personal services and retail food, which show consistent expansion.

• Location Strategy: Favor states with tax incentives and robust population growth for optimal returns.

To navigate these opportunities effectively, entrepreneurs can turn to expert resources. Franchise Ki, for instance, provides free consulting services to help match individuals with pre-vetted opportunities tailored to their goals and investment capacity. Their services include territory analysis and funding strategy support.

With total franchise output projected to reach $936.4 billion, the market offers significant potential for entrepreneurs who position themselves in these high-growth regions.

FAQs

Why is Georgia expected to lead franchise growth in 2025?

Georgia is set to become a hotspot for franchise growth in 2025, thanks to its business-friendly atmosphere. With low tax rates, policies that favor franchises, and a robust economy, the state offers an ideal foundation for franchise expansion. Adding to its appeal is a steadily growing population, which creates even more opportunities for businesses to thrive.

Predictions show there will be over 851,000 franchise establishments in Georgia by 2025, reflecting a 2.5% growth from the prior year. This booming sector is also expected to play a major role in job creation and drive an economic output exceeding $936 billion. These factors make Georgia one of the most attractive places for entrepreneurs looking to dive into franchising.

Why are Texas and Arizona considered top states for franchising due to their tax policies?

Why Texas and Arizona Are Ideal for Franchising

Texas and Arizona have emerged as prime locations for franchising, largely due to their business-friendly tax policies.

In Texas, franchise owners can benefit from significant tax incentives. For instance, there's a proposed $125,000 exemption on business inventory, which can substantially lower operational expenses. On top of that, the state has boosted its R&D tax credit from 5% to 8.72%, making it an attractive destination for franchises that prioritize research and development.

Arizona, on the other hand, offers the lowest flat income tax rate in the U.S. at 2.5%, alongside a competitive corporate tax rate of 4.9%. These rates make Arizona an appealing choice for franchise businesses looking to maximize profitability while keeping costs manageable.

Both states provide a financial environment that supports franchise growth, helping entrepreneurs cut costs and increase their bottom line.

What challenges should franchisees consider before investing in Florida's franchise market?

Franchisees looking to enter Florida's franchise market in 2025 should prepare for some notable challenges. One major issue is the tight labor market. With high demand for skilled workers, businesses may find it tough to recruit and retain employees. On top of that, rising wages and a growing number of unfilled positions across various industries could affect both day-to-day operations and long-term growth.

Another hurdle comes from Florida's franchise laws, such as the Florida Franchise Act. These regulations require franchisors to meet stringent legal standards, including registering their franchise offerings and providing comprehensive Franchise Disclosure Documents (FDDs) to potential franchisees. For newcomers, navigating these legal requirements can be tricky and may call for extra preparation to stay compliant.

Although Florida presents strong opportunities for franchise growth, these challenges underscore the need for careful research and strategic planning before diving in.

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