What's Attracting Investors to Franchises?

Franchises are hot commodities. According to the 2025 report from the International Franchise Association, the actual growth of franchises in 2024 outpaced estimates; this year, franchises are predicted to expand by an additional 2.4 percent. In 2025, the number of franchises is projected to grow by more than 20,000, adding about 210,000 new jobs to the US economy. Indeed, our sector is expected to grow faster than the US economy as a whole.

Given figures like these, perhaps it should come as no surprise that more investors are interested in franchising.

Investors are bullish on franchises

According to market research company ION Analytics, private equity has been quick to get in on the action and remains bullish about the franchise sector. Some notable deals in recent years include the private equity firm Roark Capital’s acquisition of Subway for approximately $9.5 billion and Restaurant Brands International’s purchase of Firehouse Subs for $1 billion.

Consider, as well, the rise of large corporate operators like the Flynn Group, which runs over 2,900 franchise locations and reports taking in $5 billion in sales every year, and RaceTrac, a chain of gas stations and convenience stores that acquired Potbelly, the chain of sandwich restaurants, earlier this month.

Multiple factors make franchises appealing today, despite, or perhaps even because of, daunting economic conditions.

Why franchises perform well during recessions: Proven models

First and foremost, franchises tend to be recession-resistant, weathering economic hard times better than independent small businesses. In part, this is because they offer time-tested business models. Franchises come with proven operational systems, marketing, supply chains, vendor relationships, and more.

In short, franchises provide owners with a ready-made business to run and start generating profits. For this reason, they are also appealing to those seeking a stable source of self-employment.

The benefits of scalability

Franchisors also often help franchise owners control their costs. They can marshal economies of scale and bulk purchasing power to reduce the price of supplies and services. Sharing the expenses of marketing and other charges helps keep the per-unit payments down for everyone. Sometimes, different locations can even share equipment or other resources.

Franchises are also designed to be scalable by definition; expansion is baked into the business model. Moreover, franchise owners often find it easy to secure financing from banks or other institutions because of their recognizable brands and proven track record. Some franchisors even have existing relationships with government programs and can facilitate grants or loans.

Franchisors are also well-positioned to help franchisees navigate the uncertainties of technological change and confront persistent challenges much better than they could on their own. For instance, market intelligence company FRANdata reports that major franchisors like McDonald’s and Yum! Brands are currently rolling out major initiatives to boost efficiencies and address labor shortages through the implementation of AI. This kind of large-scale, cutting-edge innovation assures investors that franchises will stay future-ready.

Familiarity and stability

Another factor in franchises’ resilience is that consumers tend to retreat into the familiar and cease experimentation during hard economic times. Franchises come with a known brand that many consumers already trust. Conversely, brand-new businesses cannot draw on an existing reservoir of goodwill and must build one from scratch.

Franchises in essential industries like healthcare, senior care, auto repair, maintenance, public adjusting, and cleaning are particularly attractive. Due to the necessary nature of these activities, these businesses tend to provide stable revenue streams. As such, they represent a great opportunity for investors to diversify without undue risk.

Franchises are safe havens of scalable growth

Many economists expect the US economy to continue wobbling for the foreseeable future, so savvy private buyers and institutional investors would be wise to consider recession-resistant franchises that offer essential services. As investors continue to seek safe havens and scalable growth, franchises offer both.

Theodore (Ted) Patestos is co-founder and CEO of Tiger Adjusters, the first-ever public adjusting franchise company.