Economic headwinds seem to be doing little to stop the growth of franchising.
This year, the number of U.S. franchise locations is expected to increase by almost 15,000, or 1.9 percent, to 805,000, according to the International Franchise Association’s 2023 Franchising Economic Outlook report. Also, the business is projected to grow by 4.2 percent to $860.1 billion, up from $825.4 billion last year. The IFA reported that the top 10 states for franchise growth are Texas, Illinois, Florida, Georgia, Tennessee, North Carolina, South Carolina, Arizona, Colorado, and Indiana.
But here’s the fact to circle—quick-service restaurants are predicted to witness higher growth than other industries.
Corey Nicholson, founding partner and CEO of Cadence Franchising, agrees with IFA’s thoughts on the size of the franchise economy exceeding pre-pandemic levels. His company experienced a drastic decline in franchise inquiries and application volumes in 2020 and 2021, but that was followed by a sharp increase throughout 2022. And that’s continued into 2023.
“Not only are we witnessing faster growth; it’s better growth,” Nicholson says. “Technology-driven sales processes led to deeper engagement from prospects, leading to advancement from more qualified buyers, setting the stage for more successful franchisees. Those successful franchisees led to a better brand story to tell all of the others and more referrals. It’s a chain reaction sparked by ambitious development teams, and made possible by powerful (and affordable) technology in the form of cloud-based franchise development software.”
Quick-service chains are appropriately positioned to thrive in the post-pandemic world, says Graham Chapman, president of 919 Marketing. He adds that customers are gravitating toward four quick-service experiences (drive-thru, kiosks, mobile pickup, and delivery) and that concepts offering all—or most—of these avenues can operate with fewer staff members and provide better convenience for customers.
Additionally, Chapman highlights that private equity investment and multi-unit operations have continued to dominate the conversation. To his latter point, look no further than Subway, the largest franchisor in the U.S. As part of a multi-year transformation, the sandwich chain is moving away from single-unit franchisees to partners who already have experience running other brands. In some cases, it happens on a pretty big scale—two years ago, Papa Johns made noise by striking a deal with Sun Holdings to open 100 restaurants across Texas through 2029.
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“As labor costs rise and supply chain/real estate challenges persist, it becomes more and more challenging to achieve the financial freedom most franchisees/entrepreneurs desire owning and operating just one restaurant (or even just a few),” Chapman says.
The franchise model is still proving fruitful. For more than a decade, QSR has highlighted fast-food and fast-casual concepts offering the best opportunities for entrepreneurs to thrive in the restaurant business. The most recent edition features 17 companies fitting that exact mold.
This is the 13th Best Franchise Deals in QSR’s history. Once again, we tapped our Franchise Council of experts to share their choices. These brands are in no particular order.
The 2023 Best Franchise Deals Council:
- Graham Chapman, president, 919 Marketing
- Lorne Fisher, CEO/managing partner, Fish Consulting
- Stan Friedman, principal consultant, Sensible Franchising
- Mike Drumm, beer and franchise attorney/founder, Drumm Law, LLC
- Corey Nicholson, founding partner and CEO, Cadence Franchising
- Liane Caruso, franchise marketing consultant and owner of helloCMO
- Michelle Rowan, president and COO, Franchise Business Review
- Alex Oswiecinski, CEO and founder, Prospect Direct
- Alex Porter, CEO, Location3
- Danielle Wright, chief development officer, Premium Service Brands
QSR magazine’s Best Franchise Deals for 2023 were selected from a nomination process that ran from mid-May to mid-June. Finalists were reviewed by the Franchise Council, which selected their top choices from shared information and FDD data. Their top choices comprise the final list. Brands cannot appear for back-to-back years, but can return after a year off.
New to this year’s edition, we recognized 15 rising franchisors that are on the outside looking in and created a Hall-of-Fame for concepts that have graced the Best Franchise Deals list several times.