Franchising 2026

USA Law and Practice Contributed by: David B. Ramsey and Michelle Murray-Bertrand, Kaufmann Gildin & Robbins LLP

1. An Introduction to Franchising 1.1 Franchise Market Overview Franchising has been a thriving part of the US econo - my for decades. In 2026, the franchise sector accounts for nearly 3% of total US GDP (according to the Inter - national Franchise Association); total franchise GDP in the United States in 2025 was estimated at USD549.9 billion, and in 2026 is estimated to increase by about 2.2%. The top fastest-growing states for franchising in 2026 are Texas, Florida, Georgia, Arizona, North Carolina, Colorado, Michigan, Utah, Ohio and Maryland. Child services and commercial and residential services are expected to be the fastest-growing franchise types in 2026. Other growth areas in business format franchising include quick service restaurants, lodging, health and wellness, automotive, business services, real estate, retail food, and personal services (such as moving and storage, pet-related goods and services, and much more). Examples of key brands active in the market include 7-Eleven, Inc, Yum! Brands (primarily Taco Bell, Pizza Hut and KFC), Jersey Mike’s Subs, Dunkin’ Donuts, McDonald’s, Wingstop, Planet Fitness, Subway res - taurants, Ace Hardware, the UPS Store, and Intercon - tinental Hotel Group, among many others. 1.2 Franchise Regulation Franchising is regulated at both the federal and state level. At the federal level (which applies throughout the United States, its territories and possessions), the Federal Trade Commission’s (FTC) Franchise Rule, as amended (the “FTC Franchise Rule”), requires franchisors to provide prospective franchisees with specified pre-sale disclosures in the prescribed for - mat of a Franchise Disclosure Document (FDD). The FTC Franchise Rule generally requires the franchisor to furnish the FDD to prospective franchisees at least 14 calendar days before the prospective franchisee signs a franchise agreement or the franchisor collects any payment for the franchise.

Additionally, at the state level, 14 states (commonly referred to as “Registration States”) have their own franchise registration and disclosure laws, which are similar in nature and overlap with – but also differ in certain ways from – each other and from the FTC Fran - chise Rule. The key difference from the FTC Franchise Rule is that, beyond requiring pre-sale disclosure, the state laws require pre-sale registration of the franchise offering with the state’s franchise administrator before offering or selling franchises in the state. The regis - tration process and the extent of regulatory review vary considerably from state to state, ranging from relatively straightforward filings to more substantive review and acceptance requirements. In the event of litigation regarding the accuracy or completeness of pre-sale required disclosures by the franchisor, various states have statutes prohibiting fraudulent and deceptive trade practices, which are sometimes referred to as “Little FTC Acts”. These state laws can play a role in franchise litigation because, in certain circumstances, a franchisor can be sued regarding its violation of the federal FTC Franchise Rule (which has no private right of action) under the auspices of a state’s “Little FTC Act” which incorpo - rates violations of the federal rule into its scope. Besides franchise registration and disclosure laws, over 20 states and territories have franchise relation - ship statutes which regulate aspects of the ongoing franchise relationship between a franchisor and a franchisee, such as under what circumstances a fran - chisor may terminate a franchise agreement, refuse to renew a franchise agreement, and restrict transfers, among other subjects. Finally, 26 states have business opportunity laws, which are broader in scope than franchises but, under certain circumstances, apply to franchises. Business opportunity laws require pre-sale disclosure to the prospective franchisee with a disclosure document similar in nature to an FDD, and in certain states either a registration filing or an exemption filing in order for a franchisor to be permitted to offer or sell franchises in that state (depending on the specifics of the business opportunity law and whether an exemption applies – which often depends, in turn, on whether the fran -

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