The Franchising Bubble: Why Some Emerging Brands Will 10x and Others Will Collapse by 2027
The impressive growth of the franchise sector in 2025, which exceeded projections for the second year in a row (2.5% > 1.9% according to the International Franchise Association) demonstrates the popularity of this company format for owners and investors. The growth is expected to continue into 2026, but as every business expert knows, growth cannot happen forever. In the franchise world, there are some brands that will probably never falter. Other emerging brands have to face the reality of difficult times and a potential bubble burst.
As a whole, franchising makes sense for everyone. The model appeals to consumers. Corporations can grow quickly into new markets. Entrepreneurs find it attractive and a lower risk opportunity. The model itself isn’t enough to guarantee success and growth, of course. What lies underneath the surface of each brand matters more. Those that will multiple value have solid support structures and controlled operational models. Those that don’t will collapse in the coming year.
Franchise Growth Is a Numbers Game
For the overall brand, more units would appear to equal more growth and revenue. The numbers game is a lot more complex than that. True growth depends on the economics of each individual franchise unit and how the operators perform in support of the overall system. If the organization focuses on selling more franchise licenses alone, they miss out on some of the most important factors for growth. It looks good on paper, but without support for the individual shops, everything falls apart.
Expansion Without Profitability = Poor Sustainability
Expanding into new locations or markets helps, of course, but if new operators come on more quickly than the brand can support them, the growth isn’t sustainable. This leads to individual unit struggles in staffing, training, marketing, and bringing in revenue. The franchise ends up standing on many shaky, malnourished legs.
Under-skilled franchisees represent a huge risk. They have the money to open one or more locations but may lack the skills to manage them profitably. This especially comes to light if they attempt to enter diverse markets without experience in them beforehand. Every minute weakness multiplies across units and weakens the systemwide performance. Too-rapid growth can lead directly to the bubble bursting.
Of course, this isn’t a foregone conclusion. Many brands will succeed as long as they handle support and oversight with an eye for making each unit succeed rather than focusing on the bigger picture alone.
Winning Sectors Heading Into 2027
What emerging brands will experience true, sustainable growth, and which will collapse upon their shaky foundations? As mentioned above, household names like McDonald’s, Dunkin’, and Taco Bell will continue their projected growth paths due to customer loyalty and well-established support frameworks.
When it comes to successful industries, those focused on pet care, senior services, and health and wellness show evidence of growth. Despite economic challenges in general, spending on pets continues to rise. The aging population supports the second, especially with increased demand for accessibility and local service availability.
From a franchise perspective, it takes more than working within the right sector to create true growth. The ability to repeat successful unit creation with proper team support and training in place will do more to avoid the franchising bubble burst in 2027 and beyond.