Franchise Statistics by State and Metro: The 2023 Franchise Density Index

Franchise statistics by state: the 2023 Franchise Density Index

The table ranks all 50 states and the District of Columbia by the share of responding employer firms that said all or part of the business operated as a franchise in 2023, from the Census Bureau’s Annual Business Survey (ABS) table AB2300CSCB01. The Franchise Density Index divides each state’s share by the US share of 4.7% and multiplies by 100, so 100 means the national rate and 200 means twice the national rate.

Every state value carries the standard error Census publishes. The 90% rank range shows how far a state could move in the ranking given that uncertainty: Arkansas ranks 1st with a range of 1 to 2, while Delaware ranks 3rd by its point estimate but has a range of 2 to 34. The last test column says whether a state’s share differs from the US share at the 90% level.

Which states are above and below the national franchise share

Only 23 of the 51 areas differ from the national share with 90% confidence. Nine states are significantly above the US share of 4.7% in 2023: Arkansas (10.8%), Texas (8.5%), Tennessee (6.8%), Alabama (6.6%), Oklahoma (6.2%), Kansas (6.1%), North Carolina (5.7%), Georgia (5.6%) and Indiana (5.6%). Fourteen are significantly below, led at the bottom by Alaska (2.0%), Vermont (2.2%), Maine (2.8%), New York (2.9%) and Hawaii (2.9%). The other 28 are not statistically distinguishable from the US share, according to our tests on Census ABS data.

The top of the ranking is clear; the bottom is less tidy. Arkansas (10.8%, standard error 1.2 points) and Texas (8.5%, standard error 0.5 points) are the two highest states, and the gap between them is significant at the 90% level (z = 1.77) but not at the 95% level. New England is not uniformly low: Vermont (2.2%), Maine (2.8%) and Massachusetts (3.2%) are below the US share, but New Hampshire (5.8%), Connecticut (4.8%) and Rhode Island (3.6%) cannot be separated from it. Florida (3.7%) is a Southern exception, significantly below the US share.

The high-share group is concentrated in the South and the south-central states, plus Kansas and Indiana. The low-share group is the West Coast, parts of the Mountain West and Southwest (Colorado 4.0%, Arizona 3.6%, Nevada 3.3%), the Northeast, Alaska and Hawaii. Small states have wide intervals: Wyoming’s 6.1% has a 90% interval of 3.5% to 8.7%, so its 7th-place rank is not meaningful on its own.

Industry mix does not explain the state gaps

A state could show a high franchise share simply because it has more restaurants and hotels, the sector where franchising is most common (19.3% of responding accommodation and food services firms nationally in 2023, per Census ABS). To test this, we computed the share each state would have if every sector franchised at the US rate. Those industry-mix expected shares fall in a narrow band, from 4.2% (Florida) to 5.7% (Hawaii).

Actual shares spread far wider than the mix predicts. Arkansas is at 223 on the mix-adjusted index (10.8% actual vs 4.8% expected) and Texas at 186 (8.5% vs 4.6%). Alaska is at 41 (2.0% vs 4.9%) and New York at 57 (2.9% vs 5.1%). The differences come from how often firms franchise within the same industry. In accommodation and food services, 39.1% of responding firms in Arkansas and 31.0% in Texas operated as franchises in 2023, compared with 9.8% in New York and 15.4% in California.

The survey does not say why. It records whether a firm franchised, not the reasons, so we do not attribute the pattern to costs, regulation or consumer preferences. For readers comparing franchise categories, our franchise ideas guide groups brands by industry.

Franchise statistics by metro area: Texas leads, coastal metros trail

The 2023 ABS publishes a franchise question cell for 387 metro areas, but 37 are suppressed and many published cells are imprecise. We kept only metros where both the franchise firm count and the share have a relative standard error under 30%, which leaves 108 metros. The table lists the 15 highest and 15 lowest of those, based on Census ABS table AB2300CSCB01.

Eight of the 15 highest are in Texas, including McAllen-Edinburg-Mission (12.5%), Midland (12.5%) and San Angelo (12.4%). Waterloo-Cedar Falls, Iowa, has the highest point estimate at 13.3%, but its standard error is 3.9 points, so its 90% interval runs from 6.9% to 19.7%.

Read the bottom list with care. Fourteen of the 15 lowest metros have fewer than 40 responding franchise firms, and several publish a standard error of 0.0. Small cells with near-zero published errors can understate real uncertainty. The large-metro chart below avoids that problem: among the 34 metros with at least 1,000 responding franchise firms, San Antonio (9.0%), Houston (8.0%) and Dallas-Fort Worth (7.7%) are highest, and Miami (2.3%), Los Angeles (3.0%) and New York (3.3%) are lowest.

Cities, rural areas and firm size

Franchising is more common among urban firms. In 2023, 4.8% of responding urban employer firms operated as franchises, compared with 3.3% of rural firms, a gap of 1.5 points that is well outside the 90% margin of 0.23 points, according to Census ABS table AB2300CSCB05.

The share varies more by firm size than by location. Only 2.4% of responding firms with 1 to 4 employees operated as franchises in 2023, against 12.3% of firms with 20 to 49 employees and 13.9% of firms with 50 to 99 employees (table AB2300CSCB04). Younger firms are slightly more likely to be franchises: 5.5% of firms under 2 years old versus 3.8% of firms in business 16 years or more (table AB2300CSCB02). The survey does not track whether these firms survive; for that question, see our franchise failure rate report.

Franchise firms employ more people than their numbers suggest

Franchise firms were 4.7% of responding employer firms in 2023 but accounted for 10.2% of their employment (standard error 2.5 points), according to Census ABS. The average responding franchise firm had 53.3 employees, compared with 24.3 for all responding firms, so the size ratio is about 2.2.

State employment shares are much less precise than firm shares. Only 14 states have a franchise employment share with a relative standard error under 30%. Among those, the ratio ranges from 1.7 in New Jersey and New Hampshire to 3.1 in Kentucky, where franchise firms were 5.8% of firms and 18.1% of employment. For Arkansas and Texas the employment estimates are flagged as unreliable, so we do not rank them on this measure.

Is franchising rising or falling? Change from 2019 to 2023 (2020 to 2024 surveys)

Nationally, the franchise share of responding employer firms was 4.9% in 2019 and 4.7% in 2023. The 0.2-point decline is inside the 90% margin of error (0.23 points), so the share is best described as flat, based on the 2020 ABS (data year 2019) and the 2024 ABS (data year 2023).

Four states show a statistically significant change between 2019 and 2023, and all four are declines: Nevada (5.1% to 3.3%), Virginia (5.7% to 4.7%), Illinois (4.8% to 4.0%) and Ohio (5.4% to 4.8%). With 50 state comparisons at the 90% level, about five false positives are expected by chance, so these four results do not establish a regional trend. No state shows a significant increase. New Hampshire (+1.8 points) and Wyoming (+1.7 points) have the largest point increases, but both are within their margins of error.

Over a longer span the picture depends on which survey is used. The Survey of Business Owners measured 5.3% in 2012 and the Annual Survey of Entrepreneurs measured 5.2% to 5.4% in 2014 to 2016 (SBO 2012, ASE 2016). The ABS readings since 2019 are lower, but the ABS replaced both the SBO and the ASE as a new survey with its own sample (ABS methodology), so we treat the 2016 to 2019 step as a likely survey break, not a measured decline.

How many franchise businesses are in the US

There is no single official count. The ABS figure of 135,505 franchise firms in 2023 covers responding firms only; Census states that these tables give percentages among responding firms and are not intended to estimate totals (ABS methodology). It also counts firms, so a franchisee with ten restaurants is one firm.

The 2017 Economic Census, the most recent national franchise-status table we found, counted 498,234 franchise establishments in the industries where it asked the question: 414,976 franchisee-owned and 82,962 franchisor-owned (EC1700FRAN). The International Franchise Association’s 2026 outlook, prepared with FRANdata, estimates 832,521 franchise establishments in 2025 and projects 845,000 in 2026 (IFA, February 2026). That is an industry model estimate, not a survey count.

Texas has the most franchises by both measures: 17,920 responding franchise firms in the 2023 ABS and 83,853 franchise locations in the IFA’s 2025 state estimates (IFA state map). For what those units cost to open, see our franchise costs guide; for lending patterns, see the SBA franchise loans report.