This year, the franchise industry is on pace to outperform the U.S. economy. Here’s why.

This story appears in the May 2025 issue of Entrepreneur. Subscribe »

Entrepreneurship has long been the backbone of the American Dream, and at its core lies the transformative power of franchising.

In 2025, franchising continues to shine as a dominant force in the U.S. economy — offering aspiring entrepreneurs a pathway to going into business for themselves, but not by themselves. The organization I lead, the International Franchise Association (IFA), projects that franchising is set to grow 2.4% this year, outpacing the broader U.S. economy’s expected 1.9% GDP growth, with projections of over 210,000 jobs created. We expect the number of franchise establishments to increase by more than 20,000 units this year, or 2.5%, to 851,000 total units across the country.

That’s a testament to its resilience and potential, even in the face of uneasiness in the economy due to wavering consumer confidence, geopolitical and policy uncertainty in the U.S., and lingering high interest rates for small businesses.

Related: 8 Reasons Why We Need Entrepreneurs Now More Than Ever

A catalyst for economic growth

Franchising’s strength lies in its unique ability to pair entrepreneurial ambition with the stability and name recognition of an established brand.

While not all franchise brands are created equal, the winning formula is clear: When potential franchise investors choose to partner with brands that uphold responsible franchising practices, they benefit from an existing business playbook, a network of other franchisees, and support from the brand.

From quick-service restaurants to retail stores to residential services, franchises span nearly every industry imaginable at a wide range of investment costs. The IFA anticipates the greatest growth to come in the personal services and retail food, products, and services categories — but there’s growth to be found throughout the system.

Before you buy a franchise, of course, the IFA recommends that potential franchise investors conduct significant due diligence when researching a franchise opportunity, talk to existing and former franchisees in those systems, and hire their own legal counsel that has experience reviewing franchise agreements.

Related: The Basics of Making Money in Franchising

Overcoming challenges and misconceptions

Despite its many advantages, franchising has faced hurdles in recent years, such as shifting policy environments and misconceptions about its business model at the federal and state levels.

However, these challenges have been largely overcome due to franchise brands and franchisees banding together through advocacy efforts — which we’ve been proud to lead.

Through proactive engagement with lawmakers and regulators, and federal court decisions striking down rules like the joint employer standard that struck at the heart of the franchise model, the IFA is ensuring that franchising remains a robust pathway to entrepreneurship and that the door to opportunity can be opened through franchising for generations to come.

The franchise industry can’t just talk to lawmakers, of course: We also must talk to the public, and invite them to learn more about this great industry. That’s why we host events like our inaugural IFA World Franchise Show, from May 9 to 10 in Miami Beach, Florida, where prospective buyers can find hundreds of franchises across all investment levels to explore.

A bright future for franchising

Franchising is more than a business model — it’s a pathway to success for countless entrepreneurs looking to own their own business and make an impact in their community.

As we witness continued growth in 2025, marked by projections of $936.4 billion in franchise output nationwide, the IFA remains steadfast in advocating for franchisees and franchisors alike. By fostering collaboration across all stakeholders, from business owners to suppliers, franchising continues to strengthen its role as a cornerstone of economic growth.

Related: How to Become an Entrepreneur – 8 Tips to Get Your Business Going, Even if You Don’t Know Where to Start

The gig economy is fueling innovation, but it’s also causing chaos. Here’s how smart companies are fighting back.

Opinions expressed by Entrepreneur contributors are their own.

The gig economy was supposed to be the great equalizer. It promised freedom for workers and flexibility for companies. And for a time, it delivered. A surge in freelance platforms allowed startups and enterprises to tap into a global talent pool, scaling fast, saving money and moving with unprecedented agility.

But beneath that glossy surface lies a growing problem: When it comes to mission-critical work, especially in tech, the gig economy is starting to break. Projects are stalling, developers are ghosting, and teams are struggling to maintain momentum. For many founders and CTOs, the very model they once leaned on has become a source of operational risk.

So, what’s the alternative? Increasingly, companies are turning to staff augmentation, not just for talent, but for accountability. And when the partner takes responsibility for outcomes, not just resumes, the results speak for themselves.

Related: Why Startups Shouldn’t Rely Solely on Gig Marketplaces for Developers

The double-edged sword of the gig economy

Let’s be clear: The gig economy isn’t going anywhere. Nearly 60 million Americans performed freelance work in 2023, with similar trends across Latin America and Europe. Platforms like Upwork, Fiverr and Toptal have made it easy to find talent in hours. That kind of access is revolutionary.

But it comes with downsides:

Lack of commitment: Freelancers juggle multiple clients, and loyalty is thin. If a better-paying gig shows up mid-project, they may disappear without warning.

Poor integration: Gig workers often operate in isolation, disconnected from internal teams, tools and culture.

Inconsistent quality: Vetting can be superficial, and many clients spend more time managing than building.

Zero accountability: When things go wrong, you’re on your own. There’s no partner to step in and fix the issue.

These risks can be catastrophic for companies trying to build real products, meet investor deadlines or drive innovation at scale.

Staff augmentation: Flexibility with backbone

That’s where IT staff augmentation comes in. Unlike gig platforms, staff augmentation isn’t about short-term help — it’s about embedding vetted engineers into your team as if they were full-time employees. You get flexibility, yes, but also structure, accountability and performance. At their best, augmentation firms go beyond staffing. They take on delivery risk, help manage outcomes and build long-term partnerships, not one-off transactions.

This model is compelling when sourced through nearshore staff augmentation. With teams based in Latin America, companies gain real-time collaboration (thanks to overlapping time zones), cultural affinity and deep technical skill — all without the high costs or timezone misalignment of offshore outsourcing.

Related: What is Staff Augmentation? 3 Reasons It is Vital For Your Business

Real-world breakdown: Freelance chaos vs. augmented stability

Consider this: A U.S.-based fintech startup needed to build a payment gateway. They hired two freelance developers from a significant platform. Week one, everything seemed fine. By week three, one had ghosted. The other delivered buggy code with no documentation. The project slipped two months and cost them a major client pilot.

Contrast that with another firm that works with a nearshore software development partner. They onboarded a full-stack team in under 10 days, working within U.S. business hours. The partner assigned a delivery manager to ensure milestones were met, blockers were resolved and code quality was maintained. They launched their MVP on time and raised their next round.

The difference? One leaned on freelancers, while the other relied on a managed talent model with accountability built in.

Offshore isn’t dead — but it’s getting riskier

Some companies still opt for offshore staff augmentation, usually to cut costs. And while offshore teams can be effective with the proper management infrastructure, they come with well-known tradeoffs: time zone friction, communication challenges and geopolitical instability.

As global volatility increases and the demand for speed intensifies, many leaders choose to de-risk by shifting closer to home. Nearshoring — especially in Latin America — is growing because it offers the best of both worlds: cost efficiency and real-time collaboration.

Key benefits of the right augmentation partner

To be clear, not all staff augmentation firms are created equal. The real value emerges when your partner commits to the following:

End-to-end recruitment : Pre-vetted candidates, not just resumes.

Cultural fit : Engineers who align with your team’s work style and values.

Fast ramp-up : Onboarding in days, not months.

Delivery oversight : Managers who track outcomes, not just hours worked.

Seamless scaling: The ability to add or reduce resources as needed.

Top-tier providers of software development services now act more like extensions of your internal tech team — offering not only capacity, but continuity, quality and innovation.

Related: Why Entrepreneurs Are Looking Towards Latin America for Nearshoring Opportunities

We’re living in a post-gig world. That doesn’t mean freelancers are obsolete. However, for core product development, enterprise systems and scalable tech innovation, the future lies in blended, agile teams that deliver like in-house talent but scale like the cloud. Staff augmentation — especially when it’s outcome-focused and nearshore-enabled — represents the next evolution. If you’ve been burned by disappearing freelancers, ghosted projects or rising costs from inefficiencies, it may be time to rethink your talent strategy.

The right partner won’t just help you find engineers. They’ll help you deliver results.

Entrepreneurship is often cited as a major engine of economic growth, particularly in the United States. The actual picture is more complicated, however. Here’s what leading scholars have to say about the importance of entrepreneurship around the world.

Key Takeaways Entrepreneurship can fuel economic growth under the right conditions and when people become entrepreneurs for the right reasons.

It’s not a magic bullet for growth, however, particularly in less-developed economies.

Social entrepreneurship can attempt to deliver both profits and societal good although often with mixed results.

The level of economic development of a country can affect whether entrepreneurship will lead to greater economic growth there.

What Is Entrepreneurship?

Entrepreneurship is a general, blanket term related to starting a business. Its precise definition has long been a matter of debate among scholars and policymakers, however.

“Despite widespread interest in the topic and a broad recognition of its importance to the economy, there remains a lack of consensus about how to specifically define entrepreneurship,” the nonpartisan Center for American Entrepreneurship notes. “‘Entrepreneur’ is an English derivation of the French word ‘entreprendre’ (to undertake), leaving wide latitude for interpretation and application.”

Howard Stevenson, known as “the godfather of entrepreneurship studies” at Harvard Business School (HBS), has defined it as the “pursuit of opportunity beyond resources controlled.” As fellow HBS professor Tom Eisenmann elaborates, “‘Beyond resources controlled’ implies resource constraints. At a new venture’s outset, its founders control only their own human, social, and financial capital. Many entrepreneurs bootstrap: they keep expenditures to a bare minimum while investing only their own time and, as necessary, their personal funds.”

The Stanford Center for Professional Development at Stanford University offers a somewhat simpler definition: “At its most basic level, entrepreneurship refers to an individual or a small group of partners who strike out on an original path to create a new business. An aspiring entrepreneur actively seeks a particular business venture and it is the entrepreneur who assumes the greatest amount of risk associated with the project. As such, this person also stands to benefit most if the project is a success.”

How Entrepreneurs Fuel Economic Growth

Innovation and entrepreneurship undeniably contribute to economic growth, making them a particular area of interest for economists and policymakers worldwide. Some scholars say that the growth created by entrepreneurship can be exaggerated, however.

Growth from entrepreneurial activity doesn’t occur evenly across an economy. Studies of economic growth have pointed toward an apparent paradox in which the growth in productivity overall in the U.S. has been only modest, despite the pervasiveness of entrepreneurship, innovation, and innovation ideology. According to studies by the National Bureau of Economic Research (NBER), this is because innovation affects industries very differently, having a large impact on some sectors of the economy but little impact on others.

The link between entrepreneurship and improving societal welfare is generally positive but it’s also complicated. It’s influenced by factors such as regional population, entrepreneurship density, and the specific industry in which the entrepreneurial activity is taking place, according to the scholarly literature.

Some studies have suggested that economic growth may be correlated to an increase in overall inequality in certain circumstances. Scholars say that in the U.S. income inequality and economic growth have been linked since the 1970s.

449,508 The number of new business applications in the United States in April 2025.

“Necessity” vs. “Opportunity” Entrepreneurs

One interesting way to look at entrepreneurship is to divide it into two broad categories. “Necessity entrepreneurship” is the launching of a business by people who lack other opportunities. “Opportunity entrepreneurship” is the creation of an enterprise in response to a new or previously overlooked opportunity.

In countries where entrepreneurial activity is largely in the form of necessity entrepreneurship, it can be a signal that the economy isn’t creating enough jobs or wage opportunities for workers. Scholars say that it may be connected to slow economic growth or lagging economic development overall.

Fast Fact Necessity entrepreneurship can be a side hustle for someone who is trying to make ends meet or a way to meet their non-economic needs and goals.

Where Entrepreneurship Aids Growth—and Where It Doesn’t

The level of economic development of a country can also affect whether entrepreneurship will lead to greater economic growth there.

Driven by the decline in manufacturing and the shift toward service businesses, industrialized market economies in later stages of economic development in the 20th century were able to benefit greatly from entrepreneurship, as economist and management professor Zoltan Acs has noted.

These countries included the United States and parts of Western Europe, such as Germany and Sweden. They saw a rise in entrepreneurship beginning in the 1970s which reversed the previous trends in their economies when workers favored high-paying jobs with big companies over self-employment.

Important Other factors may be relevant as well. Scholars point out that the U.S. in particular has benefited from a large and competitive domestic market, a highly developed financial system, and a high level of long-term government support for basic science.

Entrepreneurship isn’t a panacea for growth for developing countries, however. A study of 74 economies across six years concluded that less developed countries should not base their economic policy on “generic entrepreneurship” if they desire to stimulate economic growth. The authors argue that focusing on programs that develop human capital, take advantage of economies of scale, and entice foreign capital are more effective in spurring economic growth.

Italy may provide an additional example of a country where high levels of self-employment have proved to be inefficient for economic development. Research has shown that Italy has experienced large negative impacts on the growth of its economy because of self-employment.

Social Entrepreneurship and Economic Progress

With concerns over sustainability, inequality, and other issues gaining attention, some entrepreneurs have become more interested in the social consequences of their economic activity. The rise of social awareness among certain entrepreneurs has led to many attempts to use the principles of entrepreneurship to create a more just and sustainable world.

Social entrepreneurship has been around as a concept since the 1950s and has become increasingly common. It describes a category of entrepreneurship that can attempt to both make a profit and solve societal problems in some cases. It differs from the typical nonprofit model when it pursues both of these ends simultaneously.

Fast Fact The reliance on an economic system for entrepreneurship presents both upsides and downsides from the perspective of social justice which prizes a world with equal rights and access to opportunity,

Socially conscious entrepreneurship theoretically offers the opportunity to generate solutions for marginalized communities and the motivations for social entrepreneurs around the world tend to come from a genuine desire to fix serious problems. Sometimes attempts to solve the underlying structural problems lead to murky results, however.

The dual motives of profit and social good can sometimes clash as the example of microfinancing in India and Bangladesh revealed. Once popular in international circles, microfinancing is now seen as having a more limited impact on eradicating poverty and sometimes even increasing indebtedness. The practice may also have led to a series of suicides among farmers in Andhra Pradesh in the 2000s.

What’s the Difference Between a Small Business Owner and an Entrepreneur? Small businesses generally focus on existing products and services while entrepreneurs look to introduce new ones. Small business owners can be entrepreneurial in their own way, however and entrepreneurs may end up as small business owners if their idea catches on.

What Is an Intrapreneur? An intrapreneur is someone who works within a larger company, typically one they don’t own, to foster entrepreneurial ideas and innovation. Intrapreneurship can be another source of economic growth and intrapreneurs often have access to greater resources than independent entrepreneurs without a company behind them.

What Is a Social Entrepreneur? A social entrepreneur is someone who launches an innovative enterprise to address a larger social issue. They may or may not also hope to turn a profit from their efforts.

The Bottom Line

The relationship between entrepreneurship and economic growth is complicated and can vary from one country to another based on their level of economic development. Entrepreneurs can accelerate growth in highly developed economies. They may have less of a positive effect in less developed ones.

Some entrepreneurial efforts, often referred to as social entrepreneurship, hold out the promise of new innovations that will address problems such as climate change and structural racism, possibly while making a profit at the same time.

The U.S. economy, for the most part, is a services economy. The services sector accounts for more than 70% of the country’s gross domestic product, according to the Bureau of Economic Analysis.

This month, that sector grew at its second-weakest pace in the past year, according to a new report out this morning from S&P Global.

The weak growth is thanks in large part to weaker demand. And businesses surveyed by S&P pinned the blame for that on all of the uncertainty surrounding the economy right now — particularly the president’s tariffs.

The U.S. exports about a trillion dollars-worth of services each year. That’s about a third of all U.S. exports.

“This would be things like law, consulting, accounting, financial services,” said Abby Samp with Oxford Economics.

Services like these are not directly subject to retaliatory tariffs right now, said Robert Johnson, an economics professor at the University of Notre Dame.

But he said the services sector will be indirectly affected by retaliatory tariffs on goods, because goods producers rely on the services sector.

“A car producer will use lawyers, accountants, and bankers, in order to produce that car, and so all of the services that those car firms use ought to be worried about retaliatory tariffs on U.S. exports of goods,” Johnson said.

China and other countries have plenty of other tools they can use to crack down on American services, he added.

“So for example, they could announce restrictions on the ability of U.S. consulting firms to do business in China, or restrictions on U.S. financial firms in selling financial services into various markets,” Johnson said.

The big concern for the services sector as a whole — both for firms that export and those that do all their business here — is what will happen if the tariffs cause the whole economy to contract, said Meagan Schoenberger, senior economist at KPMG.

“Because when economies either slow or enter a recession, spend on services tends to decline,” she said.

That’s something Matt Hetrick has already noticed. He runs an accounting firm called Harmony Group, and many of his clients are restaurant owners, who are especially vulnerable to tariffs on imported goods.

Hetrick said many of them are trying to cut back on accounting services.

“There have been people who’ve reduced the scope of their work with us, looked to move to a lower package or something of that nature, lower service level to help save some money to offset their input costs,” he said.

Hetrick said other clients are scaling back expansion plans, which is also not a great sign.

“We think there’s going to be a slowdown in the speed in which there are new … restaurants basically built,” he said.

In other words, if the restaurant industry contracts, Hetrick’s business could too.

These smarter choices can help small and medium-sized businesses reduce e-waste, cut energy costs and align with a growing demand for responsible innovation.

Opinions expressed by Entrepreneur contributors are their own.

As Earth Day kicks off, it’s a great reminder for small and medium-sized businesses (SMBs) to rethink how to approach their ESG (Environmental, Social and Governance) practices when it comes to the tech they use. SMBs are the backbone of the global economy, making up approximately 90% of businesses worldwide and are responsible for 60-70% of global industrial emissions. That’s a huge environmental footprint, but it also means SMBs are uniquely positioned to drive real change.

With the global creation of e-waste projected to reach 82 million tonnes by 2030 and the demand for AI-powered computing on the rise, SMBs have a powerful opportunity — and responsibility — to lead in energy efficiency best practices, leveraging long-lasting, mindful materials and ethical sourcing. By making smarter, more energy-efficient decisions today, businesses of all sizes — especially SMBs — can help reduce e-waste, lessen their environmental impact and help build a more environmentally responsible, innovative digital future for generations to come.

Here’s how small businesses can start making a lasting impact — one smart decision at a time.

Related: 6 Ways to Profitably Integrate Eco-Friendly Practices into Your Business

Cut energy costs with AI — without sacrificing performance

SMBs often face hurdles like limited resources and the high upfront costs associated with more sustainable technologies. However, innovations are now helping level the playing field.

The rise of AI-powered computing can support broader ESG and sustainability ambitions through smarter energy use. For example, AI-enabled laptops today feature intelligent power optimization algorithms that dynamically adjust energy consumption based on workload, helping systems run more efficiently without drawing unnecessary power. Many SMBs are also exploring into AI to streamline operations — 89% are already using AI tools to automate tasks. This isn’t just about saving time, it’s about reducing energy and resource waste across workflows.

Beyond end-user devices, AI is driving greater efficiency across infrastructure. AI-powered enterprise solutions can help data centers manage workloads more intelligently and reduce energy use. And with the edge computing market expected to grow nearly 37% annually through 2030, there’s a growing emphasis on localized processing that limits energy-intensive data transfers. Meanwhile, improvements in liquid cooling, airflow design and modularity are extending device lifespans and supporting more circular approaches to IT. We’re also seeing more tech manufacturers incorporate plastic-free packaging and energy-efficient designs, aligning innovation with evolving sustainability goals.

By integrating AI into energy and infrastructure management, businesses have more tools to drive efficiency and help reduce waste.

Related: How AI Is Leveling the Playing Field For Small Businesses to Compete With Industry Giants

Advance circular economy practices

Sustainability isn’t just about how tech is used — it’s about how it’s made, used and reused. For SMBs, embracing circular economy practices can be one of the most impactful ways to improve resource efficiency, reduce both cost and environmental impact.

One of the most straightforward steps is investing in technology that incorporates recycled materials. Choosing laptops and desktops that include post-consumer content (PCC) plastics or recycled metals can help reduce reliance on virgin materials and supports more responsible sourcing practices. As of 2025, a growing number of Fortune 500 companies have made public commitments related to climate action. A World Economic Forum report cites that specifically, 78% of Fortune 500s have set climate-related targets, though only 12% have established objectives tied to biodiversity loss. This gap presents both a challenge and an opportunity for businesses — especially small and midsize ones — to lead by example. By choosing smarter technology solutions and services, SMBs can align with their broader sustainability goals while distinguishing themselves in a competitive market increasingly driven by conscious consumerism.

Beyond PCC plastics, some tech products now integrate ocean-bound plastics (OBP) — plastic waste collected from areas near coastlines and waterways where it is at risk of entering the ocean. By selecting devices and accessories that utilize OBP, SMBs can help address marine pollution while minimizing reliance on virgin plastic sources. Responsible sourcing and design choices like these are part of building more sustainable technology ecosystems.

Modular and repairable technology also plays a key role. Devices that are easier to upgrade or fix extend their usable life, helping reduce the need for early replacement. This is especially important because less than 12% of e-waste is currently recycled, while more than 85% is incinerated — often with environmental consequences. This waste stream makes durability and repairability more crucial than ever.

Finally, SMBs can also consider buy-back, refurbishment and device take-back programs to ensure tech stays in circulation longer. This approach not only can help reduce landfill waste but often unlock financial savings and potential incentives.

Related: 5 Trends Small Business Owners Need to Watch in 2025

A greener future starts with smarter choices

SMBs have a unique opportunity and influential role in shaping a more sustainable future. By embracing energy-efficient technologies, integrating artificial intelligence to optimize operations and adopting circular economy practices, SMBs can make strides towards significantly reducing their environmental footprint while simultaneously enhancing operational efficiency. These strategic choices not only contribute to global sustainability goals but also position SMBs competitively in a market increasingly driven by environmental consciousness.

This Earth Month, let’s reaffirm our commitment to being smarter, greener and more responsible when it comes to choosing our technology solutions — because the future of computing must be both responsible and innovative.

The next step starts today. How will your business lead the way?