Top 10 US States to Start a Franchise Business in 2025

Choosing the right location for your franchise can make or break your success. Whether you’re a first-time franchisee or a seasoned entrepreneur, deciding where to plant the roots of your business is one of the most critical steps in your franchise journey. Why? The state you choose determines your customer base, market potential, business regulations, taxes, and overall operating environment.

With franchise businesses contributing over $780 billion to the U.S. economy annually, states that foster a franchise-friendly environment attract more businesses. This guide dives into the top 10 states to start a franchise based on factors like tax incentives, economic growth, and franchise regulations. If you’re ready to expand your franchise dreams, keep reading to discover the locations that offer the best opportunities in 2025.

The Top 10 Best States to Start Your Franchise in 2025

1. Georgia

• Why Georgia? Georgia consistently ranks as one of the best states to do business thanks to its pro-business policies, affordable tax rates, and thriving metropolitan hubs like Atlanta. Low operating costs combined with strong economic growth offer unparalleled opportunities for franchises.
• Key Highlights:
• Population: 11.03 million, offering a large customer base.
• One of the best things about Georgia is its excellent accessibility and visibility. With a well-connected transportation network, including major highways, Hartsfield-Jackson Atlanta International Airport (one of the busiest in the world), and an extensive rail system, Georgia offers seamless connectivity for residents, businesses, and tourists. Additionally, its strategic location in the Southeast enhances visibility for businesses, making it a prime hub for commerce, logistics, and economic growth.
• Location Assistance: Lower real estate and operational costs compared to states like California and New York.

Current franchise businesses-

Georgia is projected to have over 851,000 franchise establishments in 2025. This would be a 2.5% increase from the previous year.

Tax rebate-

• Georgia has no “throwback rule” – your sales made elsewhere won't be thrown back here for taxation.
• Georgia lowered its corporate tax rate to 5.75%, effective January 2019. For 50 years, it remained at 6%.
• We have designed 100+ projects in Georgia, including franchises like Dollar General, Dunkin', and Dripbar.

Franchising in the state is predicted to provide 361,287 direct jobs and contribute $37.4 billion to the state's economy, making Georgia the No. 1 state in the nation for franchise growth this year due to population growth trends, the region's business-friendly policies, and industry growth.

2. North Carolina

• Why North Carolina? A tech-forward economy and high quality of life make North Carolina a standout for potential franchisees. This state is known for its balanced blend of urban opportunities and rural affordability.
• Key Highlights:
• Population: 10.84 million, offering a large customer base.
• North Carolina is widely recognized for its stunning natural beauty, including the Blue Ridge Parkway, the Great Smoky Mountains National Park, and its coastal areas like the Outer Banks, making it a top destination for outdoor enthusiasts. With a well-connected network of highways, major airports, and public transit systems, the state offers seamless travel options for residents and visitors alike. Its strategic location along the East Coast ensures high visibility for businesses, making it a prime destination for commerce, tourism, and economic growth.
• Affordable Cost of Living: Compared to other major business hubs, North Carolina offers lower real estate and operational costs.

Current franchise businesses-

In 2025, North Carolina is expected to have 32,395 franchise businesses, which is a 4.5% increase from the previous year.

Tax rebate-

• Corporate Income Tax Reduction: North Carolina is franchise-friendly because it is the state with the lowest corporate income tax rate in the country, just 2.5%. This tax rate will gradually decline until it’s reduced to 0% by 2030.
• Franchise Tax: Businesses operating in North Carolina are subject to an annual franchise tax, calculated at $1.50 per $1,000 of the corporation's net worth apportioned to the state, with a minimum tax of $200.
• We have designed 100 projects in North Carolina, including franchises like McDonald's, Taco Bell and KFC

3. Virginia

• Why Virginia? Virginia’s strategic location near Washington, D.C., and its business-friendly culture make it an attractive option for franchises. The state's diverse population ensures a broad customer base for new businesses.
• Key Highlights:
• Population: 8.7 million
• The best thing about Virginia is its rich history, with iconic landmarks like Colonial Williamsburg, Jamestown, and Mount Vernon, combined with diverse landscapes, including mountains, coastlines, and charming cities, making it a great place for both outdoor enthusiasts and history buffs to explore. Its well-connected transportation network, including major highways, airports, and public transit, makes travel seamless.
• Skilled Workforce – Home to a highly educated and diverse labor pool, ideal for staffing franchise operations

Current franchise businesses-

In 2025, Virginia is projected to have 25,542 franchise businesses, which is a 6% increase from the current number.

Tax rebate-

• Major Business Facility Job Tax Credit: Businesses that expand in or relocate to Virginia may qualify for an income tax credit equal to $1,000 for each new full-time job created over a threshold number of 50 jobs.
• We have designed 170+ projects in Virginia, including franchises like School of Rock, Dogtopia, Starbucks

4. Arizona

• Why Arizona? Arizona continues to attract entrepreneurs with its low tax burden, minimal wage growth, and warm weather, making it an ideal state for outdoor and retail franchises.
• Key Highlights:
• Population: 7.431 million
• Arizona is known for its natural beauty, including deserts, mountains, and the Grand Canyon. One of the best aspects of Arizona is its excellent accessibility and visibility. With well-connected highways, major airports, and pedestrian-friendly cities, getting around is easy.
• Strong Economy: With a growing population and a diverse economy, Arizona is a prime location for businesses to thrive.

Current franchise businesses-

As of 2025, Arizona is expected to have 20,434 franchise businesses. This is a 7.2% increase from the previous year.

Tax rebate-

• Business-friendly tax rates and programs: Arizona offers the lowest flat tax rate in the nation at 2.5% and a relatively low 4.9% corporate income tax rate.
• We have designed 50+ projects in Arizona, including franchises like Crocs, Buffalo Wild Wings, Toastique

5. South Carolina

• Why South Carolina? With a government that actively incentivizes franchising and an improving economy, South Carolina is perfect for franchisees looking for an affordable way to break into underserved markets.
• Key Highlights:
• Population: 5.374 million
• South Carolina has many good qualities, including a rich culture, natural beauty, and a growing economy. It's also one of the most affordable states to live in. Its thriving tourism industry, historic landmarks, and scenic coastal attractions also ensure high visibility, making it a prime destination for both businesses and visitors.

Current franchise businesses-

In 2025, South Carolina was projected to have 18,484 franchise businesses. This would be a 7% increase from the previous year.

Tax rebate-

• Corporate Income Tax: The state imposes a flat corporate income tax rate of 5%, one of the lowest in the Southeast.
• We have designed 60 projects in South Carolina, including franchises like Papa John’s, Hand & Stone, Miniso

6. Pennsylvania

• Why Pennsylvania? Pennsylvania boasts an excellent labor pool, a rich history, and a robust infrastructure, making it a smart choice for potential franchisees.
• Key Highlights:
• Population: 12.96 million
• Pennsylvania is known for its rich American history, particularly around Philadelphia, with sites like Independence Hall, diverse landscapes including beautiful state parks and forests, vibrant cities like Philadelphia and Pittsburgh, and excellent food options. Also, With a well-connected transportation network, including major highways, rail systems, and international airports, the state offers seamless access to key cities like Philadelphia and Pittsburgh.
• Access to Major Markets: Pennsylvania is strategically located with easy access to major cities like New York, Philadelphia, and Washington, D.C., enhancing market reach.

Current franchise businesses-

Pennsylvania is expected to have 851,000 franchise establishments by 2025, which is a 2.5% increase from the current number.

Tax rebate-

• Property Tax Credits: The Property Tax/Rent Rebate Program in Pennsylvania offers $380–$1,000 in rebates to eligible seniors and disabled adults.
• We have designed 100 projects in Pennsylvania, including franchises like Hey Dude, Citizen Bank, Wingstop

7. Tennessee

• Why Tennessee? Tennessee’s reputation for no state income tax and an expanding economy makes it one of the most cost-effective franchise environments. The state supports businesses in both rural and urban settings.
• Key Highlights:
• Population: 7.12 million
• The best thing about Tennessee is its rich blend of vibrant music culture, particularly centered around Nashville as "Music City. With a well-connected network of highways, major airports, and a central location in the U.S., Tennessee offers seamless travel and transportation options. Its thriving cities, such as Nashville and Memphis, are highly visible hubs for business, tourism, and culture, making it an attractive destination for both residents and visitors.
• Skilled Workforce: The state boasts a highly skilled labor force, particularly in the hospitality and service industries, which is ideal for franchise operations.

Current franchise businesses-

Tennessee is home to approximately 19,770 franchise establishments, employing around 213,367 individuals.

Tax rebate-

• Franchise Tax: Taxpayers who paid the franchise tax on the property measure using Schedule G for tax years ending on or after March 31, 2020, for which a return was filed with the department on or after January 1, 2021, are eligible for a refund.
• We have designed 50 projects in Tennessee, including franchises like Wayback Burgers, Jeremiah’s Italian Ice, Long John Silver’s

8. Florida

• Why Florida? Between its robust tourism industry, large population, and no personal income tax, Florida offers significant opportunities for franchisees, especially in the hospitality and retail sectors.
• Key Highlights:
• Population: 22.61 million
• Florida is renowned for its beautiful beaches, warm climate, diverse wildlife in the Everglades National Park, unique attractions like the Florida Keys, vibrant cities, and world-class theme parks like Walt Disney World. With a well-connected network of highways, international airports, and public transportation, getting around the state is easy. Additionally, Florida’s thriving tourism industry ensures high visibility for businesses, attractions, and real estate, making it a prime location for economic growth and exposure.
• Tourism Hub: As a top tourist destination, Florida provides a steady stream of potential customers for various industries, especially in hospitality and retail.

Current franchise businesses-

In 2025, Florida is expected to have over 851,000 franchise establishments, which is a 2.5% increase from 2024.

Tax rebate-

• Corporate Income Tax Incentives: Businesses may qualify for credits such as the Contaminated Site Rehabilitation Tax Credit, which provides 50% of rehabilitation costs up to $500,000 per site per year for rehabilitating brownfield sites.
• We have designed 260+ projects in Florida, including franchises like JETSET Pilates, 810 Billiards & Bowling, Wendy’s

9. Colorado

• Why Colorado? With a population that values sustainability and wellness, Colorado presents a unique opportunity for franchises catering to the eco-conscious and active lifestyle markets.
• Key Highlights:
• Population: 5.878 million
• With a well-connected transportation network, including major highways, international airports, and public transit systems, traveling within the state is convenient. Additionally, Colorado’s breathtaking landscapes, ranging from the Rocky Mountains to expansive plains, offer unparalleled visibility, making it a prime destination for outdoor enthusiasts, businesses, and tourists.
• High Quality of Life: The state is known for its excellent quality of life, attracting skilled professionals, which can translate into a reliable workforce.

Current franchise businesses-

Colorado is expected to have over 691,230 franchise businesses operating within the state.

Tax rebate-

• Tax Credits for Small Businesses: The Advanced Industry Investment Tax Credit is intended for qualified small businesses that have received up to $10 million in third-party investment and that generate up to $5 million in annual revenue.
• We have designed 50 projects in Colorado, including franchises like Little Caesars, Rosati's Pizza, Qdoba
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10. Maryland

• Why Maryland? Maryland’s high-income households and strategic location near Washington, D.C., make it an incredibly attractive state for franchises targeting affluent customers.
• Key Highlights:
• Population: 6.18 million
• The best thing about Maryland is its diverse mix of coastal beauty, rich history, vibrant cities like Baltimore and Annapolis, delicious seafood (especially crab cakes), and close proximity to Washington D.C It offers excellent transportation networks, including highways, airports, and public transit systems. This ensures easy connectivity for businesses, residents, and visitors alike. Additionally, Maryland's thriving economy and coastal position enhance its visibility, making it a prime location for commerce, tourism, and innovation.

Current franchise businesses-

Maryland, the state, hosts a robust small business environment, with approximately 604,176 small businesses.

Tax rebate-

• Corporation Income Tax: Maryland does not charge a general franchise tax. Franchise businesses pay corporate 8.25% or personal income tax based on their structure.
• We have designed 170 projects in Maryland, including franchises like T.J. Maxx, Dairy Queen, Jimmy John’s

Criteria for Selecting the Top States to Start a Franchise

Not all states are created equal when it comes to franchising. To determine which states offer the best environment for starting a franchise, we’ve evaluated several key criteria:

1. Business Climate

The overall business environment in a state is a major factor. States with a business-friendly atmosphere typically provide fewer bureaucratic hurdles, streamlined business registration processes, and supportive government policies.

2. Tax Incentives

Corporate tax rates and additional incentives (like tax breaks and grants) can significantly determine a franchise's profitability. States with low or no income tax and favorable business tax policies rank higher for franchises.

3. Market Demand

The purchasing power, population growth, and general demand for goods and services in a state can directly impact your franchise's chances of success. States with a growing population and high disposable income often offer greater opportunities.

4. Franchise Regulations

Franchise laws and regulations are essential considerations. States with laws that protect franchisee rights while still offering flexibility for growth stand out as prime franchise destinations.

5. Economic Factors

Economic health, including employment rates, GDP growth, and household incomes, is a good indicator of how well a state supports small businesses. Higher economic activity equals higher franchise potential.

With these factors in mind, here are the top 10 states where you should consider launching your franchise in 2025.

How to Find the Ideal Franchise Location

1. Demographics:

Analyze the local population’s age, income, and lifestyle to ensure it matches your target market. Understanding local demographics helps in tailoring your services to meet consumer needs.

2. Accessibility & Visibility:

Choose a location that is easily accessible by major roads and public transport. High visibility from busy streets can increase brand awareness and attract more customers.

3. Foot Traffic:

Look for areas with high pedestrian traffic, such as near shopping centers or busy intersections. This increases the likelihood of spontaneous visits and repeat business.

4. Local Competition:

Research nearby businesses to understand the competition level in your area. Selecting a location with minimal direct competition can give you a strategic advantage.

5. Ample Parking:

Ensure the location offers sufficient parking space for customers. Convenient parking encourages more visitors and makes your franchise more attractive to customers with cars.

6. Real Estate Costs:

Factor in the cost of leasing or buying the property. Choose a location that balances affordability with visibility and accessibility to maximize profitability.

7. Sports & Entertainment Proximity:

Being close to sports venues or entertainment hubs can drive additional foot traffic. Customers often visit these areas for both leisure and food services, creating more opportunities for your franchise.

8. Future City Growth & Development:

Research the area's potential for growth and future development plans. Investing in an area set for expansion ensures long-term business success and increased property value.

Conclusion

The success of your franchise depends not just on your business model but also on where you choose to set up shop. States like Georgia, North Carolina, and Virginia offer the perfect environments for entrepreneurs ready to thrive, while Florida and Tennessee provide unmatched opportunities for growth.

When it comes to MEP design for your franchise, NY Engineers can provide expert solutions tailored to your needs. From energy-efficient systems to efficient layout designs, our team ensures that your HVAC, electrical, plumbing, and fire protection systems are optimized for maximum performance, cost-efficiency, and compliance. Let us help you build the foundation for your franchise's success—reach out today!