Unpacking the AFA’s State of the Franchise Operator Report

This week, the American Franchise Academy marked 10 years as the franchising space’s premier independent business management academy by releasing the 2026 State of the Franchise Operator Report. The report, which the AFA says will become a yearly tradition, leveraged interviews and surveys from more than 870 franchise professionals to benchmark the state of the space, identify key challenges, and uncover new opportunities for franchisee success.

The authors of the report broke survey respondents down into four groups: franchisees, unit managers, district managers, and frontline team members. All participants were American Franchise Academy students who were surveyed before beginning their respective learning programs.

Franchisee challenges

The 54 franchisees who participated in AFA’s survey cited financial visibility as their biggest challenge. About 43% of respondents said it was their #1 concern. They feel that they lack either the financial data they need to make decisions, the correct lenses to interpret the data they do receive, or the knowledge they need to act accordingly based on data.

That’s a concerning sign for the industry because it suggests that many franchisees aren’t fully equipped to make the decisions they need to maintain profitability and improve performance. Closing those knowledge gaps, both in terms of providing information and providing management training, are key to ensuring franchise systems succeed.

On a related note, the second biggest challenge that franchisees identified was leadership development. For franchisees, this issue cuts both ways, as owner-operators need great leaders working for them in order to execute at ground level, but they also need to cultivate their own leadership skills in ways that they’d perhaps never considered before getting into this space.

Franchise systems require consistent execution to deliver a consistently strong experience. Teaching and reinforcing that consistency requires significant interventions from skilled, confident, people-centric leaders. Franchisees need to ensure those leadership structures are in place without also creating bottlenecks that actually slow down execution, intervention, and improvement.

Achieving that requires a blend of providing leadership from the top down and hiring managers who are proactive and dedicated to upholding standards. In order to strike that balance, franchisees need to focus on systems and people while constantly fighting for as much data as possible to inform their decision making process.

District manager insights

Over 420 district mangers participated in AFA’s survey, and the first big takeaway from the group was their relative inexperience. 35% of district managers had been in their role for less than one year at the time they were surveyed, and 52% had been in their role for less than two years. Only about a quarter of respondents had more than four years of experience in their role.

Those numbers speak to the challenge and churn of working as a district manager in the franchising space. On a five-point scale from “Still have lots to learn” to “I feel like a superstar,” 61% of the district managers surveyed ranked themselves a 3 (“Getting there”) or below. The data suggests that many district managers are feeling overwhelmed, as 75% of those surveyed say they manage four or more units and 22% manage more than eight.

Unsurprisingly, the #1 challenge the district manager cohort identified was time management and prioritization across units. The second and third ranked challenges also went hand in hand: accountability/upholding standards and operational consistency across multiple locations.

The data clearly illustrates that district managers need to be able to trust their unit managers. Without strong location-based managers who uphold brand standards and ensure a consistent customer experience, the district manager can be drawn into micromanagement of individual units in ways that are destructive to their productivity and the overall health of the geographic territory they manage.

To support district managers better, franchise systems need to provide more specific training on what proactive leadership looks like, how to foster a consistent culture across the units they oversee, and how to cultivate strong leadership at the unit level to take operational pressure off the district manager.

Unit manager perspectives

This cohort was comprised of 248 unit managers, general managers, and assistant managers at franchise businesses. The survey revealed that this group includes a large number of new leaders, many of whom have risen to their current role through hard work and earning promotions.

A whopping two-thirds (67%) of unit managers surveyed have been in their role for less than three years, and 36% of them have held their position for less than a year. That suggests that many unit leaders in the franchise space are still learning themselves. At the same time, they’re responsible for operating businesses that generate hundreds of thousands – if not millions – of dollars annually. That’s a lot on one person’s shoulders.

Looking back at the challenges identified by district managers, it’s no wonder that unit level managers require significant support from above when it comes to enforcing consistency and standards. Unit managers identified staff management, motivation, and retention as their top challenge, followed by time management and delegation. They’re so focused on ground-level operations (staffing, delivering services, keeping the business looking professional, etc.) that the bigger picture of the franchise system can get lost among the tasks of daily work.

The data suggest that, to better support unit managers, franchise systems need to provide more training on strategic thinking, delegation, and other strategies for ensuring that operational responsibilities do not become a timesuck that prevent them from addressing the business’ higher-order needs.

Frontline employee concerns

The AFA surveyed 155 hourly employees, crew members, and junior staff at franchise businesses to profile how franchise system pain is felt at the ground level. The survey asked workers a series of questions to uncover what’s important to them and how they feel about the franchise systems in which they work.

The data reveals that frontline workers tend to feel connected and respected in their immediate workplace but disconnected from the greater system. 91% of those surveyed said they feel their unit managers care about them, but just 77% agree that the owners of the business care about them.

Naturally, compensation emerged as a major concern for ground-level employees. 78% of frontline workers are interested in increasing their pay and level of responsibility, but only 59% are clear about how and when they might get a raise. Again, this speaks to a disconnect between the crews that actually deliver services to customers and the system that exists above them.

In order to foster better engagement, develop the next generation of leaders, and build a proactive network that’s capable of self-management without constant intervention from district-level leaders, franchise systems must get better at helping employees feel connected to the entire system and see the opportunities that are available to them when they uphold standards and take an interest in the strength of the business.

The American Franchise Academy’s 2026 State of the Franchise Operator Report reveals that many of the industry’s top challenges are felt all the way up and down the chain of command. Franchisees and district-level leaders need more time for strategy, analysis, and business planning, but their ability to do that work is impeded by the need to put out fires from an operations perspective.

Ideally, unit managers would be able to take the lead on local operations and uphold system-wide standards at each individual unit, but many of them lack the experience and training necessary to make those decisions confidently. Instead of managing, supervising, and developing talent, they’re drawn into delivering services and daily routine tasks, which should ultimately be the work of frontline employees. Those workers are excellent at delivering services, but they’re often disconnected from the bigger picture of the system in ways that lead to operational challenges and create more work for the unit and district managers.

The big takeaway from the report is that for the industry to continue to thrive, franchise systems need to strengthen role-based training and ensure they’re preparing leaders and workers at every level to be part of a thriving system, not just to handle the work that’s in front of them in the moment.