Franchise cost and rules update, September 2026

Health & Wellness

Subscription cancellation rules and the tip deduction are the two live issues.

Most concepts in this guide sell a monthly membership, which puts automatic renewal law at the center of their compliance work. The federal click-to-cancel rule was vacated by the Eighth Circuit in July 2025. The Federal Trade Commission restarted the process with an advance notice of proposed rulemaking on 13 March 2026, comments closing 13 April. So the federal position today is an open rulemaking. The states moved on their own timetable: Maine from 1 January 2026. Colorado from 16 February 2026. Maryland from 1 June 2026. Connecticut and Virginia from 1 July 2026. Virginia's reaches the front desk directly: for a membership sold in person, cancellation has to be available through an electronic platform or by telephone, free and answered during normal business hours, with the good-faith defense removed. For any studio selling memberships face to face, the cancellation path now has to match the selling path.

On labor, a Treasury and Internal Revenue Service final rule effective 12 June 2026 defines which tips qualify for the new deduction, capped at $25,000 a year and phasing out above $150,000 of income for tax years 2025 through 2028. It names barbers, hairdressers, hairstylists and cosmetologists as a qualifying occupation category. That reaches the licensed staff across the salon, blowout, waxing and lash concepts in this guide. The rule draws one line worth checking against the point of sale. Amounts a client can reduce to zero qualify. Mandatory service charges and automatic gratuities are excluded for want of a voluntary element. A studio adding an automatic gratuity to a package or group booking is paying wages. That distinction now has a cash value to the person receiving it.

A Department of Labor opinion letter issued 21 January 2026 clarified the commissioned-employee overtime exemption a service business may rely on. The regular rate must exceed $10.88 an hour, more than half of total compensation must come from commissions across a representative period. Tips count toward compensation only where they satisfy a permissible tip credit, except in Maryland, the Carolinas, Virginia and West Virginia, where all tips must be counted. Nineteen states raised their minimum wage on 1 January 2026. In a category where wages runs near half of revenue, both of those reach the largest line on the profit and loss.

On premises, United States retail availability held at 4.9% in the second quarter of 2026 with average asking rents at $24.79 a square foot, up 2.4% year on year. A second national measure put vacancy at 6.0% with rents at $25.65, up 2.2%. Rent rising faster than an unit's own revenue growth pushes that 9.68% to 11.3% occupancy cost group upward at renewal. With building work running from tens of thousands to several hundred thousand across these thirty-nine brands, the tenant improvement allowance remains the largest negotiable term in a first lease.

Sources: FTC advance notice of proposed rulemaking, 13 March 2026 · Virginia automatic renewal law, effective 1 July 2026 · Treasury and IRS final rule on qualified tips, effective 12 June 2026 · DOL opinion letter FLSA2026-4, 21 January 2026 · 2026 state minimum wage updates · CBRE US Retail Figures, Q2 2026 · Cushman & Wakefield US Retail MarketBeat, Q2 2026

Fitness

A recurring-revenue category in the year cancellation law moved.

Every brand in this guide sells on recurring billing, and at Club Pilates memberships are 87% of revenue while at StretchLab they are 80%. That puts automatic renewal law at the center of the category. The federal click-to-cancel rule was vacated by the Eighth Circuit in July 2025. The Federal Trade Commission restarted the process with an advance notice of proposed rulemaking on 13 March 2026, comments closing 13 April. So the federal position today is an open rulemaking. The states moved on their own timetable: Maine from 1 January 2026. Colorado from 16 February 2026. Maryland from 1 June 2026. Connecticut and Virginia from 1 July 2026. Virginia's reaches the front desk directly: for a membership sold in person, cancellation has to be available through an electronic platform or by telephone, free and answered during normal business hours, with the good-faith defense removed. The exposure scales with the flat charge: a brand carrying $44,400 of fixed obligation against $301,873 of average revenue has far less room to absorb a point of added members leaving than one carrying $6,000.

On premises, this is the most occupancy cost-exposed category in the library. The five brands that disclose it report 11.4% to 20.0% of revenue, against 9.68% to 11.3% across health and wellness. United States retail availability held at 4.9% in the second quarter of 2026 with average asking rents at $24.79 a square foot, up 2.4% year on year. A second national measure put vacancy at 6.0% with rents at $25.65, up 2.2%. Footprints in this guide run from 300 square feet at an one-table StretchMed studio to 48,703 at the median Crunch club in one age group, so the same asking rent produces occupancy cost two orders of magnitude apart. The tenant improvement allowance is the variable worth chasing: Orangetheory's franchisees reported an average of $28.62 a square foot last year against a ceiling of $100. Crunch's filing expects a landlord to fund around 30% of development costs.

On labor, the five brands that disclose it report 26.0% to 36.9% of revenue. The coached formats sit at the top of that range because an instructor stands in front of every class whatever the class size. Nineteen states raised their minimum wage on 1 January 2026. A Department of Labor opinion letter issued 21 January 2026 clarified the commissioned-employee overtime exemption a service business may rely on. The regular rate must exceed $10.88 an hour, more than half of total compensation must come from commissions measured across a representative period. Tips count toward compensation only where they satisfy a permissible tip credit, except in Maryland, the Carolinas, Virginia and West Virginia, where all tips must be counted. Most brands in this guide pay coaches or practitioners partly on membership or training sales. So the test applies widely and the wages build deserves checking against it.

Sources: FTC advance notice of proposed rulemaking, 13 March 2026 · Virginia automatic renewal law, effective 1 July 2026 · CBRE US Retail Figures, Q2 2026 · Cushman & Wakefield US Retail MarketBeat, Q2 2026 · 2026 state minimum wage updates · DOL opinion letter FLSA2026-4, 21 January 2026

Senior Care

The hourly rate moved 3% and the wage moved 4.93%.

The national median rate for non-medical caregiver services reached $35 an hour in results published on 2 March 2026. That is up 3% year on year and equal to $80,080 a year at 44 hours a week. Caregiver pay rose faster: home care aide rates climbed 4.93% during 2025. For-profit agencies averaging $18.75 an hour against a state range of $16.52 in Oklahoma and $23.55 in New Hampshire, turnover easing from 36.31% to 34.17%, and average sign-on bonuses reaching $2,304. 88 jurisdictions are raising minimum wages across 2026, 68 of them on 1 January. New Jersey's long-term care minimum of $18.92 now sits above the national for-profit average wage. On a category where caregiver cost is half of revenue at every brand that reports it, an hourly rate growing 3% against a wage growing 4.93% is the single most important number on this page.

On overtime, the Sixth Circuit held on 1 April 2026 that the companionship and live-in exemptions stay closed to third-party employers, upholding the 2013 rule as a valid exercise of delegated authority. The Department of Labor proposed rescinding that rule on 2 July 2025 and told its investigators on 25 July 2025 to halt enforcement. That includes open cases, until any final rule takes effect. The regulatory agenda published on 14 August 2026 still listed the replacement as pending against an August 2026 target it has passed. Enforcement policy binds the Department; a published circuit holding is what a private plaintiff cites. Medicare moved the other way for the certified lines. The proposed home health rule of 1 July 2026 nets a 2.4% increase after a 3.0% temporary clawback. The hospice rule of 30 July 2026 sets 2.3% and lifts the cap to $36,174.75. Medicaid faces $911 billion of federal reduction across 2025 to 2034 with 34 states already capping personal care hours, which pushes hours toward private pay. And for the placement brands, three states now regulate referral agencies (Texas from 20 June 2025, georgia from 1 July 2026 and Arizona from mid-2026) with fee and conflict disclosure at the center of all three.

Sources: CareScout, 2 March 2026 · LeadingAge, 14 November 2025 · National Employment Law Project, 3 December 2025 · US Court of Appeals for the Sixth Circuit, 1 April 2026 · US Department of Labor, 25 July 2025 · CMS, 1 July 2026 · KFF, 20 November 2025 · Georgia SB 439, signed 11 May 2026

Home & Commercial Services

Wages, premises and renewals.

Labor is the dominant cost across this category wherever a brand reports it, from 11.3% of revenue at Mosquito Shield to 62.56% at City Wide Facility Solutions, with most trades landing between 20% and 45%. Nineteen states raised their minimum wage on 1 January 2026. A Department of Labor opinion letter issued 21 January 2026 set out the commissioned-employee overtime exemption a service business may rely on. The regular rate must exceed $10.88 an hour, more than half of total compensation must come from commissions measured across a representative period. Tips count toward compensation only where they satisfy a permissible tip credit, except in Maryland, the Carolinas, Virginia and West Virginia, where all tips count. Technicians and cleaners across this category are routinely paid on a percentage of the work they complete and routinely tipped. So that letter reaches most of these models directly.

Premises requirements vary widely and the market has tightened for all of them. United States retail availability held at 4.9% in the second quarter of 2026 with average asking rents at $24.79 a square foot, up 2.4% year on year. A second national measure put vacancy at 6.0% with rents at $25.65, up 2.2%. Garage Living and DreamMaker require a showroom, The Cleaning Authority and MaidPro an office inside the territory, and Garage Force and WOW 1 DAY PAINTING allow a home base with a trailer or van. So the same rent increase lands on a $246,450 build and a $96,050 one very differently.

Recurring service plans have most of the revenue at the cleaning, lawn and pest brands here, which puts automatic renewal law inside those models. The federal click-to-cancel rule was vacated by the Eighth Circuit in July 2025. The Federal Trade Commission restarted the process with an advance notice of proposed rulemaking on 13 March 2026, comments closing 13 April. Among the states, Maine moved from 1 January 2026, Colorado from 16 February 2026, Maryland from 1 June 2026, and Connecticut and Virginia from 1 July 2026. Several of those statutes reach business-to-business arrangements as well as consumer ones, which brings the commercial cleaning and landscaping brands into scope alongside the residential ones.

Sources: 2026 state minimum wage updates · DOL opinion letter FLSA2026-4, 21 January 2026 · CBRE US Retail Figures, Q2 2026 · Cushman & Wakefield US Retail MarketBeat, Q2 2026 · FTC advance notice of proposed rulemaking, 13 March 2026 · Virginia automatic renewal law, effective 1 July 2026

Childcare & Education

Wages, premises and how tuition gets billed.

Staff cost is the category's defining line, and it moved on 1 January 2026 when nineteen states raised their minimum wage. At a childcare center where wages already takes 40.1% to 48.6% of revenue, a wage rise lands on the largest single cost in the business and ratio requirements leave little room to absorb it by running leaner. Scheduling is where the rest of it sits: the United States Department of Labor issued opinion letter FLSA2026-4 on 21 January 2026. Split shifts, travel between sites and training time are the places where hours accumulate quietly in both the center and the mobile models.

Premises separate the two groups as sharply as staff do. Building costs takes 12.3% to 17.6% of revenue at the brands that lease a building and 3.8% at the brand that works inside schools and parks. United States retail availability held at 4.9% in the second quarter of 2026 with average asking rents at $24.79 a square foot, up 2.4% year on year. A second national measure put vacancy at 6.0% and rents at $25.65, up 2.2%. For an owner weighing a second unit, those are the rents a renewal or a new lease commits to for the next decade.

Tuition in this category is billed on stored cards. Brings the 2026 automatic renewal rules into scope for every brand here that charges monthly. Maine's took effect on 1 January, Colorado's on 16 February, Maryland's on 1 June. Connecticut's and Virginia's on 1 July. The Federal Trade Commission issued an advance notice of proposed rulemaking on click-to-cancel on 13 March 2026 with comments closing 13 April. That is after the Eighth Circuit vacated the earlier rule in July 2025. Most of these systems run enrollment and billing through a franchisor-designated platform. So cancellation wording is set centrally while the obligation to comply stays with the owner whose name is on the enrollment agreement.

Sources: 2026 state minimum wage updates · DOL Wage and Hour opinion letters · CBRE US Retail Figures, Q2 2026 · Cushman & Wakefield US Retail MarketBeat, Q2 2026 · FTC negative option rulemaking

Pet Care

Wages, leases and the card on file.

Labor is the largest single line at nine of the ten brands here that publish it, running 14.4% to 49.3% of revenue. Much of it sits close to a statutory wage minimum. Nineteen states raised their minimum wage on 1 January 2026. A second round landed on 1 July. Alaska moved from $13.00 to $14.00, Oregon to $16.80 in the Portland metro area, $15.55 in standard counties and $14.55 in non-urban ones, and Washington, D.C. to $18.40 with a $10.30 tipped rate. On a $650,000 business every point of labor is $6,500 a year, so a two-point move costs more than most of these brands spend on marketing. The scheduling problem is shared across the category too: early drop-off, late pick-up, overnight boarding cover and appointment-driven rostering all produce split shifts and travel time.

Premises are where this category is most exposed and most varied. Kennels and training gyms need drainage, ventilation, sound isolation and floor space. So they compete for flex and light-industrial premises. Grooming salons and retail formats want visibility and parking. United States retail availability held at 4.9% in the second quarter of 2026 with average asking rents at $24.79 a square foot, up 2.4% year on year. A second national measure put vacancy at 6.0% and rents at $25.65, up 2.2%. The filings in this library all point the same way. The rent bill barely differs between a brand’s highest-selling and lowest-selling units. So a lease signed at the wrong rate stays wrong for a decade.

Almost everything in pet care is now sold on packages, memberships and recurring appointments billed to a card on file. Puts the 2026 automatic renewal rules at the center of the model. Maine’s took effect on 1 January, Colorado’s on 16 February, Maryland’s on 1 June. Connecticut’s and Virginia’s on 1 July. At federal level the Federal Trade Commission issued an advance notice of proposed rulemaking on click-to-cancel in March 2026, comments closed on 13 April with roughly 100 filed. The process remains at the notice-and-comment stage after the Eighth Circuit vacated the earlier rule in July 2025. Every brand here runs its billing through a franchisor-designated platform, so cancellation wording is configured centrally while the obligation to honor it stays with the owner.

Sources: 2026 state minimum wage updates · Mid-year state minimum wage rate updates, July 2026 · CBRE US Retail Figures, Q2 2026 · Cushman & Wakefield US Retail MarketBeat, Q2 2026 · FTC revives the click-to-cancel rule, May 2026 · FTC Negative Option Rule