Franchitti's car went airborne and destroyed a portion of the catch fence at the Grand Prix of Houston, sending shards of debris into the packed grandstands where spectators were on their feet cheering the race's final lap.
The 40-year-old Briton, who also suffered a concussion and broken ankle, was awake and alert when he was sent to hospital, where he will stay overnight but not require surgery for the spinal fracture, IndyCar said in a statement.
"He's talking," Chip Ganassi, team owner of the car that Franchitti drives, said during a television interview. "His ankle is a little sore. His back is a little sore. He's going to take a trip to the hospital, but he is OK."
The crash came less than eight months after nearly 30 fans were injured at the Daytona International Speedway when a 10-car crash sent debris, including a tire, into the crowd during the final lap of a Nationwide NASCAR race.
It is also nearly two years since the motor racing world was left reeling when one of Franchitti's best friends, fellow Briton Dan Wheldon, died after a fierce 15-car crash in the IndyCar season-finale at Las Vegas Motor Speedway.
Franchitti made contact with Japanese driver Takuma Sato on one of the final turns, sending the four-time IndyCar champion's car airborne into the protective fence before spinning several times, while debris was sprayed toward the grandstands.
"On the last lap I caught the marbles and brushed the wall and lost momentum," Sato said. "A couple cars passed me as I was off line and in turn five. I got very loose and Dario and I came together. Hopefully Dario is OK."
An IndyCar official and two spectators were transported to hospital for evaluation, according to the auto-racing body, while the Houston Chronicle reported 11 other spectators were evaluated on-site.
Franchitti is a four-time IndyCar Series Champion in his fifth season with Target Chip Ganassi Racing alongside two-time champion Scott Dixon.
The native of Scotland has 261 starts under his belt in Indy Car racing and made headlines last January when he and American actress Ashley judd announced they were ending their marriage after 11 years.
"Thank you for the prayers for @dariofranchitti I have only clothes on my back & the dogs but that's all that we need & we are on our way," Judd said on her Twitter site.
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