The Low-Down: Best States to start a Franchise

By JORDY PATANO Have you ever imagined picking up and relocating to start your own business or to open a franchise? Moving to a different state may actually be financially beneficial when starting a business. We’ve compiled a list of the most franchising-friendly states, considering personal income tax, business tax and the ease of starting up your own business. Georgia: If you have ever wondered why Georgia has the largest percentage of franchises based in state or seems to be heavily-populated with multi-unit franchisees, we have the answer. Starting in July of 2012, Georgia’s House Bill No. 548 (HB 548) was put in to effect, finally defining the franchisor/franchisee system as a contractual agreement by statute, not as an employment relationship. There has been much contention in other states about the definition and liability between franchisees and franchisors, including unpaid services, employee benefits and workers compensation claims. The Georgia bill adds a definition for the first time to exclude individuals who are part of a franchise agreement and protect the franchisor from liability of workers compensation claims made by franchisees. The move by the legislature will continue to promote franchising state-wide. Nevada: Nevada has no corporate income tax, no taxes on corporate shares, no franchise tax, no personal income tax and only nominal annual fees. If you haven’t thought of opening in Nevada before, you may want to consider it. Texas: Throughout the turbulent economy, Texas has remained ahead of the curve with increases in population, job expansion and small business growth. It has been particularly strong because Texas has no personal or corporate income tax and a tax rate of 0.5 to 1.0 percent for franchises. Other state and local business taxes are also lower than the national average. Oklahoma: Both Oklahoma City and Tulsa have seen explosive growth over the past three years largely because of their business and hiring laws. Oklahoma City was just ranked third in the country for one-year job growth and Tulsa boasts 26.29 small businesses for every 1,000 residents, which is 10 percent higher than the national average. Oklahoma offers entrepreneurs low start-up costs, friendly tax codes, cash rebates for job creation and relatively inexpensive real estate, making it an appealing, pro-business state. Utah: In 2011, Utah was among the top three easiest states in the nation to start a small business and was at the top of the list in terms of friendliest states in the country towards small business. Its low hiring costs and limited regulations on business have entrepreneurs feeling optimistic about the small business climate throughout the state.