What Arkansas' Economic Outlook Means for Franchisors

If you’re a franchisor looking to develop your business in Arkansas, you’ll want to consider the state’s policy variables and growth rates when scaling your plans.

By Victoria CampisiStaff Writer

11:11AM • 07/07/23

This month, 1851 is taking an in-depth look at ALEC-Laffer’s 16th annual “Rich States, Poor States” Economic Competitiveness Index and how it can be useful to franchisors as they expand their footprints. The report ranks all 50 states based on two criteria: 1) Economic Outlook, a state’s current standing in 15 state policy variables; 2) Economic Performance, a retrospective measure based on a state’s performance over the past 10 years.

For the state of Arkansas, these rankings reveal a lot about where the state economy is going and where there is opportunity for their economy to grow.

2023 Economic Outlook Ranking: 15
2023 Economic Performance Ranking: 15

The State

As of May 2023, Arkansas total personal income (the sum of wages and salaries, proprietor's income, rent, dividends, interest, and transfer payments) for fiscal year 2023 is estimated at $162.9 billion, an increase of $10.4 billion or 6.8% from fiscal year 2022. Meanwhile, gross general revenues are estimated at $8,704.6 million, a decrease from fiscal year 2022 of $68.5 million, or -0.8%.

According to 2022 data from the Department of Finance and Administration, thousands of people have recently chosen Arkansas as their home. The state’s population was 3,045,637 in 2022, a 0.58% increase from 2021. And in 2021, the population of Arkansas was 3,028,122, a 0.46% increase from 2020.

Meanwhile, Arkansas seasonally adjusted unemployment rate decreased one-tenth of a percentage point, from 2.8% in April to 2.7% in May 2023. In comparison, the United States’ jobless rate increased over the month, from 3.4% in April to 3.7%.

Making Sense of the Data

What does this mean for Arkansas’ economy? To start with the Economic Performance report, the index shows that within the past 10 years, Arkansas has been outperformed by 14 other state economies.

The performance index is based broadly on a state’s performance within state gross domestic product, absolute domestic migration and non-farm payroll employment. Arkansas has seen an absolute domestic migration of 25,636, the 19th highest in the country.

The Economic Outlook tells another story about Arkansas’ economy. The ranking is based on a state’s current standing in 15 state policy variables. Each of these factors, ranging from sales tax burden to state minimum wage, is influenced directly by state lawmakers through the legislative process. In this ranking, Arkansas appears at No. 15, with a top marginal personal income tax rate of 4.9% and a top marginal corporate income tax rate of 5.3%.

The report indicates that, generally speaking, states that spend and tax less experience higher growth rates than states that spend and tax more. While this is an important finding for entrepreneurs looking to start their own businesses, it shouldn’t discourage them from investing in their dream franchises if they're in a market with a slower growth rate.

Franchise Growth Plans

So what should franchisors do with this information? When it comes to deciding where franchisors should develop their brand, it’s always important to look at the complete picture of what the region has to offer. Though most franchisors take a shotgun approach — meaning wherever a prospect franchisee inquires, the franchisor will typically entertain that marketplace — the strategy of looking at these overall policies can help them scale their business at a more efficient rate. With that said, findings within the report should not be the deciding measure for franchisors, but they should play a role in the decision.

Tippi Toes

Current units in state: 0
Growth capacity in state: N/A
Total jobs created at max growth capacity: N/A
Total unit count: 38
Investment range: $52,100 to $69,100

Tippi Toes, the 38-unit and growing children’s enrichment franchise, is actively seeking multi-unit operators nationwide, including markets such as Arkansas. The brand recently partnered with franchise consulting firm, Franchise Fastlane, to help further accelerate its expansion plans.

“We're excited to bring Tippi Toes into new communities across the country,” said CEO Sarah Nuse.

Atomic Wings*

Current units in state: 0
Growth capacity in state: N/A
Total jobs created at max growth capacity: N/A
Total unit count: 23
Investment range: $155,900 to $338,500

In April, Atomic Wings, the brand specializing in flavorful chicken wings, announced it had an additional 10 locations under construction, with plans to open throughout the year in new states across the country, including Arkansas.

“Growth has been tremendous over the past year, and we are excited to maintain that momentum with new grand openings across the country, “ said CEO Zak Omar. “Our organic growth and commitment to quality have positioned us as a trusted brand in the industry."

Scoop Soldiers

Current units in state: 1
Growth capacity in state: N/A
Total jobs created at max growth capacity: 2-5 per location
Total unit count: 36
Investment range: $68,300 to $118,300

Scoop Soldiers, the pet waste removal franchise that aims to help pet owners and their four-legged friends by taking on the dirty work of pet ownership, is also targeting Arkansas for development as demand for pet services increases.

“The demand for services in pet waste removal has significantly increased — people want their time back,” said EJ McCoy, Co-Founder of Scoop Soldiers.