What Colorado’s Economic Outlook Means for Franchisors

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

By Jeff DwyerStaff Writer

9:09AM • 07/13/23

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 Colorado, 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: 25
2023 Economic Performance Ranking: 5

The State

Colorado’s economy continues to grow despite looming concerns of a potential recession. That’s according to a recent report from ColoradoCast, which says the state is outperforming previous projections.

“In the months of March and April, the actual economic growth exceeded the ColoradoCast and the forecast for the subsequent months is for largely positive, albeit weak, growth in the state’s economy,” the report notes.

However, while Colorado’s economy continues to exceed the national average and likely will continue to do so through the second half of 2023, growth is projected to slow by the end of the year.

“Colorado’s strong economy continues to outpace the nation as we build upon our ongoing work to save people money and connect hardworking Coloradans to in-demand jobs,” noted Governor Jared Polis in the recent quarterly economic report. “With one of the lowest unemployment rates in the country, Colorado continues to be the best place to live, work and do business.”

Additionally, Colorado’s unemployment rate stands at 2.8%, which is below the national average of 3.7%. In terms of population, Colorado continues to see new residents move to the state. But according to the state’s demographer’s office, Colorado’s population growth has been slowing down over the last two years. That report shows that while Colorado added more than 27,000 people in 2022, that’s the lowest growth rate the state has seen since 1990.

Making Sense of the Data

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

The performance index is based broadly on a state’s performance within state gross domestic product (GDP), absolute domestic migration and non-farm payroll employment. Colorado has seen an absolute domestic migration of about 352K, placing the state at sixth in the country.

The Economic Outlook tells another story about Colorado’s 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, Colorado appears at No. 25, with a top marginal personal income tax rate of 4.40% and a top marginal corporate income tax rate of 4.55%.

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 prospective 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.

Renovation Sells*

Current units in state: 3
Growth capacity in state: 5+
Total jobs created at max growth capacity: 5, plus subcontractors
Total unit count: 35
Investment range: $78,208 to $101,142

Renovation Sells, the presale home renovation franchise, is looking to expand its operations in regions similar to Colorado. The brand is looking for an abundance of homes and properties that are in need of renovation and repairs.

“As we embark on franchising our opportunity, we have the benefit of a business model that fills a gap in the marketplace, as well as ample territory availability across the country,” said CEO Michael Valente. “We’re excited to expand and establish a footprint in metros that are experiencing a real estate surge as millennials are reaching home-buying age. We also look at communities that have a large amount of older, dated homes that can greatly benefit from simple renovations to increase their value in the marketplace.”

Scoop Soldiers

Current units in state: 7
Growth capacity in state: 20+
Total jobs created at max growth capacity: 50
Total unit count: 40+ franchise territories
Investment range: $68,300 to $118,300

Scoop Soldiers, the pet waste removal franchise, is seeking to add single- and multi-unit operators in territories such as Denver and Colorado Springs. The brand has chosen Colorado due to the increase in the state’s population of pet-owners.

“We are thrilled to announce our plans for franchise development in Colorado,” said Scoop Soldiers CEO and co-founder E.J. McCoy. “We have seen a significant increase in demand for our services in the state, and we believe there is a great opportunity for growth and success here.”

Joshua Tree Experts

Current units in state: 0
Growth capacity in state: 24
Total jobs created at max growth capacity: 50
Total unit count: 2
Investment range: $196,760 to $303,091

Joshua Tree Experts, the emerging Pennsylvania-based brand that offers services such as tree care maintenance, plant health care, lawn care and pest control, is gearing up to offer franchise opportunities in a number of locations across the U.S., including Colorado, Massachusetts, Georgia, New Jersey, North Carolina, Ohio and Texas.

“We have noticed that, with the changing environmental conditions, these states are becoming more interested in tree care services,” said Dylan DeGroat, the director of franchise development at Joshua Tree Experts. “We believe that targeting the southern portion of the United States come late July into August will be extremely helpful to providing a successful launch.”

Franchise Brands Headquartered in Colorado:

*This brand is a paid partner of 1851 Franchise. For more information on paid partnerships please click here.

What Colorado’s Economic Outlook Means for Franchisors

Renovation Sells*

Scoop Soldiers

Joshua Tree Experts

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