What Connecticut’s Economic Outlook Means for Franchisors

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

By Luca Piacentini1851 Franchise Managing Editor

2:14PM • 07/19/23

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 Connecticut, 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: 39
2023 Economic Performance Ranking: 48

The State

Although overall population has decreased, Connecticut has seen a rare influx of residents from other states, likely due to New Yorkers and others relocating after the COVID-19 pandemic. As a result, the housing market of Connecticut is reaching unprecedented highs — the Hartford area was recently named Realtor.com’s No. 1 Top Housing Market for 2023.

Historically, Connecticut's per capita personal income has been the highest of any state.

Connecticut’s personal income grew 2.6% last year — 27th fastest in the nation — after several years of stagnant growth. The state's per capita personal income was $84,972 in 2022, the highest in the country. The U.S. average was $65,423, with a growth rate of 2.4%.

There is, however, a great disparity in incomes throughout the state; after New York, Connecticut had the second-largest gap nationwide between the average incomes of the top 1% and the average incomes of the bottom 99%. Finance and insurance is Connecticut's largest industry, according to the U.S. Census Bureau, generating 16.4% of gross domestic product (GDP) in 2009. There are 106 insurance companies based in Connecticut. While agriculture no longer holds its once-prominent position in Connecticut's economy, farming is still important to the state.

Making Sense of the Data

What does this mean for Connecticut’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Connecticut has been outperformed by almost every other state economy. The performance index is based broadly on a state’s performance within state gross domestic product, absolute domestic migration and non-farm payroll employment. Connecticut has seen an Absolute Domestic Migration of a negative ??188,418, one of the worst in the country.

The Economic Outlook tells another story about Connecticut’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, Connecticut appears at No. 38 for its Top Marginal Personal Income Tax Rate of 6.9% and at No. 32 for its Top Marginal Corporate Income Tax Rate of 2.60%.

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.

USA Insulation

Current units in state: 1
Growth capacity in state: 4
Total jobs created at max growth capacity: 28
Total unit count: 80+
Investment range: $271,000 to $399,500

USA Insulation, the 80-plus-unit insulation franchise under the Threshold Brands umbrella, has its sights set on Connecticut for continued franchise expansion. As part of its push up the East Coast, the company is ready to bring quality insulation to the state, with four units available across the Stamford-New Haven coastal area.

“We have identified Hartford, and other markets within Connecticut as primed for growth,” said Threshold Brands chief growth officer Ron Bender. “As we continue to expand across the country with hard-working and determined franchisees, we are confident Connecticut is a great next step for the brand.”

Atomic Wings*

Current units in state: 0
Growth capacity in state: 5+
Total jobs created at max growth capacity: 75+
Total unit count: 10+
Investment range: $170,400 to $377,355

The NYC-based Buffalo wing franchise Atomic Wings has also identified Connecticut as a prime state for franchise growth. "We have great brand recognition in the Northeast,” said CEO Zak Omar. “We've done a brand survey in the tristate area, and we realize that our brand awareness is strong within those states. That's why it's not a reach for us to expand up and down the East Coast. It's similar to what Dunkin' did when they first started expanding — we're going to build our base and then take on major markets to the West. We've done well in the largest city in America, so we're looking forward to taking that model and getting it up and bringing it to other metropolitan areas and suburbs as well."

The Melting Pot

Current units in state: 0
Growth capacity in state: 5
Total jobs created at max growth capacity: 50+
Total unit count: 94
Investment range: $1.3 to $1.5 million

The Melting Pot, the 94-unit fondue franchise, is looking to continue their growth efforts in locations where both the demand and environment are a natural fit for the popular franchise. There is already interest building in Connecticut for franchise development, with at least two locations forecasted to be built in the coming year, with possible markets of focus including suburbs Frog Hollow and Parkville, and a potential location like downtown Hartford all being considered.

“Connecticut has such a storied history, rich in American tradition,” said Collin Benyo, franchise growth strategist for the brand. “Since The Melting Pot is a brand that can fit into many different types of physical locations, we find ourselves ready to build and become a real part of the community as opposed to standing out.”