What Florida’s Economic Outlook Means for Franchisors

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

By Luca Piacentini1851 Franchise Managing Editor

8:08AM • 10/27/20

This summer, ALEC-Laffer published its annual Economic Competitiveness Rankings that forecasts a state’s current standing within 15 state policy variables. The report features two different rankings: Economic Outlook — a forecast based on a state’s current standing in 15 state policy variables — and Economic Performance — a backward-looking measure based on a state’s performance over the past 10 years.

2020 Outlook Ranking: 7
2008–2018 Performance Ranking: 6

The State

According to a new report from the University of Central Florida’s Institute for Economic Forecasting, Florida’s economy is expected to contract by 6 percent year-on-year in 2020 — but will bounce back with growth of 7.6 percent in 2021. The Central Florida institute now forecasts annualized statewide unemployment rates of 8.2 percent for 2020, 5.5 percent for 2021 and 3.6 percent for 2022. Leaders in jobs recovery will be the leisure and hospitality sector, such as massage, beauty and salon franchises, which is expected to grow 31 percent in 2021 after contracting 8.6 percent in 2020.

The Data

What does this mean for Florida’s economy? To start with the Economic Performance report, the index shows that within the past ten years, Florida has been outperformed by six 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. Florida ranked sixth in economic performance, finishing 21st in cumulative GDP growth, second in cumulative domestic migration and third in non-farm employment growth.

The Economic Outlook tells another story about the Florida 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, are influenced directly by state lawmakers through the legislative process. In the 15 policy variables used to determine economic outlook, Florida ranked in the top 10 for top marginal personal income tax rate (first), top marginal corporate income tax rate (eighth), personal income tax progressivity (second), no estate/inheritance tax levied (first), recently legislated tax changes (fifth), public employees per 10,000 of population (third), being a right-to-work state and tax expenditure limits (third).

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 business, it shouldn’t discourage them from investing in their dream franchise if they're in a market with a slower growth rate.

Franchise Growth Plans

Should franchisor’s expand in Florida? Though most franchisors take a shot-gun approach — meaning wherever the prospect is that inquires they will 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, the findings within the report should not be the deciding measure for franchisors, but they should play a role in the decision.

Big Blue Swim School*

Current Units in State: 4 signed
Available Units: 20
Total Potential Jobs: 700

Big Blue Swim School CDO Scott Thompson notes that the swim school franchise has recognized Florida as an underserved market.

“We have to get awareness out there about the importance of swimming lessons,” Thompson said. “At the end of the day, there is a lot of water in Florida. We need a presence here so that we can teach children to swim and feel confident in the water.”

Famous Toastery

Current Units in State: 0
Available Units: 30
Total Potential Jobs: 900

President Robert Maynard noted that the state could be a great leap forward for breakfast franchise Famous Toastery. “What makes this region so great for growth is the fact that there’s a vast amount of territory to choose from,” he said.

MOOYAH Burgers, Fries & Shakes*

Current Units in State: 4
Available Units: 30
Total Potential Jobs: 600

Tony Darden, President of burger franchise Mooyah Burgers, Fries & Shakes said the brand has identified Florida as a prime target market for growth.

“Our Franchise Owners have now opened four MOOYAH restaurants in Florida, and we are looking forward to expanding our presence across the Sunshine State,” said MOOYAH Burgers, Fries & Shakes President Tony Darden. “Florida residents are starting to crave our quality menu, and as we open more restaurants, even more visitors will gain additional access to our ‘better burgers’ and superior customer service. With Florida being a top tourist destination in the U.S., we are hopeful that even more Guests will fall in love with our brand and want to become Franchise Owners in their hometowns, helping expand the MOOYAH footprint across America.”

Right at Home*

Current Units in State: 30
Available Units: 8
Total Potential Jobs: 400

Eric Little, CDO for Right at Home notes that the home care franchise is focusing on Palm Bay, Melbourne, Titusville and Port St. Lucie.

“When we identify target markets, the first thing we look at it are markets where we don’t currently have a presence,” said Little. “It’s important for us to plant Right at Home flags in new MSA’s so we can increase our market share, and to help us provide market coverage for our national and regional referral partners. We also consider household income, population density, and other standard demographics.”

Footprints Floors*

Current Units in State: 1
Available Units: 22
Total Potential Jobs: 22+

Linton Dowling, Marketing Director for Raintree* notes that Footprints Floors has recognized Florida as a state for growth.

“When considering expansion, numerous factors are considered and economic factors are always key,” said Dowling. “Is this a growing state market? How are employment factors? Are they experiencing a housing or remodeling boom? Is the population growing? (More houses needed or remodeling) Is this a market that traditionally accommodates wood flooring or tiling?

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. Historically, Florida has been a very strong market for franchising, and according to the ALEC-Laffer report, the economic outlook looks like that trend will continue.