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 Morgan Wood1851 Franchise Contributor

Updated 10:10AM • 07/05/23

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 Florida, 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: 9
2023 Economic Performance Ranking: 1

The State

According to Bloomberg, Florida alone could rank as the world’s 18th-biggest economy, measuring up with countries like the Netherlands. With a 2022 gross domestic product (GDP) of about $1 trillion, an increase of 2.5% from the previous year, it’s clear that the state is a hotbed for successful businesses.

Florida was also the fastest-growing state in 2022, with a population increase of nearly 2%, bringing the state’s total resident count to over 22.2 million. This is yet another indicator that, whether business owners or private citizens, many people are recognizing the strength of the state and are making moves accordingly.

Making Sense of the Data

What does this mean for Florida’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Florida has been outperformed by no other state economies.

The performance index is based broadly on a state’s performance within state GDP, absolute domestic migration and non-farm payroll employment. The state’s cumulative GDP growth between 2011 and 2021 was 66.25%, and its cumulative domestic migration between 2012 and 2012 was 1,627, 395 people — the highest of all states. Florida also saw a 25.04% increase in non-farm employment growth between 2011 and 2021.

The Economic Outlook tells another story about Florida’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, Florida appears at No. 9 with a top marginal personal income tax rate of 0% — the best in the country and a driver for many Florida transplants — and a top marginal corporate income tax rate of 5.5%.

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.

Sunny Street Café

Current units in the state: 0
Growth capacity in the state: 20
Total jobs created at max growth capacity: 250
Total unit count: 23
Investment range: $598,000 to $956,000

President Scott Moffitt explained that the franchise is looking to Florida for expansion due to the remarkable population growth that has occurred in recent years, as well as the consistently ideal climate. The café also aims to provide nearly year-round enjoyable patio seating to its guests, which is something that is highly achievable under bright blue Northwestern Florida skies.

“First, we will fill out our existing markets,” said Moffitt. “Step number two would be to expand into contiguous markets, where we have an opportunity, brand recognition, and our distribution and support systems already exist. Outside of those strategies, we’re also interested in expanding across the Southeast — Georgia, Florida and the eastern seaboard.”

Main Squeeze Juice Co.

Current units in the state: 0
Growth capacity in the state: 22
Total jobs created at max growth capacity: 400+
Total unit count: 28
Investment range: $382,500 to $574,000

The juice bar and smoothie franchise sees Florida as an ideal growth market because of the ever-expanding population and welcoming business environment.

“There's tons of people going through South Florida from all over the world at any given moment,” said director of franchise sales Jessie Wiliams. “In Orlando, not only do you have a big airport, but you also have Disney World. There's just tons of people from all over the country that are there all the time.”

Frenchies Modern Nail Care

Current units in the state: 1
Growth capacity in the state: 1
Total jobs created at max growth capacity: N/A
Total unit count: 23
Investment range: $270,042 to $533,231

With an existing presence in the state, Frenchies Modern Nail Care is looking to capitalize on brand recognition while providing an in-demand, clean nail service that rivals the standard nail salon experience in the state.

“We want prospects to know that this is a blue-water opportunity,” said Frenchies co-founder Guy Coffey. “Ninety-nine percent of this industry is made up of poor competition. It is a rare combination — there is a huge demand but substandard operations. Our big dream is to clean up the nail care industry by making it a pleasant, safe, pampering, self-care experience, rather than one that just makes your nails look better. We want there to be a pre-Frenchies nail care industry and a post-Frenchies nail care industry, and now is the time to join the revolution.”

Pollo Campero*

Current units in the state: 2
Growth capacity in the state: 15
Total jobs created at max growth capacity: 600
Total unit count: 350
Investment range: $1,287,250 to $2,491,500

With a growing population in Florida, a notable portion of which self-identifies as Hispanic or Latino, Pollo Campero feels the state is primed to support the expansion of its Central American chicken flavors.

“All the demographic indicators that we typically look for are looking quite good,” said managing director and chief operating officer Luis Javier Rodas (LJ). “We see enough space for us to really be able to take over this business space in these north Florida areas in which we will offer the better, or elevated, chicken solution.”