What Georgia’s Economic Outlook Means for Franchisors

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

By Andrea Jablonski1851 Franchise Contributor

10:10AM • 10/19/20

This summer, ALEC-Laffer published its annual Economic Competitiveness Rankings, which 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 retrospective measure based on a state’s performance over the past 10 years. For the state of Georgia, these rankings reveal a lot about where the state economy is going and where there is opportunity for their economy to grow.

2020 Outlook Ranking: 21
2008–2018 Performance Ranking: 10

The State

Like every other state in the union, Georgia’s economy struggled to navigate the COVID-19 pandemic. Not only did the economy suffer, but the state experienced some of the highest numbers of daily cases reported. Georgia hit its peak in July with nearly 5,000 daily cases, with new cases slowing down to just over 1,000 per day in September.

The report indicates that Georgia’s economic outlook has been on the decline since 2013, when it was positioned at number eight, but after the first six months of 2020 Georgia has announced $2 billion in new investments. Additionally, the state expects incoming investments will total more than $1.2 billion over the first two months of 2021. The state is again welcoming the television and film production industries, and last year Georgia reported record tourism income at $152.3 million in international and domestic visitors — an industry that supported 484,056 jobs.

The Data

What does this mean for Georgia’s economy? To start with the Economic Performance report, the index shows that within the past ten years, Georgia has been outperformed by nine 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. Georgia is ranked tenth in economic performance, finishing thirteenth in cumulative GDP growth, tenth in absolute domestic migration and thirteenth again in non-farm payroll employment.

The Economic Outlook tells another story about the Georgia 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. Within the variables used to determine outlook, Georgia ranked first as a right-to-work state, first in state minimum wage, third in remaining tax burden (per $1,000 of personal income) and first in estate/inheritance tax levied.

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 the franchise of their dreams if they're in a market with a slower growth rate.

Franchise Growth Plans

Should franchisors expand in Georgia? Though most franchisors take a shotgun approach — meaning wherever the prospect is that inquires, the brand 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.

Here are a few franchise brands that are planning to grow in Georgia:

Home Clean Heroes*

Current units in state: 1
Growth capacity in state: 13
Total jobs created at max growth capacity: 91

“It’s no secret we aren’t the first residential cleaning business model, but we are excited to bring a fresh approach to markets in states where this particular model and franchise opportunity haven't been available,” said Timothy Holadia, director of franchise development for Buzz Franchise Brands, Home Clean Heroes’ parent company. “We’ve gained great traction in the Southeast and are looking to build out neighboring territories to existing locations. We look at income and household numbers in these markets along with website analytics. From there we can zero in on markets where the need matches the want.”

**Checkers* & Rally’s**

Current units in state: 91
Growth capacity in state: 5
Total jobs created at max growth capacity: 2,400

"The Checkers & Rally's franchise opportunity has proven to be a strong and resilient investment throughout the COVID-19 pandemic. Our drive-thru model and well-integrated delivery system has allowed our brand to thrive during a difficult time for many restaurant brands, which has resulted in minimal disruption; new restaurant openings with record sales; a lift in both drive-thru and delivery sales and several new franchisee signings,” said Robert Bhagwandat, Checker’s director of franchise development. “There are a lot of great things in the works and we're looking forward to partnering with strong franchise owners as we continue to grow our brand."

Renovation Sells*

Current units in state: 0
Growth capacity in state: 1
Total jobs created at max growth capacity: 1, plus subcontractor work

“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. 2020 has been an interesting year that's for sure,” said Michael Valente, CEO of Renovation Sells. “But it's proven how resilient our business model is. We're excited to expand 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.”

Hounds Town USA

Current units in state: 1
Growth capacity in state: 15
Total jobs created at max growth capacity: 90

“When choosing new markets we first look at the vicinity to established markets. This means we’re able to increase brand awareness or recognition with a limited budget,” said Linton Dowling, director of marketing for Raintree*, Hounds Town USA’s marketing agency. “Also for an emerging brand like Hounds Town USA, franchise disclosure document registrations is a serious factor. The costs, time for registration and other legal considerations are taken into account.

When we’re looking to grow our footprint in a new market, the natural first step is to look at dog to human ratio. We then move into the economic prospects of that state and demographics.

If we’re trying to project growth potential, we look at a number of economic data points: employment rate, apartment/housing booms, employment growth and interstate population growth. Young people move a lot, and of course, they bring their dogs with them. Dogs need the support of a pack mentality just like our need to build a friendship circle.”

FYZICAL Therapy & Balance Centers

Current units in state: 4
Growth capacity in state: 14
Total jobs created at max growth capacity: 84

“FYZICAL serves a very diverse population base with patients as young as toddlers to folks in their 90s, but our typical client is between 30–70 years old. While income levels are a factor we look at they are not a primary driver. We typically look at the percent of the population over the age of 50 along with areas that have larger employers with good benefits packages,” said Dan Doulen, chief development officer of FYZICAL. “Being around areas that are healthcare hubs is also a consideration for us so proximity to doctors offices and hospitals is also taken into consideration.”