What Kansas's Economic Outlook Means for Franchisors

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

By Andrea Jablonski1851 Franchise Contributor

10:10AM • 10/14/20

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 a 10-year period from 2008 until 2018. For the state of Kansas, 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: 25
2008–2018 Performance Ranking: 41

The State

Kansas’s rate of unemployment peaked in April at 179,494; however, as recently as August that number fell to 103,562 — a rate of 6.9%, which is lower than the national rate of 8.2%, according to the Bureau of Labor Force Statistics.

Even before the onset of the COVID-19 pandemic, Kansas’s agriculture industry — as well as the U.S. agriculture industry more generally — had been struggling with increased farm bankruptcies. As the number of unemployed farmers increased, it became difficult to get their food to market, meaning a shortage of supply in the economy and millions of dairy products dumped, animals slaughtered and vegetable crops destroyed. As a result, experts are suggesting that crops like corn and soybeans be phased out of rotation because they aren’t good for the environment and the market is already saturated — meaning Kansas’s agricultural focus may shift to new industries as the pandemic continues to shake up the economy.

Making Sense of the Data

What does this mean for Kansas’s economy? To start with the Economic Performance report, the index shows that within the past ten years, Kansas has been outperformed by 40 other state’s 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 — and Kansas ranked relatively low in all three categories. The state saw 31.8% growth in its Gross Domestic Product and only 2.4% growth in its Non-Farm Payroll Employment. The state ranked No. 40 in Absolute Domestic Migration, losing 92,771 residents.

The Economic Outlook tells another story about the Kansas 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, Kansas ranked No. 25, at the very middle of the pack, meaning the state’s economy still has more potential to grow than 24 other states.

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. For states like Kansas, this presents an opportunity to grow, and, in a time when the state is struggling from the effects of the pandemic, there will be people in search of new career opportunities.

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. Although in the past Kansas hasn’t stood out significantly in its performance, the diversification of the state’s economy outside of agriculture could be a help in boosting that performance.

Franchise Growth Plans

So what should franchisors do with this information? 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, 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 Kansas:

1-800-JUNKPRO

Current units in state: 2
Growth capacity in state: 1
Total jobs created at max growth capacity: 8

Mike Davis, CEO of the junk-removal service franchise 1-800-JUNKPRO, says that their growth strategy is based on population and household income, making Kansas a prime target.

“When we are determining where to grow, we look at a number of data points, including: population, household income and demographics,” said Davis. “1-800-JUNKPRO works best in areas with populations of 500,000 or more. If the population is high enough it will create waste, and if it creates waste, that's a good market for us to be in. We also look at household income, as well as the percentage of single-family homes versus the percentage of multi-family homes in each market to determine if it is a viable market for 1-800-JUNKPRO.”

Hand & Stone Massage and Facial Spa

Current units in state: 2
Growth capacity in state: 11
Total jobs created at max growth capacity: 220

Wild Birds Unlimited*

Current units in State: 2
Growth capacity in state: 5
Total jobs created at max growth capacity: 75

Paul Pickett, chief development officer of nature-forward franchise Wild Birds Unlimited, said that Kansas is primed and ready for growth.

“Kansas has amazing markets and a great population,” said Pickett. “For us in particular, it’s a state full of wildlife and has a diverse bird population that can attract customers and new franchisees. Overall, there’s a lot of room for growth. It’s possible to have very close communication with a quality candidate and build huge volume stores with them in that market. If there’s bird activity and density, then it’s the right move.”