What Louisiana’s Economic Outlook Means for Franchisors

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 Louisiana, 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: 26
• 2023 Economic Performance Ranking: 50

The State

Although Louisiana ranks dead last in the nation regarding its economic performance, it’s not all negative. According to a recent report from the U.S. Bureau of Economic Analysis, Louisiana’s personal income grew 6.2% during the first quarter of 2022, beating the national average of 5.1%. Additionally, the state is expected to gain 6,000 more jobs by the end of 2023 than previously expected, with the state’s employment growth also increasing by 0.8%.

Governor John Bel Edwards says these figures are proof that Louisiana’s economy is rebounding.

“My administration has done bipartisan work to grow and diversify our economy, and we are seeing the results of this work again and again,” noted Gov. Edwards. “This news is not only a testament to our thriving economy, but to the strength and skill of Louisiana’s diverse workforce. We will continue working hard to create good-paying jobs and to make Louisiana a leader in the emerging industries of tomorrow. I have no doubt that our best days are ahead of us.”

In terms of population, as IBISWorld reports, Louisiana’s population has declined over the past five years by about 0.3% annually. The state’s current population sits at a little over 4.6 million residents.

Making Sense of the Data

What does this mean for Louisiana’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Louisiana has been outperformed by all other state economies. 

The performance index is based broadly on a state’s performance within state gross domestic product (GDP), absolute domestic migration and non-farm payroll employment. Louisiana has seen a decline in absolute domestic migration of about 160K, placing the state at 40th in the country. 

The Economic Outlook tells another story about Louisiana’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, Louisiana appears at No. 26, with a top marginal personal income tax rate of 4.25% and a top marginal corporate income tax rate of 5.93%.

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 prospective 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.

Right at Home*

• Current units in state: 3 territories
• Growth capacity in state: 2+
• Total jobs created at max growth capacity: 18
• Total unit count: 700+ (U.S. and international)
• Investment range: $87,394 to $156,194

Right at Home, the in-home senior care franchise, is looking to expand its footprint and offer its services to the people of Louisiana. Specifically, the brand is looking for qualified and passionate franchisees who are looking to set up shop in Baton Rouge, as roughly 14.2% of the city’s population is made up of persons aged 65 and over.

“Right at Home starts with our passionate franchise owners, and we’re excited to partner with the people of Baton Rouge,” said Jennifer Chaney, vice president of franchise development. “We are seeking passionate individuals who aren’t just looking for a business to make a living. Entrepreneurs should choose Right at Home to make a positive impact on their communities and the people for whom they provide care. Our mission is to improve the quality of life for everyone that we serve.”

Melting Pot

• Current units in state: 0
• Growth capacity in state: 3
• Total jobs created at max growth capacity: N/A
• Total unit count: 94+
• Investment range: $1.3 million to $1.5 million

Melting Pot, the experiential fondue dining concept, has seen a remarkable few years of growth, and the brand is looking to take its success and expand into Louisiana, where Melting Pot at one point had two locations.

“We are hungry to return to Louisiana, knowing very well that the state provides ample opportunity to potential new franchisees,” explained Collin Benyo, franchise growth strategist at The Melting Pot. “Louisiana is a fantastic culinary destination. The population density and collection of a wide diversity of residents make this a top priority for the brand.”

United Water Restoration Group

• Current units in state: 1
• Growth capacity in state: N/A
• Total jobs created at max growth capacity: 20
• Total unit count: 95
• Investment range: $159,342 to $441,874

United Water Restoration Group (UWRG), the full-service restoration company, is looking to grow through franchising. As such, it is offering new opportunities throughout the country. The brand says every city in the U.S. experiences damage resulting from fire, water, mold or structural damage, which UWRG believes allows its franchise owners to thrive anywhere. UWRG is currently targeting markets such as Louisiana, California, Texas, Maryland and Washington, D.C.

“We have a lot of great prospects in the pipeline that we feel really good about going into the second half of the year,” said Bob Moore, president at UWRG. “I think the biggest news coming out of the first two quarters is the performance of our existing franchise owners. We've doubled our revenue in the first quarter compared to Q1 of last year. And that's continued into Q2.”

Franchise Brands Headquartered in Louisiana:

• Walk Ons
• Painting with a Twist
• VooDoo BBQ & Grill
• My Salon Suite
• Planet Beach Tanning Spa
• Cartridge on Wheels