What Maine’s Economic Outlook Means for Franchisors

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

By Luca Piacentini1851 Franchise Managing Editor

11:11AM • 07/21/23

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 Maine, 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: 44
2023 Economic Performance Ranking: 21

The State

Though Maine’s economy has historically relied on the paper and paper products industry, the state has become heavily dependent on the services industry in recent years. Fishing, forestry, mining and agriculture are secondary sectors that keep the economy moving. Tourism also plays an important role in Maine’s economy throughout the summer months.

This year, experts are anticipating rough economic headwinds in states like Maine.

“There is a higher than usual chance of a slowdown in 2023,” said Amanda Rector, Maine’s state economist. “Contributing factors include ongoing inflation, especially impacting energy, shelter and food prices, and the Federal Reserve interest rate increases intended to bring inflation under control.”

Maine’s labor market has also continued to stay tight due to many older workers accelerating their retirement plans following the COVID-19 pandemic. According to the Maine Department of Labor, the unemployment rate dipped to 2.4% in April 2023 — the lowest rate on record.

Making Sense of the Data

What does this mean for Maine’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Maine has been outperformed by 20 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. Maine has seen an increase of nearly 40,000 residents, the 18th highest Absolute Domestic Migration ranking in the country.

The Economic Outlook tells another story about Maine’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, Maine appears at No. 39, with a top marginal personal income tax rate of 7.15% and a top marginal corporate income tax rate of 8.93%.

The report indicates that, generally speaking, states that spend and tax less experience higher growth rates than states that spend and tax more. Maine ranked dead last for property tax burden, with an average cost of $53.94 per $1,000 of personal income. 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.

Sylvan Learning*

Current units in state: 0
Growth capacity in state: 5
Total jobs created at max growth capacity: 50
Total unit count: 710+
Investment range: $85,525 to $186,930

Entering several new markets recently, Sylvan Learning, the early education and child care franchise, has identified Maine for further expansion opportunities.

“We pick areas to focus our franchise development efforts based on demographic data we receive from our mapping system provider,” said John McAuliffe, CEO of Sylvan Learning. “We look for areas with a high concentration of families with school-age children whose annual income is $50K or above. We also look at some other factors such as shopping centers, where tutoring centers can be located, schools and competition.”

Atomic Wings*

Current units in state: 0
Growth capacity in state: 5+
Total jobs created at max growth capacity: 75
Total unit count: 15
Investment range: $155,900 to $338,500

Based on the East Coast, chicken franchise Atomic Wings is looking to grow concentrically within the region to capitalize on brand recognition.

"We have great brand recognition in the Northeast,” said Atomic Wings CEO Zak Omar. “We've done a brand survey in the tri-state area, and we realize that our brand awareness is strong within those states. That's why it's not a reach for us to expand up and down the East Coast. It's similar to what Dunkin' did when they first started expanding. We're going to build our base and then take on major markets to the West. We've done well in the largest city in America, so we're looking forward to taking that model and getting it up and bringing it to other metropolitan areas and suburbs as well."

TWO MEN AND A TRUCK*®

Current units in state: 1
Growth capacity in state: 1
Total jobs created at max growth capacity: 23
Total unit count: 400+
Investment range: $105,500 to $435,600

TWO MEN AND A TRUCK®, the nation’s largest franchisor in the moving industry with over 400 franchises and more than 3,000 trucks in operation, has been seeing significant momentum over the past few years. Now, the franchise is targeting states all throughout the East Coast for further growth, including Maine.

“We look at many different pieces when defining territories, specifically using data on individual household incomes, population and ZIP codes,” said TWO MEN AND A TRUCK franchise development specialist Cheryl Ackley. “These reflect how the full-service moving experience will impact our communities in a positive way by moving our customers forward.”