What Maryland’s Economic Outlook Means for Franchisors

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

By Victoria CampisiStaff Writer

10:10AM • 07/20/23

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 Maryland, 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: 41
2023 Economic Performance Ranking: 40

The State

According to the most recent data from the Small Business Administration, Maryland has 634,622 small businesses, which make up 99.5% of Maryland businesses. Those small businesses also employed around 1.2 million people, or 49.4% of all Maryland employees. In recent years, information technology, telecommunications, and aerospace and defense are leading forces behind Maryland's economic growth.

Maryland consistently ranks as one of the least economically competitive states in the country, as well as regionally when it comes to taxation on individuals, businesses and property. The state also ranks poorly in business friendliness; economy; cost of doing business; cost of living; and economic, fiscal and regulatory freedom. Data also shows that Maryland’s population is declining, with the state losing 7,550 residents from 2020 to 2021, while workforce growth over the past year has been moderate.

Making Sense of the Data

What does this mean for Maryland’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Maryland has been outperformed by 39 other state economies. The performance index is based broadly on a state’s performance within state gross domestic product (rank: 37th), absolute domestic migration (rank: 42nd) and non-farm payroll employment (rank: 32nd).

The category that most negatively impacted the state’s economic performance was their absolute domestic migration status. Around 205,062 residents migrated out of Maryland from 2012 to 2021. Maryland’s state gross domestic product also saw only 36.06% growth.

The Economic Outlook tells another story about Maryland’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, Maryland appears at 41. It has gone up one point from last year but has dropped significantly since 2016 when it was ranked 31st.

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.

Paris Baguette*

Current units in state: 1 (coming soon)
Growth capacity in the state: 15
Total jobs created at max growth capacity: 225 - 300
Total unit count: 4,000+
Investment range: $652,565 to $1,750,900

Mark Mele, chief development officer for Paris Baguette, the bakery café concept with 4,000 units worldwide, notes that, as part of the D.M.V. (D.C., Maryland and Virginia) area, Maryland is primed for growth.

“Paris Baguette brand is eager to grow in the Mid-Atlantic region, and we believe the D.M.V. market is filled with potential,” said Mele. “In markets all over the U.S., this brand has been ahead of the curve in terms of creating the kinds of spaces that work for guests and franchisees.”

Dog Training Elite*

Current units in state: 3
Growth capacity in the state: N/A
Total jobs created at max growth capacity: N/A
Total unit count: 243
Investment range: $159,050 to $186,750

Linton Dowling, vice president of marketing at Raintree* Growth, which has been partnering with dog training franchise Dog Training Elite for three years, says that the state is perfect for Dog Training Elite franchisees because of its high pet ownership rate. In Maryland alone, 30% of residents own a dog.

"We're also looking at the inner suburbs of the D.C. area,” said Dowling. “Demographically, those are areas with families and high dog ownership. This area also has a high education rate, which is typically a key indicator for dog ownership.”

United Water Restoration Group

Current units in state: 1
Growth capacity in state: N/A
Total jobs created at max growth capacity: 10-20 per location
Total unit count: 95
Investment range: $159,342 to $441,874

United Water Restoration Group, the premier water restoration and reconstruction franchise, is targeting Baltimore for development. The franchise already has one successful location in the city.

When asked about what specific markets the brand is interested in, president and shareholder Bob Moore said, “We have a lot of white space. Dallas is a huge opportunity, as well as Louisiana, because they're constantly getting hit by hurricanes and flooding. There’s also Baltimore, Washington DC, Philadelphia and New York — anywhere around any of the major metropolitan areas is a huge opportunity because of the density of people.”