What Massachusetts' Economic Outlook Means for Franchisors

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

By Victoria CampisiStaff Writer

2:14PM • 07/19/23

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 Massachusetts, 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: 37
2023 Economic Performance Ranking: 24

The State

Economic growth in Massachusetts picked up at the end of 2022, providing a solid start to 2023. However, this growth is expected to slow down in the second half of the year. The health sector in Massachusetts is expected to help mitigate the decline in overall economic activity. It is projected that the real gross domestic product (GDP) will slow to 1.5% in 2023 and 1% in 2024.

The unemployment rate in Massachusetts declined sharply and reached its lowest level since the pandemic in May 2023. Employment in the state grew slightly faster than the national average during the first five months of the year. However, the labor force experienced a temporary increase at the beginning of the year and remains lower compared to the previous year. The unemployment rate in Massachusetts is expected to average 3.2% this year and 3.9% in 2024.

The population of Massachusetts experienced a decline of approximately 8,000 people, representing a decrease of about 0.1%, between July 2021 and July 2022. However, according to the latest estimate from the U.S. Census Bureau, the state's population has surpassed its revised 2020 Census level.

Making Sense of the Data

What does this mean for Massachusetts’ economy? To start with the Economic Performance report, the index shows that within the past 10 years, Massachusetts has been outperformed by 23 other state economies.

The performance index is based broadly on a state’s performance within state GDP, absolute domestic migration and non-farm payroll employment. Massachusetts has seen an absolute domestic migration of -215,004, ranking it 43rd in the country.

The Economic Outlook tells another story about Massachusetts’ 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, Massachusetts appears at No. 37, with a top marginal personal income tax rate of 9% and a top marginal corporate income tax rate of 8%.

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.

Joshua Tree Experts

Current units in state: 0
Growth capacity in the state: N/A
Total jobs created at max growth capacity: 5 to 7 per location
Total unit count: 2
Investment range: $196,760 to $303,091

Joshua Tree Experts, the emerging Pennsylvania-based service brand known for its reliable tree care maintenance, plant health care, lawn care and pest control, is targeting Massachusetts for development as it grows around its home state of Pennsylvania. With no current franchisees in the state and wide open availability when it comes to territories, new franchisees have the opportunity to pioneer the growing brand in their local communities while benefiting from being driving distance from Joshua Tree Experts’ headquarters.

“Massachusetts is very closely matched with Pennsylvania as far as what the licensing requirements are for the services that we provide,” said Dylan DeGroat, director of franchise development. “It’s also relatively close to where we are in Pennsylvania, so we can get up there easily when we need to.”

Junk Junk Baby!

Current units in state: 0
Growth capacity in state: N/A
Total jobs created at max growth capacity: N/A
Total unit count: 1
Investment range: $84,775 to $131,500

Junk Junk Baby!, the emerging waste hauling franchise, is concentrating its franchise development efforts on its home Boston region as one of its target markets. With the company operating in the Boston metro area for the last 12 years, there is a proven need for junk hauling services in the region.

“Our strategy is to grow out in concentric circles, so new franchise owners are close to a territory that is already up and running and successful,” said Eric Myers, Junk Junk Baby!’s founder and CEO. “We’re starting with markets in Massachusetts close to our headquarters so we can provide hands-on support for any situation at any time.”

Paris Baguette*

Current units in state: 1
Growth capacity in the state: N/A
Total jobs created at max growth capacity: 15 - 20 per location
Total unit count: 4,000+
Investment range: $652,565 to $1,750,900

Paris Baguette, the bakery café concept with 4,000 units worldwide, including nearly 150 in the United States, is targeting states in New England for development, including in Connecticut and Massachusetts.

Franchise Brands Headquartered in Massachusetts:

*This brand is a paid partner of 1851 Franchise. For more information on paid partnerships please click here.