What Mississippi’s Economic Outlook Means for Franchisors

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 Mississippi, these rankings reveal a lot about where the state economy is going and where there is opportunity for its economy to grow. 

• 2020 Outlook Ranking: 20
• 2008–2018 Performance Ranking: 49

The State

Historically, manufacturing and services have been the largest sectors of Mississippi’s economy — primarily government (federal, state, and local), retail and wholesale trade, real estate and health and social services. The services sector has expanded particularly rapidly since the late 20th century and has increasingly benefitted Mississippi.

During this COVID-19 pandemic, Mississippi has seen a nearly 9,000% increase in unemployment claims. Still, Mississippi's June unemployment rate is at 8.7 percent, compared to 5.4 percent in June of last year. However, the state’s year-over-year change was down 3.3 percent, marking it as the best in the nation.

Making Sense of the Data

What does this mean for Mississippi’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Mississippi has been outperformed by 48 other state economies. The performance index is based broadly on a state’s performance within State Gross Domestic Product (rank: 47th), Absolute Domestic Migration (rank: 38th) and Non-Farm Payroll Employment (rank: 42nd).

The Economic Outlook tells another story about the Mississippi 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, are influenced directly by state lawmakers through the legislative process. In this ranking, Mississippi is No. 20. Although its been significantly behind in performance, the report suggests that the state’s economic future is looking bright.

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 Mississippi, this presents an opportunity for growth. For example, the state is ranked No. 13 in the nation for top marginal corporate income tax, with a rate of 5.00%. The report also ranks it tied for the number one spot when it comes to estate tax, minimum wage and Right-to-Work.

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 Mississippi has been behind in performance, its potential for growth is improving exponentially and is likely to continue upward. 

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. 

Checkers* & Rally's 

• Current units in state: 14
• Growth capacity in state: 5+
• Total jobs created at max growth capacity: 30

Robert Bhagwandat, director of franchise development at Checkers & Rally’s notes that Mississippi is primed for growth for the iconic burger brand. 

"The Checkers & Rally's franchise opportunity has proven to be a strong and resilient investment throughout the COVID-19 pandemic,” said Bhagwandat. “Our drive-thru model and well-integrated delivery system, has allowed our brand to thrive during a difficult time for many restaurant brands, which has resulted in minimal disruption; new restaurant openings with record sales; a lift in both drive-thru and delivery sales and several new franchisee signings. There are a lot of great things in the works and we're looking forward to partnering with strong franchise owners as we continue to grow our brand."

MOOYAH Burgers, Fries & Shakes*

• Current units in state: 0
• Growth capacity in state: 5+
• Total jobs created at max growth capacity: 125

The fast casual, “better burger” franchise recently recognized Mississippi as a territory with a strong potential for franchise growth. 

“When looking to expand, at a macro level we look at population growth, the health of the economy, supply chain availability and the state of both the residential and commercial real estate markets,” said MOOYAH President Tony Darden. “Once through that we then take a more granular approach in terms of understanding the workforce, density of the population and the number and competitive seats.”

Workout Anytime

• Current units in state: 0
• Growth capacity in state: 5+
• Total jobs created at max growth capacity: 7

Terri Harof, director of franchise development for Workout Anytime notes that the fitness brand has identified Mississippi as a prime territory for growth. 

"We are growing slowly but surely throughout the eastern side of the country, and we are looking for franchise partners who are looking to grow with us in those markets. We are from the South, but when we go in the states where the weather isn’t quite as warm and sunny, we find customers who are looking for more indoor workout opportunities,” said Harof.

Franchise Brands Headquartered in Mississippi

• McAlister's Deli