What Montana’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 Montana, 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: 33
• 2023 Economic Performance Ranking: 14

The State

Although Montana is experiencing a record number of residents moving to the state, economists from the Bureau of Business and Economic Research (BBER) predict that the state will encounter minimal to no growth by the end of 2023. These experts not only believe there will be zero growth in 2023 but also anticipate weak growth moving into 2024. These projections come despite Montana’s remarkable net migration rate, which was 3.3 times higher between 2020 and 2022 compared to the average between 2000 and 2019.

Experts also believe inflation in the state is only expected to worsen Montana’s economic conditions.

“Inflation has been no kinder to Montana than any place else,” said BBER director Patrick Barkey. “In fact, you could argue that it’s even been a little worse here because we’re a state that uses more energy and we’re also a state that’s experienced higher-than-average housing price growth.”

As mentioned, Montana’s population has skyrocketed over the last few years. As of July 2023, it stands at about 1.1 million. The rise in population is one of the contributing factors that has resulted in Montana’s unemployment rate hitting an all-time low of 2.5%, which in January was the fourth lowest unemployment rate in the nation.

Making Sense of the Data

What does this mean for Montana’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Montana has been outperformed by 13 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. Montana has seen an absolute domestic migration of about 74K, placing the state at 14th in the country. 

The Economic Outlook tells another story about Montana’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, Montana appears at No. 33, with a top marginal personal income tax rate of 6.75% and a top marginal corporate income tax rate of 6.75%.

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.

Famous Dave’s*

• Current units in state: 3
• Growth capacity in state: N/A
• Total jobs created at max growth capacity: 30 to 60
• Total unit count: 180
• Investment range: $1,316,250 to $2,920,750 (For a Full-Service Location)

Renowned BBQ franchise Famous Dave’s has restaurants scattered across the United States, as well as in the United Arab Emirates and Canada. The brand is seeking to expand its operations in 46 states, including Montana. Currently, the brand has all territories available in Montana except Cascade County.

“Given the recent trends over the past two years and the resiliency of the Famous Dave’s brand throughout the pandemic, growth is the focal point for us moving forward,” said Al Hank, the CEO at Famous Dave’s. “We’re excited to enter new markets and into new territories, by utilizing data, demographics and traffic to find the best locations possible.”

Right at Home*

• Current units in state: 1
• Growth capacity in state: N/A
• Total jobs created at max growth capacity: 18 per location
• Total unit count: 700+ (U.S. and international)
• Investment range: $87,394 to $156,194

Right at Home, the in-home care concept that helps seniors and adults with disabilities live comfortably at home, is looking to add passionate entrepreneurs to its roster of franchisees in multiple states, including Montana, where the brand has already established its presence.

“We are seeking passionate individuals who aren’t just looking for a business to make a living,” said Jennifer Chaney, the vice president of franchise development at Right at Home. “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.”

Franchise Brands Headquartered in Montana:

• Bandana's Bar-B-Q
• Dee-O-Gee
• Great Harvest Bread Company
• HuHot Mongolian Grill