What Nevada’s Economic Outlook Means for Franchisors

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

By Victoria CampisiStaff Writer

6:06AM • 07/06/23

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 Nevada, 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: 10
2023 Economic Performance Ranking: 11

The State

In 2022, the gross domestic product (GDP) of Nevada amounted to $165.45 billion with the finance, insurance, real estate, rental and leasing industries adding the most real value, totaling around $33.94 billion. The manufacturing sector also added around $8.44 billion to the state's real GDP.

Additionally, Nevada was named one of the fastest growing states last year, with its population growing by 226,428 people, at a 7.8% increase. The areas of Las Vegas, Henderson, and Paradise were ranked ninth in the fastest-growing metropolitan area, with an increase of 153,640 people at 7.2%.

Meanwhile, Nevada’s employment increased 6% over the past year (ending in January 2023), data from the Bureau of Labor Statistics shows. As of May 2023, the state has an unemployment rate of 5.4%.

Making Sense of the Data

What does this mean for Nevada’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Nevada has been outperformed by 10 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. Nevada has seen an absolute domestic migration of 305,477, the 10th highest in the country.

The Economic Outlook tells another story about Nevada’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, Nevada appears at No. 10, with a top marginal personal income tax rate of 0% and a top marginal corporate income tax rate of 0.63%.

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.

Tippi Toes

Current units in state: 0
Growth capacity in state: N/A
Total jobs created at max growth capacity: N/A
Total unit count: 32
Investment range: $52,100 to $69,100

Tippi Toes is actively seeking multi-unit operators nationwide, including markets such as Nevada. The brand recently partnered with franchise consulting firm Franchise Fastlane to help further accelerate its expansion plans.

“We partnered with Franchise Fastlane because they will be able to help us exponentially grow. We're excited to bring Tippi Toes into new communities across the country,” said CEO Sarah Nuse.

Voodoo Brewing Co.

Current units in state: 2
Growth capacity in state: N/A
Total jobs created at max growth capacity: N/A
Total unit count: 17
Investment range: $331,75 to $762,500

Nevada is one of the states being targeted by Voodoo Brewing Co., according to Linton Dowling, vice president of marketing at Raintree*, a franchise development organization working with the brand.

“With brewing, we need to have distribution routes and supplies established to be in legal compliance,” he said of Nevada.

Caring Transitions

Current units in state: 2
Growth capacity in state: N/A
Total jobs created at max growth capacity: N/A
Total unit count: 280
Investment range: $58,912 to $82,712

Caring Transitions has identified Nevada as a priority for franchise development.

“We want to accelerate growth because we believe there should be a Caring Transitions location in every market to serve seniors and their families through life's stages,” said Caring Transitions president Ray Fabik.