What New Hampshire’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 New Hampshire, these rankings reveal a lot about where the state economy is going and where there is opportunity for their economy to grow. 

• 2020 Outlook Ranking: 13
• 2008–2018 Performance Ranking: 24

The State

With a June jobless rate of 11.8% and a five-year annualized employment growth rate of negative 1.8% the New Hampshire economy finished 16th best in a new ranking of how state economies are recovering from COVID-19 by the website 24/7 Wall St. The state’s annualized gross domestic product growth through the first quarter of this year reached 2%, the financial news website reported, while its poverty rate came in at 7.6%. 

Although manufacturing is still an important part of New Hampshire’s economy, advances in technology and the decline of traditional fabrication work all over the country means that factories employ far fewer people than in the past. Toward the end of the 20th century, New Hampshire’s neighbor Massachusetts became a center for high-tech sectors. New Hampshire has been able to piggyback off of Massachusetts’ success by moving its economy toward electronic-component manufacturing and other high-tech industries, as well as growing its tourism and health care industries. 

Making Sense of the Data

What does this mean for New Hampshire’s economy? To start with the Economic Performance report, the index shows that within the past ten years, New Hampshire has been outperformed by 32 other state economies. The performance index is based broadly on a state’s performance within State Gross Domestic Product (rank: 20th), Absolute Domestic Migration (rank: 2nd) and Non-Farm Payroll Employment (rank: 29th). 

The Economic Outlook tells another story about the New Hampshire 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. New Hampshire appears at No. 13 in this ranking. Although they have ranked in the middle of the pack in the past, the state is showing significant potential for growth. 

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 New Hampshire, this presents an opportunity to grow. Thanks to New Hampshire’s lack of a sales tax, the report ranked the state first in the nation for top marginal income tax rates and second for personal income tax progressivity. On the other hand, New Hampshire ranked dead last for property tax burden, with property owners paying an average of $57.90 per $1,000 of personal income.

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 New Hampshire doesn’t charge a sales tax, it is clear that there are many factors to consider when deciding to start a business in the state. 

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. 

Workout Anytime

• Current units in state: 1
• 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 New Hampshire as a prime territory for growth. 

"We are growing slowly but surely throughout the Northeast, 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.

Showhomes

• Current units in state: 0
• Growth capacity in state: 5+
• Total jobs created at max growth capacity: 4

Home-staging franchise Showhomes has identified territories in New Hampshire as primed for franchise growth. 

“We create territories by focusing on the number of homes in a market. Our sweet spot is luxury markets, said COO Matt Kelton. “We want at least 25,000 homes in the upper-end tier. Our real focus is on the upscale suburbs of major metropolitan areas. To set our franchisees up for success, we need a certain amount of density. We also look at income levels and the number of employers in a market. But for us, the main driver is the number of luxury homes. We also use census data and MLS realtor information to prioritize our development markets.”

Renovation Sells*

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

Renovation Sells, the Chicago-based renovation franchise, has also identified New Hampshire as a prime state for franchise growth. 

“We create territories by focusing on the number of homes and listings in a market,” said Co-founder Michael Valente. “Our team is dedicated to making sure franchisees are positioned for success, which includes help with training, staffing, marketing and more. We help franchisees find the subcontractors and team they need to fulfill the design coming from corporate.” 

Franchise Brands Headquartered in New Hampshire

• Wave Home Systems
• Margaritas
• Morana Gelato
• Planet Fitness
• The Meat House