What New Mexico’s Economic Outlook Means for Franchisors

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

By Luca Piacentini1851 Franchise Managing Editor

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 New Mexico, 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: 38
2023 Economic Performance Ranking: 42

The State

In the past, New Mexico's economic stability has been anchored by the oil and gas industry, tourism, and federal government expenditure. With the aim of fostering job expansion and enticing business investments, particularly in cutting-edge technologies, the state's government has instituted a complex array of tax incentives and technical support. Despite the COVID-19 crisis, the oil and gas sector continued to be a key economic propellant, even as it grappled with setbacks in the southeastern region, primarily due to declines in the industry. The industry faced an uphill battle with oil prices, particularly after the unprecedented drop in oil prices to below $0 in April 2019.

Now, as per Albuquerque's local broadcaster KOAT News, the city's Economic Development body is conducting an in-depth study of the metropolitan area and developing a five-year strategy to accelerate job creation. The focus of the Albuquerque Economic Development is to collaborate with neighboring areas to attract a variety of businesses, including call centers, aerospace corporations, renewable energy enterprises and film industry companies.

“We are an attractive location for remote workers, as well as for companies seeking a new frontier, either for startup or expansion,” the Albuquerque Journal wrote. “With affordable housing, commercial, industrial and office space; with our burgeoning aerospace and tech industries; and with open land to build, opportunity awaits.”

Making Sense of the Data

What does this mean for New Mexico’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, New Mexico has been outperformed by 41 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. New Mexico has seen a decrease of over 65,000 residents over the past 10 years, and has seen its State Gross Domestic Product increase by just 25%, which puts it at 46th in the country.

The Economic Outlook tells another story about New Mexico’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, New Mexico appears at No. 26, with a top marginal personal income tax rate of 5.9% and a top marginal corporate income tax rate of 5.9%.

The report indicates that, generally speaking, states that spend and tax less experience higher growth rates than states that spend and tax more. New Mexico is ranked almost last when it comes to sales tax burden, with $47.25 owed per $1,000 of personal income, but is ranked No. 8 when it comes to Property Tax Burden, with only $19.79 owned per $1,000 of personal income. 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.

JAN-PRO Franchise Development™

Current units in state: 0
Growth capacity in state: 1 Regional Developer
Total unit count: 120 Regional Developers
Investment range: $127,500 to $769,0000

JAN-PRO Franchise Development™, the sub-franchisor for commercial cleaning franchise with 120 regional developers worldwide, offers executive leaders an opportunity to leverage the skills they’ve developed in their careers to take control of their destiny and help others do the same. As a regional developer, they will sell individual JAN-PRO Cleaning & Disinfecting™ franchises to entrepreneurs in their protected territory and offer ongoing business coaching for those certified business owners. Now, with demand booming in the commercial cleaning space, JAN-PRO franchise development is looking to fill out some of the limited available territories across the country and has its sights set on New Mexico.

“The Greater Albuquerque and Santa Fe MSA is one of our top three targets for expansion in the United States,” said Joe Sloyan, VP of franchise development. “That is impressive when you look at our scale. The population count is at or above a level we have historically performed well at. Customer verticals we target, such as medical, educational, logistics, manufacturing and hospitality, all have strong presence throughout the greater market. The JAN-PRO franchise development executive model offers a terrific opportunity in the development of this strategically critical market that few other companies can offer.”

MOOYAH Burgers, Fries & Shakes*

Current units in state: 0
Growth capacity in state: 5+
Total jobs created at max growth capacity: 125
Total unit count: 90
Investment range: $477,918 to $989,793

MOOYAH, the Texas-based better-burger franchise, began looking at New Mexico as a prime expansion market back in 2017. The team said Albuquerque could support three to five restaurants, and the chain is currently looking to expand to Rio Rancho, Santa Fe and Las Cruces.

“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 Doug Willmarth, MOOYAH Brand President. “Once we’re 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.”

Dog Training Elite* Franchising

Current units in state: 0
Growth capacity in state: 45+
Total jobs created at max growth capacity: 1-50 per unit
Total unit count: 238
Investment range: $159,050 - $185,750 (for 3 territories)

Dog Training Elite, the pet care franchise that offers obedience, puppy, personal protection, therapy, service dog, anxiety, aggression, retired military and lifestyle training, includes a network of 80 franchise owners who oversee 234 territories. Now, with only about 100 open territories remaining before the entire country is sold out, Dog Training Elite is looking for franchise partners in certain states, one of which is New Mexico.

“Our franchise development team has candidates that are interested in these states,” explained Linton Dowling, vice president of marketing at Raintree*. “Most importantly to us, an overwhelming majority of our franchisees are multi-unit owners. They have realized that they have the ability to grow an empire and create a family legacy through our brand, and that’s really important to us.”