What North Carolina's Economic Outlook Means for Franchisors

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

By Andrea Jablonski1851 Franchise Contributor

8:08AM • 10/28/20

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 North Carolina, 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: 5
2008–2018 Performance Ranking: 12

The State

Since the start of the pandemic, more than one million North Carolinians have filed for unemployment, and most of the jobs lost still have not been recovered. And as the crisis continues, more and more of the temporary jobs lost are becoming permanent. According to the North Carolina Justice Center, even as jobs are being created there are still more than 380,000 fewer jobs in the state than there were before the pandemic began in February.

For many farmers in the state, the pandemic has been especially challenging. As the virus continues to drag on, one thing that North Carolina has had to navigate has been the way people are obtaining their food and the impact that it’s having on local agriculture. Even prior to the pandemic, many consumers have been turning to third-party retailers like Blue Apron or services like DoorDash as their source of food, and in the process, local farms and retailers have suffered. To see any semblance of recovery, North Carolina will have to look to diversify its economy outside of agriculture to meet the needs of its consumers.

Making Sense of the Data

What does this mean for North Carolina’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, North Carolina has been outperformed by 11 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. North Carolina experienced a significant growth rate of 36.4% in gross domestic product and 10.3% increase in non-farm payroll employment. Over the last 10 years, the state fluctuated in its domestic migration rate, and since 2018 it has welcomed 472,668 residents.

The Economic Outlook tells another story about North Carolina’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, North Carolina is No. 5. ALEC-Laffer has ranked North Carolina favorably over the last 10 years, with more potential to grow economically than 45 other states.

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 North Carolina, this presents important opportunities for growth across several industries.

Franchise Growth Plans

So what should franchisors do with this information? 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, the findings within the report should not be the deciding measure for franchisors, but they should play a role in the decision.

Here are a few franchise brands that are planning to grow in North Carolina:

Home Clean Heroes*

Current units in state: 0
Growth capacity in state: 12
Total jobs created at max growth capacity: 84

“It’s no secret we aren’t the first residential cleaning business model, but we are excited to bring a fresh approach to markets in states where this particular model and franchise opportunity haven't been available,” said Joe Delatte, president of Home Clean Heroes. “We’ve gained great traction in the Southeast and are looking to build out neighboring territories to existing locations. We look at income and household numbers in these markets, and along with website analytics, we can zero in on markets where the need matches the want.”

1-800-JUNKPRO

Current units in state: 1
Growth capacity in state: 7
Total jobs created at max growth capacity: 56

“When we are determining where to grow, we look at a number of data points. including population, household income and demographics,” said Mike Davis, CEO of 1-800-JUNKPRO. “For population, 1-800-JUNKPRO works best in populations of 500,000 or more. If the population is high enough and if they create waste, that's a good market for us to be in. We also look at household income as well as the percentage of single-family homes versus the percentage of multi-family homes in each market to determine if it is a viable market for 1-800-JUNKPRO.”

Famous Toastery

Current units in state: 17
Growth capacity in state: 15
Total jobs created at max growth capacity: 450

"We are looking to grow in places like North Carolina where the population grows exponentially daily,” said Robert Maynard, CEO of Famous Toastery. “We also look into new home permits, school expansion and population drivers. Finally, when identifying places to grow, we look at the average income, average home price, tourism, colleges and climate as well."

**Checkers* & Rally’s**

Current units in state: 8
Growth capacity in state: 53
Total jobs created at max growth capacity: 1325

"The Checkers & Rally's franchise opportunity has proven to be a strong and resilient investment throughout the COVID-19 pandemic,” said Robert Bhagwandat, Checkers & Rally’s director of franchise development. “Our drive-thru model and well-integrated delivery system have allowed our brand to thrive during a difficult time for many restaurant brands, which has resulted in minimal disruption — we’ve seen 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."

Right at Home*

Current units in state: 10
Growth capacity in state: 2
Total jobs created at max growth capacity: 100

“When we identify target markets, the first thing we look at it are markets where we don’t currently have a presence,” said Eric Little, chief development officer of Right at Home. “It’s important for us to plant Right at Home flags so we can increase our market share, and to help us provide market coverage for our national and regional referral partners. We also consider household income, population density and other standard demographics.”

Eggs Up Grill

Current units in state: 5
Growth capacity in state: 20
Total jobs created at max growth capacity: 500

“While 2020 has at many times been a challenging year, it has also proven to us and our franchise owners the resiliency and appeal of our brand and business model,” said Todd Owen, vice president of franchise development for Eggs Up Grill. “We’re dedicated to continuing to support our current and future franchise partners as we accelerate growth across the Southeast, and we look forward to finding more strong partners to be a part of our expansion.”

Atomic Wings*

Current units in state: 0
Growth capacity in state: 5+
Total jobs created at max growth capacity: 75+

"We have great brand recognition in the Northeast. We've done a brand survey in the tristate area, and we realize that our brand awareness is strong within those states. That's why it's not a reach for us to expand up and down the East Coast,” said Zak Omar, CEO of Atomic Wings. “It's similar to what Dunkin' did when they first started expanding — we're going to build our base and then take on major markets in the West. We've done well in the largest city in America, so we're looking forward to taking that model and bringing it to other metropolitan areas and suburbs as well."