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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.

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 North Carolina, 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: 2
  • 2023 Economic Performance Ranking: 10 

The State

As of a February economic report, North Carolina is the ninth-largest state in the U.S. with 10.6 million residents. From July of 2021 to July of 2022, an additional 133,000 people came to the state, indicating a pattern of strong population growth. Compared to a nationwide population increase of 0.4% in 2022, North Carolina experienced a 1.3% increase, demonstrating that the state is outpacing national averages.

Alongside this population growth, employment growth has also increased. For the first time since the pandemic, North Carolina’s unemployment rate dipped below pre-pandemic numbers in 2022. While some professionals are concerned about the potential of a recession, others suggest that unemployment rates may not spike considerably at all.

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 just nine other state economies. 

The performance index is based broadly on a state’s performance within state gross domestic product (GDP), absolute domestic migration and non-farm payroll employment. North Carolina has seen a 53.37% increase in cumulative GDP between 2011 and 2021 and a cumulative domestic migration of over 600,000.

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 appears at No. 2 with a Top Marginal Personal Income Tax Rate of 4.75% and a Top Marginal Corporate Income Tax Rate of 2.5%.

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. 

Scoop Soldiers

  • Current units in state: 7
  • Growth capacity in state: 20+
  • Total jobs created at max growth capacity: 50

Scott Oaks, vice president of franchise development at the pet waste cleanup franchise, explained that North Carolina is a prime target for the business as it offers both a “large population of pet owners as well as a strong pet community.” The state as a whole is also experiencing notable population growth. 

“North Carolina is currently experiencing an influx of people moving into the state, with the Charlotte and the Raleigh-Durham areas being two of the most popular destinations,” said Oaks. “This trend is an excellent opportunity for businesses, especially those catering to pet owners.”

Joshua Tree Experts

  • Current units in state: 0
  • Growth capacity in state: 24
  • Total jobs created at max growth capacity: 50

Joshua Malik, founder and CEO of the tree maintenance, lawn care and pest control franchise, said that the brand has seen a strong uptick in web traffic to consumer and franchise development sites in recent months, indicating that the demand for its services is rising and local business owners are taking note.

“We have noticed that, with the changing environmental conditions, the state is becoming more interested in tree care services,” said Malik. “We believe that targeting the southern portion of the United States come late July into August will be extremely helpful to providing a successful launch.”

Pollo Campero*

  • Current units in state: 3
  • Growth capacity in state: 27
  • Total jobs created at max growth capacity: 100

Pollo Campero, the Central American chicken franchise, has identified North Carolina as a strong target market thanks to the state’s diverse populations and a history of strong unit-level performance in Charlotte and Raleigh.

“There is a significantly underserved customer base in North Carolina, and chicken is the number one favorite food of people in that part of the country,” said director of franchise development Blas Escarcega. “A lot of people also are moving to the area, both from inside and outside the U.S. We have an existing knowledge and supply chain in the area, and we know it is a great business environment. Some states allow you to grow faster than others. States in the Southeast tend to be more business-friendly with a great economic environment and reasonable cost of living.”

Patio Patrol

  • Current units in state: 0
  • Growth capacity in state: 12
  • Total jobs created at max growth capacity: 35+

North Carolina’s hot, humid climate creates an incredibly pest-friendly environment, which ultimately lends itself to a strong market for pest control businesses, something Patio Patrol, a full-circle pest control franchise has recognized.

“Charlotte is expected to be very successful for Patio Patrol because of its geography and associated climate,” explained Ron Bender, chief growth officer at Threshold Brands. “We’re excited to expand in and around Charlotte, including areas like Huntersville, Concord, Matthews, Mooresville and Cornelius.”

Franchise Brands Headquartered in North Carolina:

*This brand is a paid partner of 1851 Franchise. For more information on paid partnerships please click here.