What North Dakota’s Economic Outlook Means for Franchisors

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 Dakota, 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: 8
• 2023 Economic Performance Ranking: 22

The State

North Dakota’s overall economic outlook seems to be positive. According to a report from North Dakota State University, the state is experiencing a growing economy. And for the most part, forecasts show increasing wages and salaries, a low unemployment rate, and an expected increase in the labor force. That report also found that, in 2022, the state’s unemployment rate dropped below 3%, where it has since stayed. As of May 2023, according to the Bureau of Labor Statistics, North Dakota’s unemployment rate remains at 2.1%.

As for population, there appears to be an upward trend of new residents moving to the state. In 2022, North Dakota saw a slight population increase of 0.17% from the year prior, bringing the total population to 779,261. Speaking to North Dakota’s The Center Square, Ernie Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton University, discussed the positive upturn for the state’s economy.

“After negative growth during the first quarter of this year, the Rural Mainstreet economy experienced positive, but slow, economic growth for all of the second quarter,” Goss stated to The Center Square. “Only 3.4% of bankers reported a downturn in economic conditions for the month.”

Making Sense of the Data

What does this mean for North Dakota’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, North Dakota has been outperformed by only 21 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 Dakota has seen an absolute domestic migration of about 21,423, placing the state at 21st in the country. 

The Economic Outlook tells another story about North Dakota’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 Dakota appears at No. 8, with a top marginal personal income tax rate of 2.90% and a top marginal corporate income tax rate of 4.31%.

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 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, findings within the report should not be the deciding measure for franchisors, but they should play a role in the decision.

Famous Dave’s*

• Current units in state: 4
• Growth capacity in state: N/A
• Total jobs created at max growth capacity: 30 to 60
• Total unit count: 180
• Investment range: $1,316,250 to $2,920,750 (For a Full-Service Location)

Renowned BBQ franchise Famous Dave’s has restaurants scattered across the United States, as well as in the United Arab Emirates and Canada. The brand is seeking to expand its operations in 46 states, including North Dakota. Currently, the brand has all territories available in North Dakota, except Williams, Ward and Stark.

“Given the recent trends over the past two years and the resiliency of the Famous Dave’s brand throughout the pandemic, growth is the focal point for us moving forward,” said Al Hank, the chief operating officer at Famous Dave’s. “We’re excited to enter new markets and into new territories, by utilizing data, demographics and traffic to find the best locations possible.”

Right at Home*

• Current units in state: 2
• Growth capacity in state: N/A
• Total jobs created at max growth capacity: 2 to 18 per location
• Total unit count: 700+ (U.S. and international)
• Investment range: $87,394 to $156,194

Right at Home is an in-home care concept that helps seniors and adults with disabilities live comfortably at home. The brand, which boasts more than 700 locations spanning seven countries, is looking to add passionate entrepreneurs to its roster of franchisees in multiple states, including North Dakota.

“We are seeking passionate individuals who aren’t just looking for a business to make a living,” said Jennifer Chaney, the vice president of franchise development at Right at Home. “Entrepreneurs should choose Right at Home to make a positive impact on their communities and the people for whom they provide care. Our mission is to improve the quality of life for everyone that we serve.”

Wings and Rings*

• Current units in state: 2
• Growth capacity in state: N/A
• Total jobs created at max growth capacity: 50 to 60 per location
• Total unit count: 88+
• Investment range: $1,129,950 to $1,670,500

Wings and Rings, the Cincinnati, Ohio-based sports restaurant and bar concept, is looking to expand operations throughout regions of the United States. As such, the brand is seeking to grow and add units in new markets and established territories.

Dan Doulen, the director of franchise development at Wings and Rings, says there’s an “immediate potential” to open dozens of new Wings and Rings locations in several new markets for the right single-unit and multi-unit franchisees.

Franchise Brands Headquartered in North Dakota:

• Advanced Maintenance
• ABC Seamless
• CertiRestore