What Ohio’s Economic Outlook Means for Franchisors

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

By Luca Piacentini1851 Franchise Managing Editor

9:09AM • 07/11/23

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 Ohio, 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: 20
2023 Economic Performance Ranking: 35

The State

The state of Ohio has experienced an economic boom in recent years. Lower taxes and operating costs, as well as an overall lower cost of living, have been a major draw for new franchise brands. Ohio's two largest industries by percentage of gross domestic product (GDP) are manufacturing and financial activities, respectively. By employment, Ohio's largest sector is trade/transportation/utilities, followed by the health care sector, education sector, the government sector and the manufacturing sector.

Plus, with no property or corporate income tax, Ohio is home to several Fortune 500 companies, including brands like Cardinal Health, Kroger, Marathon Petroleum, Procter & Gamble and Progressive. The state is also centrally located near 60% of the American and Canadian job market, making it an attractive hub for businesses seeking to re-shore critical industries and rebuild the national supply chain.

Making Sense of the Data

What does this mean for Ohio’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Ohio has been outperformed by 34 other state economies.

The performance index is based broadly on a state’s performance within state GDP, absolute domestic migration and non-farm payroll employment. Ohio has lost roughly 223,000 residents, which puts it near the bottom of the list for Absolute Domestic Migration rankings. On the flip side, it has seen its state GDP grow nearly 50% over the past 10 years.

The Economic Outlook tells another story about Ohio’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, Ohio appears at No. 30, with a top marginal personal income tax rate of 6.49% and at no. 6 with a top marginal corporate income tax rate of only 3.65%.

The report indicates that, generally speaking, states that spend and tax less experience higher growth rates than states that spend and tax more. Ohio ranked fourth in the country for Average Workers’ Compensation Costs, coming in at just $0.77. 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. Findings within the report should not be the sole deciding measure for franchisors, but they should play a role in the decision.

Paris Baguette*

Current units in state: 3
Growth capacity in state: 50-100
Total jobs created at max growth capacity: 1,000+
Total unit count: 4,000-plus-unit global bakery cafe franchise with 90 locations across the U.S.
Investment range: $652,565 to $1,750,900

Paris Baguette, the global bakery franchise, is looking to Ohio as one of its top states for growth after recently opening its first location in the city of Cincinnati. The brand also has plans to open locations in the Columbus market as well.

“Cincinnati represents an ideal location for Paris Baguette because of its low barriers to entry from a construction standpoint,” said Mark Mele, the brand’s chief development officer. “Multi-unit developers and multi-unit franchisees from other brands love the fact that you can expand there pretty quickly.”

Joshua Tree Experts

Current units in state: 0
Growth capacity in state: 5 to 10
Total jobs created at max growth capacity: 10-50
Total unit count: 2
Investment range: $196,760 to $303,091

Joshua Tree Experts, the Pennsylvania-based home services franchise that provides tree maintenance, lawn care and pest control services, has identified Ohio as a top target market for growth.

“We’ve seen a lot of interest from clients in Columbus, and we currently have wide-open market availability in Ohio,” explained Joshua Malik, founder and CEO of Joshua Tree Experts. “And with Columbus being so close to corporate headquarters in Pennsylvania, training will be very easy to get to for new franchisees. We are excited to keep growing and make the push into our neighboring state.”

Lightbridge Academy*

Current units in state: 9 in development
Growth capacity in state: 20
Total jobs created at max growth capacity: 200+
Total unit count: 70
Investment range: $2,611,900 to $5,202,500

The early education and child care franchise Lightbridge Academy has expanded far beyond its home state of New Jersey over recent years, establishing a strong presence in the Northeast and Mid-Atlantic regions. This past year alone, the Lightbridge Franchise Company signed agreements for five centers in Cincinnati, three in Columbus and one in Dayton.

"We are pushing full steam ahead with our franchise development plans and bringing our Circle of Care to new states like Ohio,” said CEO of Lightbridge Academy Gigi Schweikert. “We're looking forward to entering more communities and making a difference for families in new markets across the East Coast and South."

Wings & Rings

Current units in state: 15
Growth capacity in state: 5+
Total jobs created at max growth capacity: 275
Total unit count: 85
Investment range: $1,359,000 to $1,982,000

Wings and Rings*, the 85-unit sports restaurant franchise, is based in Ohio. The brand’s global headquarters is located in Cincinnati, as are four corporate locations; four franchisee-owned restaurants; and four non-traditional locations at the Cincinnati Reds’ stadium, Cincinnati Bengals’ stadium, FC Cincinnati’s stadium and the University of Cincinnati. But the team says there is still room for more locations in the area and the state.

“It's a smart and natural decision for us to build more stores and to continue to grow in greater Cincinnati,” Thomas Flaherty, Wings and Rings chief development officer said. “We and our franchisees get more traction with customers and awareness when we have sizable exposure in the region. With such a heavy presence of stores, our operations team can work with many franchisees and corporate employees in a very compact area, and that’s really efficient. It also makes sense from a purchasing and supply chain perspective.”