What Oklahoma’s Economic Outlook Means for Franchisors

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

By Luca Piacentini1851 Franchise Managing Editor

8:08AM • 10/26/20

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 Oklahoma, these rankings reveal a lot about where the state economy is going and where there is opportunity for their economy to grow.

2020 Outlook Ranking: 9
2008–2018 Performance Ranking: 31

The State

Oklahoma’s economy is not as balanced as those of many other U.S. states. In the past there has been overdependence on agriculture and petroleum, but the efforts of state and local officials to attract new forms of industry as well as tourism have achieved modest success. The annual per capita income is significantly below the national average, as is the median household income. Services employ the greatest number of people, followed by wholesale and retail trade, manufacturing, finance, insurance and real estate, transportation and public utilities, construction and mining.

The COVID-19 pandemic has continued to take a financial toll on Oklahoma's economy. The state’s gross tax collection was down 14 percent in May 2020 compared to May 2019.

Making Sense of the Data

What does this mean for Oklahoma’s economy? To start with the Economic Performance report, the index shows that within the past ten years, Oklahoma has been outperformed by 30 other state economies. The performance index is based broadly on a state’s performance within State Gross Domestic Product (rank: 42nd), Absolute Domestic Migration (rank: 17th) and Non-Farm Payroll Employment (rank: 32nd).

The Economic Outlook tells another story about the Oklahoma 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, Oklahoma occupies the 9th spot. The state’s performance has been only moderate, but the report suggests that Oklahoma’s economic future is looking great in comparison to 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 states like Oklahoma, this presents an opportunity for some serious growth. The state was ranked second-lowest in the nation for property tax burden, with property owners paying $17.20 per $1,000 of personal income. The state’s top personal income tax rate of 5 percent is 18th lowest in the nation. On sales tax burden, however, Oklahoma ranked 36th.

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. Oklahoma may have been behind in the past, but according to the report, the state is positioned to rise to the top 10 economic growth predictions.

Franchise Growth Plans

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

TWO MEN AND A TRUCK*

Current units in state: 4
Growth capacity in state: 9
Total jobs created at max growth capacity: 135

Cheryl Ackley, franchise development specialist for moving franchise TWO MEN AND A TRUCK, notes that the brand is looking to grow in Oklahoma.

“At TWO MEN AND A TRUCK, we look at many different pieces when defining territories, specifically using data on individual household incomes, population and ZIP codes,” said Ackley. “These reflect how the full-service moving experience will impact our communities in a positive way by moving our customers forward.”

Wild Birds Unlimited*

Current units in state: 3
Growth capacity in state: At least 2
Total jobs created at max growth capacity: 14

The bird-feeding franchise Wild Birds Unlimited has recognized Oklahoma as a potentially strong market for franchise growth.

"We currently have three units in Oklahoma, and we’d like to launch more. There aren’t a ton of viable markets, but at least two are very dense." said Chief Development Officer Paul Picket .

Hand & Stone

Current units in state: 1
Growth capacity in state: 6
Total jobs created at max growth capacity: 90

The massage and facial franchise Hand & Stone opened its first studio in Oklahoma earlier this year and is now focused on expanding throughout the state, specifically in Tulsa and Oklahoma City.