What Pennsylvania’s Economic Outlook Means for Franchisors

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

By Jeff DwyerStaff Writer

10:10AM • 07/18/23

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 Pennsylvania, 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: 35
2023 Economic Performance Ranking: 46

The State

Pennsylvania’s economy appears to be on an upward trend, and economists predict the state will see modest growth by the end of 2023. According to experts with the state’s Independent Fiscal Office, Pennsylvania isn’t expected to enter a recession within the next two years. Additionally, those same economists forecast the state’s gross domestic product (GDP) to grow by 1.6% by the end of this year and another 1.2% in 2024.

However, despite the positives for the state’s economy, Pennsylvania saw an increase in its unemployment rate. As the Pennsylvania Department of Labor & Industry notes, in February 2023, the state’s unemployment rate rose to 4.4%, the same as it was in February 2022. However, that same report found that the state recovered more than 100% of the 1.1 million jobs it lost in the first two months of the pandemic.

In terms of population, Pennsylvania continues to see a slight increase in new residents. Between 2017 and 2022, the state saw its population grow by 0.3% annually, placing it at 33rd out of all states by growth rate. As of July 2023, Pennsylvania’s population stands at around 12.9 million people.

Making Sense of the Data

What does this mean for Pennsylvania’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Pennsylvania has been outperformed by 46 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. Pennsylvania has seen a decline in absolute domestic migration by about 246K, placing 45th in the country.

The Economic Outlook tells another story about Pennsylvania’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, Pennsylvania appears at No. 35, with a top marginal personal income tax rate of 6.86% and a top marginal corporate income tax rate of 15.82%.

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.

Paris Baguette*

Current units in state: 7
Growth capacity in state: N/A
Total jobs created at max growth capacity: 15 to 20
Total unit count: 4,000 worldwide
Investment range: $ $652,565 to $1,750,900

Paris Baguette, the bakery café franchise with over 4,000 open units in the U.S. and across the globe, has seen explosive growth in the last few years and shows no sign of slowing. As such, the brand continues to offer new franchise opportunities in a number of states, including Pennsylvania, and several other northeastern markets where it has already established a strong brand presence.

“We are on track to enter 45 new markets and open a total of 64 units by the end of 2023,” said TJ Rogers, franchise sales manager. “Even throughout the pandemic and its aftershocks, we did not shy away from opening additional units and exploring new markets. With great year-over-year revenue increases and a persistent interest in the brand from franchisees and consumers alike, we expect nothing but a strong continued growth trajectory for the brand.”

Joshua Tree Experts

Current units in state: 2
Growth capacity in state: 24
Total jobs created at max growth capacity: 50
Total unit count: 2
Investment range: $196,760 to $303,091

Joshua Tree Experts is actively seeking new strategic franchise partners to open locations across the U.S. In addition to markets such as Georgia, Massachusetts, Colorado, New Jersey, North Carolina, Ohio and Texas, Joshua Tree Experts is also looking to expand in its home state of Pennsylvania. Specifically, the tree care maintenance brand has its sights set on Pittsburgh, the state’s second-largest city.

“Pittsburgh is very close to us, and we understand a lot of the landscape features in the area because they are similar to what we have here in the Lehigh Valley,” said Dylan DeGroat, director of franchise development. “The location also gives us the ability to go out there and support franchisees on site after their launch. We also understand what it takes to get a business started in Pennsylvania, as far as licensing goes.”

Pool Scouts*

Current units in state: 0
Growth capacity in state: 20
Total jobs created at max growth capacity: 50
Total unit count: 110+ across 18 states
Investment range: $ $70,950 to $88,350

Pool Scouts, the pool cleaning franchise based out of Virginia Beach, is also targeting Pennsylvania for development as the demand for pool services continues to grow across the country.

“The past couple of years have been incredibly robust from a pool construction standpoint across the country,” said Michael Wagner, president of Pool Scouts. “Lots of new pools have been built, and they need us to take care of them. So, we expect customer acquisition to continue to be robust, and we're very much looking forward to that.

Franchise Brands Headquartered in Arizona:

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

What Pennsylvania’s Economic Outlook Means for Franchisors

Paris Baguette*

Joshua Tree Experts

Pool Scouts*

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