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What Rhode Island’s Economic Outlook Means for Franchisors

If you’re a franchisor looking to develop your business in Rhode Island, 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 Rhode Island, 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: 40
  • 2023 Economic Performance Ranking: 36

 The State

Historically, Rhode Island's economic landscape was dominated by industrial activities, with sectors such as agriculture, mining, forestry and fishing playing minor roles. The state's primary manufacturing outputs included jewelry, silverware, machinery, primary metals, textiles and rubber products. In recent times, the state's economic focus has shifted considerably toward the service sector, especially in areas like health care and education, although manufacturing still retains some relevance. Rhode Island's maritime legacy persists in the 21st century, visible particularly in the construction of nuclear submarines.

Today, the top three sectors by total employment in Rhode Island are real estate and rental and leasing, health care and social assistance, finance and insurance, while the unemployment rate across the state in 2022 was 3.4%. While housing prices are trending down in most U.S. markets, Rhode Island continues to hold strong, with the median price of sales rising 9.7% year-over-year to $411,450 in 2022. These high prices and the lack of inventory preserve a lot of wealth for homeowners. 

In terms of the future, University of Rhode Island economist Leonard Lardaro says the Rhode Island economy is “teetering on the brink of recession.” While parts of the state economy related to the higher end of the income spectrum are thriving, average- to below-average income Rhode Islanders are struggling, which Lardaro says increases the odds of a recession in the state.

Making Sense of the Data

What does this mean for Rhode Island’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Rhode Island has been outperformed by 35 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. Rhode Island has seen a decrease of over 33,000 residents over the past 10 years, and has seen its state gross domestic product increase by just 32%, which puts it at 39th in the country.

The Economic Outlook tells another story about Rhode Island’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, Rhode Island appears at No. 28, with a top marginal personal income tax rate of 5.99% and a top marginal corporate income tax rate of 7%.

The report indicates that, generally speaking, states that spend and tax less experience higher growth rates than states that spend and tax more. Rhode Island is ranked No. 22 when it comes to sales tax burden, with $18.21 owed per $1,000 of personal income. It is also ranked particularly low when it comes to state minimum wage, with a minimum wage of $13, significantly higher than the federal floor of $7.25. 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. 

TWO MEN AND A TRUCK*® 

  • Current units in state: 1
  • Growth capacity in state: 3
  • Total jobs created at max growth capacity: 30+
  • Total unit count: 405
  • Investment range: $105,500–$435,600

In 2021, TWO MEN AND A TRUCK®, America’s number-one moving franchise, broke into its 46th state with a location in Warwick, Rhode Island. 

Alan Oversmith and Joe Turbeville, the franchisees behind the opening, have plans to expand their footprint in the future. 

“We would love to be the number-one moving company in Rhode Island, well-known for our customer service,” said Oversmith. “Our hope is to have continuous growth year after year in order to move both our customers and our employees forward.”

“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 franchise development specialist at TWO MEN AND A TRUCK Cheryl Ackley. “These reflect how the full-service moving experience will impact our communities in a positive way by moving our customers forward.”

MOOYAH Burgers, Fries & Shakes*

  • Current units in state: 1
  • Growth capacity in state: 5+
  • Total jobs created at max growth capacity: 125
  • Total unit count: 90
  • Investment range: $477,918 to $989,793

MOOYAH, the Texas-based better-burger franchise, currently has one location in Rhode Island and, in line with a plan to grow in the Northeast, can support up to five restaurants in the state.

“When looking to expand, at a macro level we look at population growth, the health of the economy, supply chain availability, and the state of both the residential and commercial real estate markets,” said Doug Willmarth, MOOYAH Brand President. “Once we’re through that we then take a more granular approach in terms of understanding the workforce, density of the population and the number and competitive seats.”

Atomic Wings*

  • Current units in state: 0
  • Growth capacity in state: 5+
  • Total jobs created at max growth capacity: 15+
  • Total unit count: 15
  • Investment range: $155,900 to $338,500

With a focus on East Coast expansion, the NYC-based Buffalo wing franchise Atomic Wings has identified Rhode Island as a prime state for franchise growth. 

"We have great brand recognition in the Northeast,” said CEO Zak Omar. “We've done a brand survey in the tristate area, and we realize that our brand awareness is strong within those states. That's why it's not a reach for us to expand up and down the East Coast. It's similar to what Dunkin' did when they first started expanding. We're going to build our base and then take on major markets to the West. We've done well in the largest city in America, so we're looking forward to taking that model, getting it up, and bringing it to other metropolitan areas and suburbs as well."

Franchise Brands Headquartered in Rhode Island

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

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