What Wisconsin’s Economic Outlook Means for Franchisors

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

By Victoria CampisiStaff Writer

Updated 11:11AM • 01/13/24

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 Wisconsin, 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: 17
2023 Economic Performance Ranking: 34

The State

The latest forecast from S&P Global projects Wisconsin’s real gross domestic product (GDP) to increase by 1.2% in 2023 and 0.9% in 2024. The first quarter of 2023 saw weak GDP growth, primarily due to a slowdown in personal consumption. The forecast assumes a smooth raising of the debt limit. While recent financial turmoil has subsided, it has resulted in stricter lending standards that may hinder consumption and GDP growth in the coming years.

Employment growth remains strong, but a slower pace is predicted in the second half of the year. Wisconsin's total employment has returned to pre-pandemic levels, and the state's employment is projected to grow by 1.5% in 2023 and remain stable through 2026. Personal income in Wisconsin increased by 2.6% in 2022, driven by wage and salary growth of 8.2%. However, due to high inflation rates, real personal income declined by 3.6% in 2022, with only a modest growth of 0.8% expected in 2023.

Meanwhile, Wisconsin has regained almost all the population it lost since 2020. Between the official U.S. Census count on April 1, 2020 and July 1, 2021, Wisconsin lost 13,624 people (-0.23%). However, Wisconsin regained most of that loss by July 1, 2022. The state had nearly 5.9 million residents in 2022.

Making Sense of the Data

What does this mean for Wisconsin’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Wisconsin has been outperformed by 33 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. Wisconsin has seen an absolute domestic migration of -83,717, ranking it 35th in the country.

The Economic Outlook tells another story about Wisconsin’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, Wisconsin appears at No. 17, with a top marginal personal income tax rate of 7.65% and a top marginal corporate income tax rate of 7.9%.

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.

Layne’s Chicken Fingers*

Current units in state: 0
Growth capacity in state: N/A
Total jobs created at max growth capacity: 20-25 per location
Total unit count: 11
Investment range: $656,000 to $1,280,500

Layne’s Chicken Fingers, the Soon to be Famous™ fast food chicken concept, is crossing the Texas state line for the first time. As part of its expansion, the brand is on target to open in Madison, Wisconsin, by the end of the year.

A&W Restaurants*

Current units in state: 45
Growth capacity in state: N/A
Total jobs created at max growth capacity: N/A
Total unit count: 1,000+
Investment range: $871,000 to $1,469,554 for a freestanding restaurant; $401,000 to $1,051,088 for an inline restaurant; and $276,000 to $704,000 for a captive restaurant.

In January, A&W, the fast-food burger chain with over 1,000 units, opened its 45th Wisconsin-based location in the city of Altoona.

"We believe Wisconsin has the capacity to house several more additional successful restaurants,” said John Palumbo, A&W senior director of franchise development.

Griswold

Current units in state: 0
Growth capacity in state: 1-2 units per year until market fills out
Total jobs created at max growth capacity: N/A
Total unit count: 170+
Investment range: $95,850 to $174,100

In 2022, Griswold, the leading non-medical home care franchise, began targeting Wisconsin for expansion; its strong markets and notable senior population provide a welcoming environment for the brand.

“Wisconsin is an area that we don’t have any franchisees in currently,” explained Brian Hill, Griswold’s franchise development manager. “It’s a state that we really want to get into and start building out. They’ve got some strong markets there like Milwaukee, Madison and Green Bay. It’s a blank slate for us, and we could have a big impact there.”