What Tennessee’s Economic Outlook Means for Franchisors

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

By Jeff DwyerStaff Writer

Updated 7:07AM • 07/06/23

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 Tennessee, 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: 11
2023 Economic Performance Ranking: 12

The State

Tennessee’s overall economy tends to be doing fairly well following the lifting of COVID-19-related restrictions. According to Don Bruce, the director of the Boyd Center for Business and Economic Research at the University of Tennessee in Knoxville, the state is on an upward trend. The Boyd Center’s most recent annual economic forecast predicts the state could see a 0.7% growth increase for all of 2023. That study also claims Tennessee’s economy is doing better than that of the national average, as UT economists predict the U.S. economy will decline by 0.2% for all of 2023.

“The continued growth in jobs in Tennessee, the record number of business startups, and the investments being made by new and expanding businesses in the state all point to a Tennessee economy that is vastly better than the national economy,” Bruce told the Chattanooga Times Free Press.

Additionally, as a whole, Tennessee’s population growth also continues to skyrocket. In terms of population, the state grew by 1.8% between 2020 and 2022, and now has more than 7 million residents that call Tennessee home.

“We saw an increase in net migration that boosted the population gains from just over 50,000 in 2021 to more than 82,000 last year,” Tim Kuhn, the director of the Tennessee State Data Center, told the Chattanooga Times Free Press. “The increase pushed the state’s population over the 7 million mark for the first time, as it surpassed Massachusetts to become the nation’s 15th most populous.”

Making Sense of the Data

What does this mean for Tennessee’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Tennessee has been outperformed by 11 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. Tennessee has seen an absolute domestic migration of about 339K, placing the state at 7th in the country.

The Economic Outlook tells another story about Tennessee’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, Tennessee appears at No. 11, with a Top Marginal Personal income tax rate of 0.00% and a top marginal corporate income tax rate of 6.50%.

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 prospective 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.

Scoop Soldiers

Current units in state: 1 enhanced territory in Nashville
Growth capacity in state: 4 to 6 territories
Total jobs created at max growth capacity: 1 to 50
Total unit count: 40+ franchise territories
Investment range: $68,300 to $118,300

Scoop Soldiers is a pet waste removal franchise that has been undergoing rapid expansion. The brand is actively seeking a new franchise partner to set up shop in Nashville, Tennessee, where Scoop Soldiers has already established an enhanced territory. According to E.J. McCoy, the CEO of Scoop Soldiers, the brand is looking to branch into Tennessee due to the influx of new residents moving to Nashville and surrounding areas.

“Every single city is unique and has a different economy,” said McCoy. “There’s a lot that goes into it. Before we enter a new market, we need to make sure we have the proper manpower and resources to meet the demands of potential new customers. We do a ton of research before we get started in a new territory. We’ve got the advantage of having a pretty big and incredibly talented team. It doesn’t take us long to launch in either a brand-new market or an enhanced market like in Nashville.”

MOOYAH Burgers, Fries & Shakes*

Current units in state: 4
Growth capacity in state: N/A
Total jobs created at max growth capacity: 20+ per location
Total unit count: 90
Investment range: $495,918 to $1,168,251

MOOYAH Burgers, Fries & Shakes, the “better burger” franchise, is actively looking to expand its footprint and has franchise opportunities in core markets throughout the U.S. According to former MOOYAH president Tony Darden, Tennessee is an excellent place to expand, given the state’s warm atmosphere and capacity for growth.

“We have had many franchise owners join our brand after embracing everything we offer to our guests,” said Darden.

According to him, the brand’s “locations in Tennessee will help lay the path for further development across the area.”

MOOYAH Burgers, Fries & Shakes is currently offering a franchise incentive that provides franchise owners who sign agreements and leases in 2023 to receive three years of royalty relief. Brand president Doug Willmarth says he hopes this incentive will encourage aspiring entrepreneurs to join MOOYAH’s franchise family.

“So many of our franchise owners are stepping into ownership for the first time,” Willmarth said. “They’re looking to transform their family tree and live the American dream. Part of what we’re doing with this franchise incentive is enabling people to do that. We’re partnering with them to make sure they get a successful start.”

Mold Medics

Current units in state: 0
Growth capacity in state: N/A
Total jobs created at max growth capacity:
Total unit count: 2 corporate locations
Investment range: $83,049 to $158,999

Mold Medics, the emerging indoor environmental health concept that operates under the Threshold Brands franchise network, is looking to expand into a number of new markets. The brand, which recently began offering franchise opportunities, is targeting states such as Tennessee, Ohio, Michigan, Pennsylvania, New Jersey and more for expansion.

“We have a lot of complete markets that are available for somebody to come in and begin growing and expanding at their own pace,” said Mold Medics CEO Tim Swackhammer. “We’re looking to grow concentrically so we can have a good support system in place for onboarding franchises. That overlap is definitely something that makes our target markets appealing from a franchising perspective.”

Franchise Brands Headquartered in Tennessee:

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

What Tennessee’s Economic Outlook Means for Franchisors

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