What Vermont’s Economic Outlook Means for Franchisors

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 Vermont, 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: 49
• 2023 Economic Performance Ranking: 41

The State

The northern tri-state region of New England saw below-average economic growth in the first half of last year, but has since grown at or slightly above the national average. In 2023, it is expected that Vermont will grow by 1.2%.

Vermont’s employment has been positive (up 0.2%), though below average, over the past three months to June. The state’s labor force is also up 0.6%, while its unemployment is down 0.9 percentage points to 2.1%. In 2023, Vermont is expected to see an uptick in unemployment rates as economic growth slows, at 2.5%. Leisure and hospitality job growth has increased sharply as the summer travel season kicked off, which in addition to strong job gains from the government has supported the state's job growth this year.

Meanwhile, Vermont is the 45th largest in the country by area and the 49th largest by population. The only state with fewer people is Wyoming. The state’s population has seen a slight decline over the past few years and is currently shrinking at .12% per year.

Making Sense of the Data

What does this mean for Vermont’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Vermont has been outperformed by 40 other state economies. 

The performance index is based broadly on a state’s performance within state gross domestic product (GDP), absolute domestic migration and non-farm payroll employment. Vermont has seen an absolute domestic migration of -6,152, ranking it 23rd in the country. 

The Economic Outlook tells another story about Vermont’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, Vermont appears at No. 49, with a top marginal personal income tax rate of 8.75% and a top marginal corporate income tax rate of 8.5%.

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. 

TWO MEN AND A TRUCK*®

• Current units in state: 1
• Growth capacity in state: N/A
• Total jobs created at max growth capacity: 1-22 per location
• Total unit count: 400+
• Investment range: $105,500 to $435,600

TWO MEN AND A TRUCK®, the national, full-service franchised moving company, noted it was targeting Vermont in 2023. 

Fresh Coat*

• Current units in state: 0
• Growth capacity in state: N/A 
• Total jobs created at max growth capacity:  N/A
• Total unit count: 170+
• Investment range: $53,945-$76,845 

The Fresh Coat team has identified several markets primed for franchise growth, including Vermont.

Franchise Brands Headquartered in Vermont:

• Beans & Brews
• Bruegger's Franchise Corporation