What Virginia’s Economic Outlook Means for Franchisors

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

By Luca Piacentini1851 Franchise Managing Editor

10:10AM • 07/10/23

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 Virginia, 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: 18
2023 Economic Performance Ranking: 29

The State

Virginia’s overall economy appears to be rebounding despite concerns about a potential recession. According to Stephen Cummings, the state’s secretary of finance, Virginia had an increase of roughly 339,000 new jobs in May, easing some lingering economic concerns.

“We feel pretty good about where we are,” said Cummings. “We remain cautious about the future. We still believe that we are going to have a delayed recession. There is a lot of debate, but I think people have become much more hopeful and optimistic.”

Additionally, a quarterly CEO Economic Outlook Survey conducted by the University of Richmond’s Robins School of Business found that roughly 56% of CEOs expect revenue to increase in the near future, while another 51% expect employment figures to also increase over the next six months.

In terms of population, as World Population Review reports, Virginia is currently enjoying a growth rate of 1.15%. Since 2010, it has added roughly 380,000 new residents and sits at the 12th most populated state in the country.

Making Sense of the Data

What does this mean for Virginia’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Virginia has been outperformed by only 28 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. Virginia has seen a decline in absolute domestic migration by about 104K, placing the state at 38th in the country.

The Economic Outlook tells another story about Virginia’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, Virginia appears at No. 18, with a top marginal personal income tax rate of 5.75% and a top marginal corporate income tax rate of 7.60%.

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.

Scoop Soldiers

Current units in state: 5 territories
Growth capacity in state: N/A
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 new franchise partners in places like Virginia, Colorado, Florida, North Carolina and Washington. According to E.J. McCoy, the brand is targeting states like Virginia, which is seeing an increase in new residents moving to the region.

“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.”

Paris Baguette*

Current units in state: 4
Growth capacity in state:
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 concept with more than 4,000 units worldwide and 120 locations in the U.S., has experienced exceptional growth in recent months and continues to offer new franchise opportunities across the country. As part of its efforts, Paris Baguette is expanding its reach in Virginia, where it currently has locations in Centreville, Manassas, Fairfax and McLean.

“We are thrilled to announce additional expansion within Virginia,” explained Mark Mele, chief development officer. “There’s a tremendous amount of opportunity in the bakery café space. No one else is doing what we are on the same scale, and that’s attracting a lot of attention. It’s a really exciting time for us as we continue seeing growth through franchise expansion and year-over-year revenue numbers.”

Right at Home*

Current units in state: 3 territories
Growth capacity in state: 2 territories
Total jobs created at max growth capacity: 8 to 18 per location
Total unit count: 700+ (U.S. and international)
Investment range: $87,394 to $156,194

Right at Home is an in-home care concept that helps seniors and adults with disabilities live comfortably at home. The brand, which boasts more than 700 locations spanning seven countries, is looking to add passionate entrepreneurs to its roster of franchisees in multiple states, including Virginia. In fact, Richmond is already primed for Right at Home’s services, as persons over the age of 65 and over make up 13.2% of the population.

“Right at Home starts with our passionate franchise owners, and we’re excited to partner with the people of Richmond,” said Jennifer Chaney, vice president of franchise development. “We are seeking passionate individuals who aren’t just looking for a business to make a living. Entrepreneurs should choose Right at Home to make a positive impact on their communities and the people for whom they provide care. Our mission is to improve the quality of life for everyone that we serve.”