What Washington’s Economic Outlook Means for Franchisors

If you’re a franchisor looking to develop your business in Washington, 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 • 07/18/23

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 Washington, 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: 34
2023 Economic Performance Ranking: 6

The State

Washington, home to some of the world’s largest employers and manufacturers such as Amazon and Microsoft, is consistently ranked among the best states in the nation for business and workers. In a recent report, WalletHub ranked Washington's economy the best in the nation, pointing to factors such as the state’s exports per capita, independent inventor patents per 1,000 working-age population, average educational attainment of recent immigrants and number of jobs in high-tech industries. Some of the top sectors in Washington include aerospace, agriculture, clean technology, forestry products, ict, life sciences, maritime and military.

However, when it comes to its unemployment rate of 4.3%, Washington ranks as one of the worst in the country, significantly higher than the national average of 3.4%. The Evergreen State also made the bottom for state-government surplus per capita at 46th.

“Washington continues to rank at the top for patents, high-tech jobs and exports, but there is still more work to do in terms of ensuring that every resident has access to economic opportunity and mobility, including quality education, workforce training and living wage jobs,” Mike Fong, director of Washington’s Department of Commerce, told McClatchy News. “This will keep Washington positioned to lead the nation as a preferred place to work and live for years to come.”

Making Sense of the Data

What does this mean for Washington’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Washington has been outperformed by only five 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. Washington has seen an increase of over 320,000 residents over the past 10 years, which ranks it as No. 8 in terms of Absolute Domestic Migration. Even more impressive is Washington’s State Gross Domestic Product growth over the past decade, which came in at 78.49%, the second best in the country.

The Economic Outlook tells another story about Washington’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. Washington came in at No. 1 for its top marginal personal income tax rate of 0%, for example, but came in at No. 50 for its high state minimum wage of $15.74.

The report indicates that, generally speaking, states that spend and tax less experience higher growth rates than states that spend and tax more. Washington is ranked No. 43 when it comes to sales tax burden, with $32.50 owed per $1,000 of personal income. 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: 4
Growth capacity in state: 14
Total jobs created at max growth capacity: 276
Total unit count: 405
Investment range: $105,500 to $435,600

TWO MEN AND A TRUCK®, America’s number-one moving franchise, has locations in nearly every state and has identified Washington as a market that has room for growth.

“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”.

Footprints Floors*

Current units in state: 4
Growth capacity in state: N/A
Total jobs created at max growth capacity: N/A
Total unit count: 150+
Investment range: $477,918 to $989,793

Footprints Floors, the flooring installation concept with over 150 active territories in over 35 states, has several locations in the state of Washington.

“The potential with Footprints Floors is endless,” said Nate Yarusso, a franchisee who signed on with the brand in Northwest Washington. “In the past 10 years, the population in every ZIP code in my territory has increased by at least 10%. We’re seeing a trend of people relocating here, and the current residents are taking more pride in the homes and maintaining their interiors. I have contractor contacts who tell me how they’re swamped with residents who wanted to update their homes, and I’m thrilled to be able to help meet that growing demand.”

Right at Home*

Current units in state: 8
Growth capacity in state: 16
Total jobs created at max growth capacity: 288
Total unit count: 700+
Investment range: $88,719 to $157,669

Right at Home, the 700-plus location in-home care concept helping seniors and adults with disabilities live comfortably at home, has available territories all over the country, including several in Washington state.

“Right at Home starts with our passionate franchise owners, and we’re excited to partner with the people of Washington,” 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.”