What West Virginia’s Economic Outlook Means for Franchisors

This summer, ALEC-Laffer published their annual Economic Competitiveness Rankings, which forecasts a state’s current standing within 15 state policy variables. The report features two different rankings: Economic Outlook — a forecast based on a state’s current standing in 15 state policy variables — and Economic Performance — a retrospective measure based on a state’s performance over a 10-year period from 2008 until 2018. For the state of West Virginia, these rankings reveal a lot about where the state economy is going and where there is opportunity for their economy to grow. 

• 2020 Outlook Ranking: 28
• 2008–2018 Performance Ranking: 43

The State

Historically, West Virginia has been a global hub for chemicals, a national hub for biotech industries and a leader in energy, while having a diverse economy in aerospace, automotive, healthcare and education, metals and steel, media and telecommunications, manufacturing, hospitality, biometrics, forestry and tourism.

Although West Virginia has struggled to combat COVID-19, the state is showing signs of recovery. The state’s unemployment rate was around 4.9% before the pandemic and skyrocketed to 16% in April. This unprecedented spike peaked at 146,566 weekly West Virginia unemployment insurance benefits filings the week of April 1. That number has improved to 76,609 filings during the week of June 13.

Making Sense of the Data

What does this mean for West Virginia’s economy? To start with the Economic Performance report, the index shows that within the past ten years, West Virginia has been outperformed by 37 other state economies. The performance index is based broadly on a state’s performance within State Gross Domestic Product (rank: 44th), Absolute Domestic Migration (rank: 28th) and Non-Farm Payroll Employment (rank: 49th).

The Economic Outlook tells another story about the West Virginia 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. West Virginia appears at No. 28 In this ranking. Although they’re somewhat behind in performance, the report suggests that the state is on the up-and-up when it comes to economic growth.

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 business, it shouldn’t discourage them from investing in the franchise of their dreams if they're in a market with a slower growth rate. For states like West Virginia, this presents an opportunity for improvement. For example, the state is ranked 16th in the nation for both property and sales tax burden. 

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. Although in the past West Virginia has lagged behind in performance, its potential for growth is improving exponentially.

Franchise Growth Plans

So what should franchisors do with this information? 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, the findings within the report should not be the deciding measure for franchisors, but they should play a role in the decision. 

The Greene Turtle

• Current units in state: 1
• Growth capacity in state: 5+
• Total jobs created at max growth capacity: 50

The beloved Maryland-based restaurant brand, The Greene Turtle, currently has 44 locations throughout the Mid-Atlantic, including one in West Virginia. The company is looking for strategic franchise partners to continue its dynamic growth.

“We want strong candidates who already have success in multi-unit development and management and who are seeking to leverage their existing resources to expand their business and brand portfolios,” VP of Franchise Development Tom Finn told 1851 Franchise. “Multi-unit operators are already choosing The Greene Turtle as their growth brand in Maryland, Virginia, New York, New Jersey, Delaware, Pennsylvania and West Virginia.”

BeBalanced

• Current units in state: 2
• Growth capacity in state: 5+
• Total jobs created at max growth capacity: 5+

GYMGUYZ

• Current units in state: 0
• Growth capacity in state: 5+
• Total jobs created at max growth capacity: 35

The New York-based fitness franchise GYMGUYZ also has its sights set on West Virginia for further franchise expansion as it grows throughout the East Coast and Mid-Atlantic. 

Franchise Brands Headquartered in West Virginia

• Best in Class
• Woodcraft