HomeBusinessWhy are Texas and Florida the perfect states for purchasing a franchise?

Why are Texas and Florida the perfect states for purchasing a franchise?

By buying a franchise, you can copy a company’s tried-and-true business plan, which can help your chances of success. However, other variables like the regional economy and governmental rules also play a role. 

By choosing the right market, you can cut your compliance and operation costs by a lot. This is because not all states have the same rules for the franchise industry.

Texas and Florida have become the best places to start a franchise in 2022 because they are friendly to business and their populations are growing. 

Also, both states are known for having less strict COVID-19 rules and cheaper electricity prices than many other parts of the US. Opening a franchise is even more straightforward when you deal with a design company that is familiar with regional codes and other needs.

Here, we’ll go through the four primary aspects that have made Texas and Florida potential franchise markets. 

Texas and Florida were named first and second among the top 10 states for franchises in the 2022 Franchising Economic Outlook. 

By state, the research predicts growth through 2022:

  • 36,386 new employees and 2,815 new franchise sites in Texas.
  • 27,273 new employees and 1,924 new franchise sites in Florida.

Pro-Business State Policies

The absence of a state income tax is a significant perk for business owners in Texas and Florida. This encourages people to dwell in these states and build businesses there. 

This means that the franchisee will keep a higher portion of the revenues after paying royalties and running expenses.

Texas and Florida don’t have complicated rules or expensive application costs for the franchise industry and have minimal tax burdens. Compared to New York and California, these states also have a comparatively low cost of living. 

Even though population expansion has increased real estate costs, franchise owners can still find reasonable offers.

Relaxed COVID-19 regulations

All company sectors were hurt by the COVID-19 lockdowns, but franchises were hit the hardest because they depended on client engagement. 

On the other hand, Texas and Florida had less onerous regulations and were among the first states to permit restaurant operations during the pandemic.

During the worst months of the pandemic, businesses in Texas and California saw a small drop in sales. Local businesses got back on their feet faster than those in states that kept tough regulations in place for a longer time. 

While several other states maintained their limitations for more than a year, Texas and Florida only kept their restaurants closed for a few weeks.

Increased Populations

The thriving economic climate in Texas and Florida favored top franchises to own, but all industries also benefited. For example, many computer companies have moved to Texas, while many financial companies have moved to Florida.

Both states’ populations are expanding quickly, which means there is a growing demand for the best franchises to purchase. Florida currently has more than 21 million people, while Texas has nearly 30 million. 

In both states, mixed-use developments include both homes and businesses. This lets franchisees open their businesses close to the customers they want to reach.

According to Restaurant Dive, Tropical Smoothie Cafe has launched more than 135 sites in Florida, and Papa John’s recently announced the opening of 100 new stores in Texas by 2029. 

In Texas, restaurants account for 51% of all food expenses, and the state has passed six pieces of legislation providing incentives for the Texas Restaurant Association in 2021.

low-cost electricity

Although energy costs have generally increased since 2021, Texas and Florida still have very affordable power rates. 

The Energy Information Administration’s most recent data shows that in April 2022, the average commercial rate in the US was 11.92 cents/kWh, with both states reporting below-average rates:

  • 11.08 cents per kWh in Florida.
  • 8.48 cents/kWh in Texas.

Since the last US EIA report, commercial electricity rates in many other states have already gone over 17 cents/kWh. 

This means that a franchise location will have to pay 50% more per kWh than in Florida and twice as much as in Texas.

In conclusion, 

Texas and Florida are two of the best states to buy a franchise due to their business-friendly climates, diverse economies, and large populations. 

If you’re looking to start a franchise business, these states should be at the top of your list.

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