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Where’s Franchising’s Growth? Look to the Southern U.S.

Population studies find eight of 10 of the nation’s largest gains are in the Southern region.

Within the past 10 years, the Southern United States has experienced the nation’s strongest economic transformation and population growth. To capitalize on recent growth opportunities, many franchisors are now seeking new markets in the region. For all new market seekers, there is the challenge of evaluating the U.S. marketplace from three perspectives: population growth, economic prosperity and market forecasting.

Population Growth

One of the most compelling reasons to look to the South for opportunities is escalating population growth. According to the Pew Research Center, the Brookings Institute and the 2010 U.S. Census, the top 10 fastest-growing cities in the nation are located below the Mason Dixon line. Population studies indicate that eight-out-of-10 of the nation’s largest gains are in the Southern region.

According to the U.S. Census Bureau, within the past 80 years, Southern populations have experienced yearly double-digit growth since 1930, resulting in the South now housing the largest proportion of the U.S. population. From 2000 to 2010, Southern states grew 14.3 million versus Western states at 8.7 million, with the South attaining a new 10-year growth margin at a much greater rate than the West.

Between 2000 and 2010, the South became home to one-half of the top 10 growth states and seven of the top 10 fastest-growing cities. Beyond the 2010 data, there seems to be no end to the rising trend.

A May 2013 press release issued by the U.S. Census Bureau reported eight of the 15 fastest-growing large U.S. cities and towns for the year ending July 1, 2012 are in Texas. With population growth as an indicator of an increasing customer base, the Southern regions should continue to offer much promise for expanding brands and franchising.

Economic Growth in the South

Four major drivers of opportunity in the South are climate, economic opportunity, cost-of-living and a growing awareness of the region’s business-friendly environment.

Climate has a sizable influence for those seeking to optimize quality of life. Sunbelt states of the South offer milder, warmer weather – a more attractive option for retirees from the colder states of the North and upper Midwest.

Economic opportunity has seen substantial growth over the past 20 years and this trend still continues as a result of several factors, including the increasing number automakers locating in the Southern states, where they are investing billions into state of the art non-union automotive assembly plants. South Carolina, Tennessee, Alabama and recently, Mississippi are now home to automakers Nissan, Toyota, Mercedes Benz, BMW and Hyundai, as well as numerous producers and suppliers of automotive components.

The South also hosts a growing market share in the oil and natural gas industries. According to a June 2013 Wall Street Journal article titled, “U.S. Oil Notches Record Growth,” U.S. crude-oil production grew by more than one million barrels per day last year, the largest increase in the world and the largest in U.S. history. The American oil boom of this decade has already created an estimated 1.7 million new jobs. Louisiana is home to the two largest natural gas capital investments in the nation. The area from Louisiana to Corpus Christi holds the largest concentration of oil refineries and petrochemical facilities in the United States.

Retail, services and consumer support are also large-scale industries in the South. Countless call centers, banks and insurance companies have offices, as well as service centers located there. Global retail giant WalMart is headquartered in Little Rock and the City of Austin recently approved a multitude of business incentives for e-commerce giants, eBay and PayPal, which will add 1,000 new jobs there.

Growing evidence shows the South has increasingly become a business-friendly environment supported by a diverse number of industries thriving, creating jobs and growing toward the future. The work force is eager and mostly non-union. City and state governments have a reputation for being pro-business states, giving businesses much to consider when determining where to locate. Lower taxes or in some states, no state income taxes, lower cost of living for housing and property taxes, newer communities, and milder weather, as noted earlier, are all factors that support the new rising South.

Current trends and growth data support the conclusion that the growth trajectory will continue to expand, offering potential rewards for businesses seeking markets in the growing cities. For both franchisors and franchisees, the South offers a new green field of growth for brand expansion that includes business friendly cities, economically diversified industries and lower cost of living. Total Woman Gym + Spa has prioritized the South in its development plans and is poised to successfully capitalize on this rising tide.

Ben Amante is the executive manager of franchising at Total Woman Gym + Spa, founded 50 years ago as a uniquely branded full-service gym and spa chain designated for women only. Find him at fransocial.franchise.org via the directory.

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