What Are the Best States for Starting Franchise Businesses?

The best states for starting franchise businesses are those friendly to entrepreneurs in many ways.    Taxes are a major consideration.   Many states also provide incentives to reduce the cost of operations.   Labor, environmental and other government regulations can have a huge impact on your franchise profitability.   If you have flexibility regarding where you will open your new small business, consider locations within the business and franchise friendly states as identified below.

The table below shows the best states for starting a new small business franchise, compiled by Forbes in 2007.

Table: The Best States For Starting a Small Business
 

   

Sources: Moody's Economy.com; Pollina Corporate Real Estate; Pacific Research Institute; Tax Foundation;
CFED, Sperling's Best Places. 

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Virginia

The Forbes table above shows Virginia as a top location for buying and starting a small business.   Moody's ranks Virginia's tax structure around 15 percent below the national average for state business taxes.

Texas

Texas has long operated by the slogan, "Everything is Bigger in Texas." This certainly applies to the economic booms that took place in the nineties and headed straight into the new millennium. The more a state's economy booms, the more potential clients will come to live in the location, the more loans and grants will be available, and the more the economy will make room for new businesses. Texas certainly fits this description in recent decades, and the boom has been accompanied by a relatively low rise in the cost of living. Real estate is still fairly affordable in most cities, and the quality of living ranks high in this Southern region. Texas additionally offers a low incidence of tort reform and business litigation.

North Carolina

North Carolina has seen its own business boom in recent decades. Like Texas's, North Carolina's boom has not come at the price of increased cost of living for the most part. The cost of doing business here still ranks among the lowest in the entire country. Additionally, the cost of labor in North Carolina remains low. Many find North Carolina appealing due to the quality of its universities, including the University of North Carolina, Duke and Wake Forest University. These schools turn out top graduates yearly who are ready to go to work for businesses just getting started in the state.

Utah

Utah offers large incentives to business formation, including a very low cost of starting a business. On the whole, Utah has a relatively small bureaucracy in place considering the size of the state and its economy. The state does not see a high number of lawsuits annually. The one factor holding Utah back, however, is the quality of living in the area. For many individuals, this sparsely populated Western state with a unique religious culture is not an attractive place for starting franchise businesses.

Colorado

Colorado boasts low labor costs.  In addition, the economic climate experienced a boom in previous decades thanks to the popularity of Colorado's mountain cities. Many businesses will find the operating environment in this state very friendly to new start-ups.  Many business owners would prefer starting franchise businesses along the Eastern seaboard with quicker access to major business centers.