Buying a Franchise

Some Franchise Businesses Have Trusted Names: So What?

One of the things you buy when you buy a franchise business is a trusted name. True Value, a hardware chain owned by its 3,000 owner-operators (for this reason, True Value describes itself as a co-op rather than a franchise, but the process is essentially the same) is the third most-trusted name in its industry, right behind Big Box stores Lowe’s and Home Depot. Casey’s General Stores is on the Forbes list of Most Trustworthy Companies. A recent study found that Subway was the most trusted by American consumers when it comes to nutrition information. Pizza Hut has also made a Most Trusted list, and Merry Maids is mentioned regularly in home security tip lists as a safe option for nervous homeowners.

We could go on, but these examples should make the point: when franchisors say that buying a franchise lets you buy a “trusted name,” they’re correct. The question is, how much does it matter?

 Is the trusted name of a franchise a real benefit compared with starting up a business on your own?

Dr. Thomas D. Lacki is one of the many who have tried to quantify the value of trust. He points out that there are a lot of value-creating behaviors that are influenced by how much people trust a company:

  • We’re more likely to refer friends to a trusted company.
  • We’re more likely to buy from them a second time.
  • We’re more likely to stick with them in the future.

His extensive research has demonstrated that increasing a customer’s trust in a company can be worth billions in revenue for a large company, just because of these factors.

Those three customer behaviors are not the only business factors influenced by trust, though.


  • Price – A recent study in the United Kingdom found that a trusted company can charge 10% more for a product than a less trusted one. People simply aren’t willing to take a chance with a less trusted company unless they are getting such a bargain that they’re willing to take a chance.
  • Value – An Asian study found that companies spent five times as much on transactions with less-trusted vendors – not that they were willing to spend five times as much or that they ordered five times as much, but that they spent five times as much time and money on following up as they did with a trusted vendor. Clearly, a trusted vendor makes better financial sense, and those businesses will realize this.
  • Marketing – It’s an accepted principle in marketing that customers have to have contact with a company 7-12 times before taking action. With a trusted national company, your customer has already had enough contact. Instead of thinking, “Hey, a new pizza place… maybe I should try it” six times before taking the plunge, your customer is just as likely to think, “Oh, there’s a Little Caesar’s” and turn right into the parking lot. When it comes to the cost of marketing your new franchise, you may be able to get ten times the results right from the beginning, compared with the cost of marketing a brand-new business.

David Horsager, author of The Trust Edge, has estimated that a lack of trust doubles the cost of doing business, and a high level of trust generates three times the returns compared with a low level of trust.

After you’ve been in business for a while, you’ll earn the trust of your community. In the meantime, a franchise gives you a significant head start.

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