Master Franchise is a kind of business model in which the concerned stock broking house centrally allows a number of franchising activities in a particular area, city or territory. With this, the master franchisee gets the full control of all these business partners associated in different capacities with the broker.
This is a widely prevalent model in the stockbroking industry in India.
The Master Franchise Program provides you with a fixed amount of franchise fee when an outlet opens in your territory through your reference. This is followed strictly as per the amount which has been finalized in the sub-broker agreement during the registration process. Besides this, you will be provided access to various tools and platforms for trading that will help you in the process of revenue generation through your acquired client base.
Master Franchise Example
Getting an idea? Let’s consider an example to understand it even further.
Let us consider an example in which you are a master franchise in your city with a prominent stockbroker of the country. During your registration as a master franchise, it was agreed that you will get 50% whenever a new outlet opens in your territory.
Let’s say a new franchise or sub-broker business is opening up and the net cost amounts to ₹200,000 while opening it. Then as per the agreed franchise fee, you will be entitled to ₹100,000. Besides this, you will also be eligible for a royalty amount which constitutes of a certain part of the brokerage that will be generated from the franchises operating under your master franchise business.
In this article, we will see how the master franchise programs of a few eminent stock broking houses work. This will help you to know about the different business and operational aspects of this business model such as day to day working, revenue sharing, costing etc.
In the master franchise business model of Angel Broking, you will be solely responsible to represent the company directly in a particular area. There will be a number of sub-broking partners who will be mapped under your master franchise in your area.
It implies that the whole geographical area will be under your control without any competition from the contenders. This plays a vital role in enabling you to work towards developing your business at the organic level.
The corporate team of Angel Broking won’t interfere in your activities of establishing the sub-broker business in the area of the Master Franchise. Thus, as per your requirement, you can hire people who are in need as well as suitable for such jobs.
As a primary role, you have to make sure that the sub-brokers working under you are well-equipped to generate a fixed amount of revenue consistently. If needed, you can assist them with training, sharing your experiences of the region, customer acquisition techniques and more.
At the end of the day, it is only going to increase your revenue from the brokerage generated through partners under you.
Angel broking Master Franchise Criteria:
The Master Franchisee owns and has rights to access various financial products offered by the stockbroking house. But in order to become a Master Franchise, you will have to fulfil certain criteria, which are as enumerated in the following section:
Registration with SEBI is compulsory.
Ideally, you should have a very good network of clients in your territory that will make it easy for you to carry out your business without having to create a customer base.
There should be enough capacity to set up an infrastructure which meets the expectations and experience of the potential clients at the branch level.
Leadership skills in your business are highly preferred.
A basic understanding of the stock market trading and investment is necessary.
Minimum education of 10+2 is needed.
You should be at least 21 years old.
You should not have any blemishes in your background such as criminal cases, pending cases, etc.
Angel Broking Master Franchise Costing:
An upfront cost of ₹1 lakh – ₹3 lakh is needed to begin a master franchise under Angel Broking. This is needed to set up the infrastructure and other related costs.
As a master franchise, your revenue share will depend on the amount of brokerage generated by the sub-brokers. This amounts to approximately 60%-85% of the brokerage.
You will also get a certain amount when a person starts a franchise business on your referral.
From the industry perspective, these numbers are pretty competitive and you will end up earning quite well through this partnership model.
HDFC Securities Master Franchise Model
You can start a master franchise business model under HDFC securities by establishing some infrastructure as well as fulfilling some eligibility conditions. This is a standalone business model which has a sort of monopoly in nature and its strength lies in its customer base. At the same time, the trust the brand instils among its potential client base.
In a particular area, there can be one master franchise of HDFC Securities.
Unlike some other stock broking houses, in case of HDFC securities, there are no other franchise or sub-brokers in the area where the master franchise business exists. This eliminates any chances of affecting the business in any negative way.
HDFC securities Master Franchise Cost:
If you want to get into the master franchise model of this stock broking house, you need to deposit a certain amount of money that ranges from ₹3 lakh – ₹5 lakh. This amount also includes infrastructure investment as well as the security deposit.
The main expenses involved in infrastructure setup include:
Acquiring an office area of at least 300 square feet.
You need to hire a minimum of 7 employees to carry out the business operations efficiently.
You must have internet facilities, proper telephone lines, and a desktop or laptop to operate as the operations are online.
There must be trading terminals in all your franchise offices.
You must have a team which can efficiently perform the research works so as to benefits the clients
HDFC Securities Franchise Revenue sharing:
The revenue that a master franchisee of this stock broking house will get, depends on the initial amount which he has paid as a security deposit. In general, the commission percentage varies from 70%-75% and a revenue share of 50%-65% can be expected.
Like many other master franchises, Edelweiss Master Franchise also operates through monopoly in a particular territory such as a town or a city. This implies you will have the sole responsibility of carrying out the business in an area without the impact of any other competitors.
Compared to certain stock broking houses, Edelweiss’ cost of starting the master franchise is on a higher end. You will need an initial minimum investment of ₹3 lakh which may also be as high as ₹5 lakhs.
An office has to be set up where you will carry out your business activities. This will need some infrastructure investment cost and other expenses such as getting a stable internet connection, a phone network, and a desktop or laptop to carry out the online processes.
Edelweiss Master Franchise Revenue sharing:
As a master franchisee, you can expect a revenue share of 70%-80%. If the initial amount you have invested is high, then you are more likely to get a better revenue share. In certain cases, when the number of clients of the master franchisee is high, a better revenue can be obtained even at a lower investment.
At the same time, if the other Edelweiss Broking franchises under you do well, it directly impacts the monetary gains you make.
So, we can say that the exact revenue you will get depends on various factors such as the size of your client base, the initial amount you have invested and the revenue generated by the sub-brokers. It is necessary to have a minimum of 3-year experience in the stock market to start this business model to be successful in it.
Thus, with these 3 examples of master franchise business in the stockbroking space, you must have got a reasonable idea of how things work in this model.
Business aspects such as eligibility, revenue sharing, initial costing, business operations, training vary from one stockbroker to another. If you are serious enough towards stockbroking business, make sure you understand all these areas and figure out which broker works the best for your requirements.
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