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 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 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.
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 instills 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 the 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 that 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 a 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, 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 stock broker to another. If you are serious enough about the stockbroking business, make sure you understand all these areas and figure out which broker works the best for your requirements.
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