A broking franchise is a company that deals in stocks and is willing to give their franchise to medium and small sub brokers. They sell the rights to their franchise to make an extra clientele and make more money from these sub broker and franchise partners. They are known as a Franchiser.
Further ahead, these sub brokers share their clients with them and also use their software to be able to build their business. While doing so, these partners generate revenue from their clients in the form of the brokerage generated.
A part of brokerage is earned by the franchise and the remaining is shared with the sub broker. The franchisers charge money from sub brokers to buy their franchise and start operations. In one location multiple sub brokers can operate parallelly unless you are a Master Franchise.
This model is a great way to start an independent business. To become one of the Best Sub Broker Franchise in the country, there are different aspects that are to be considered. We talk about all of those at length here.
Sub Broker Franchises Basics
Before you start thinking of setting up a business in this industry, this needs to be known that the amount that you put in with the stockbroker is refundable in nature. This means that the money that you pay to buy a franchise or pay as a security deposit is transferred back to you when you decide to shut down the business.
The company whose franchise you are buying will help you get the sub broker registration done with NSE or BSE.
When an investor buys or sells shares, whether he or she will make a profit/loss out of it depends on the shares he or she invested in. As a sub broker, your income will come out as the brokerage or the commission that the client is going to pay to you, nonetheless.
The ratio or percentage of brokerage you make differs from one stockbroker to another. Usually, the larger share is earned by the sub broker and the rest goes back to the broker. In order to set up such a business, you will need to get an office space, although, you can work from home or broker’s office in a few instances.
Furthermore, learning how to operate software and how to run the back office, all this will be taught to you by the stockbroker itself that you are working with via training and workshops.
5 Best Sub Broker Franchises in India
Let’s discuss the front line best sub broker franchises and what are the specific reasons that make them so:
Angel Broking is one of the largest networks of stockbroking franchises in India and thus becomes an easy candidates for one of the Best Sub Broker Franchise. It has a huge brand name in India and that makes it very easy for sub brokers to acquire new clients. Angel broking requires a very low amount of security deposit and the team at angel broking can set up your business in just 2-3 working days.
Isn’t that smooth!
This full-service broker is a great option to choose for sub brokers if they are constantly generating a high volume of clients. If they are doing so, the revenue share can be as high as 80:20 i.e. 80% for the sub broker and 20% for the franchiser. Next, it also depends on the security deposit made by the sub broker.
If the security deposit is as high as ₹1 lakh then profit sharing can be 70:30 and if it is approximately ₹50,000 then it can be 60:40. A lot of it also depends on the negotiation skills of the sub broker. In order to become a sub broker of Angel Broking, one needs to pay a minimum security deposit of ₹50,000.
This amount is completely refundable and can be obtained back when the sub broker decides to shut the business. Hence, this is a safe business option where the risk is actually very minimal. The security deposit for angel broking varies from ₹50,000 to ₹3 lakh rupees. The higher the security deposit, the higher the revenue share for the sub broker.
Being a part of angel broking comes with a set of benefits like, low initial investment, a great brand name so it is easier to acquire clients, 20% brokerage cash back, trading for multiple asset classes, free demat account for client acquisition, trading across devices and browsers, various revenue sharing options etc.
There are great client acquisition and marketing support that angel broking provides.
IIFL has been in the business for a very long time and has scaled up really fast with its franchise business. The sub broker who is appointed by IIFL acts as a sub broker for the brand at a regional or local level. Although, IIFL is not that big a brand, yet it shares lucrative revenue sharing options with its sub brokers.
One of the primary reasons, IIFL is among the Best Sub Broker Franchise options is their revenue sharing that varies between 50% to 75%. The factors that depend on deciding the initial revenue sharing arrangement include security deposit, negotiation skills of the sub broker, his or her experience, volume of business expected, the experience of sub broker etc.
The security deposit required to be a part of the IIFL franchise can be between ₹50,000 to ₹2,00,000. What differentiates IIFL is that there is actually no need to set up an office space for a sub broker initially.
The benefits of being a part of IIFL would be that since it is a growing organization, there would be a chance for you to grow with the company, lesser compliances, easy procedures, less initial investment required, reasonable revenue sharing ratio, and a lot of support.
They also provide technical training to their sub brokers to excel in their business along with huge backend support.
Motilal Oswal sub broker program is an elite partner program. Although, they are not the largest, yet they have hired some of the highest yielding sub brokers who bring in a lot of business. They have different types of programs for sub brokers like:
Motilal Oswal Sub broker or elite partner
Motilal Oswal Remisier
Motilal Oswal Employee to Entrepreneur Program
Motilal Oswal Channel Partner
Each of these programs has its own unique set of requirements. Motilal Oswal sub broker or elite partner program has a stringent set of requirements from their sub brokers like he or she should:
Have a client base of more than a 100
An initial investment of ₹5 to ₹10 lakh
Great networks in the financial market
In the Motilal Oswal Remisier Program these are the requirements:
2-3 years of stock market experience
An initial investment of ₹1 lakh
Good past track record
Motilal Oswal Employee to Entrepreneur Program:
anyone who has worked in the sub broker program with any company can start this. The rationale behind this program is that employees can make great broking franchise. An initial investment of ₹50,000 to ₹2 lakh is required.
Motilal Oswal Channel Partner:
Under this program, any small or medium business which does not have in-depth knowledge about stockbroking can enter through this channel. This is for people who have a good network and need not have much knowledge about the financial market. The initial investment of ₹50,000 to ₹2 lakh is required.
The revenue sharing for Motilal Oswal varies from 50% to 70% and varies depending on the volume of trade, quality of clientele, negotiation skills etc. However, for the remisier model and employee to entrepreneur model, the ratio varies between 30% to 40% again depending on the number of clients fetched, the quality of clients etc.
One should opt for Motilal Oswal because they have a great brand name, a lot of program options to choose from, a strong advisory team, innovative trading platforms, customer support team, large product profile, and a solid history.
They also provide a lot of marketing support along with technical training and a friendly customer service support.
The sub broking program of Edelweiss Broking comes with a gigantic 20+years of experience. They provide great financial services to sub brokers.
Types of Edelweiss sub broker business programs:
Edelweiss Elliance or Remisier:
This is sort of like a referral program. In this model, the franchise can refer clients for Edelweiss online and can make a commission of about 10% to 30% based on the revenue generated. This is a low-cost model, where the security deposit required is zero and office space is also not required
This program forces a monopoly in a particular town or a small city. The initial investment required for this is ₹3 lakh. The sub brokers work on a commission from 70% to 80% and the master franchisee also has to have an office in place. The master franchisee must also have at least 3 years of experience in the stock market.
Sub broker or Associate Partner:
The only difference between a master franchisee and associate program is that it does not force a monopoly in a particular location. Although an office space is mandatory and an initial investment of ₹50,000 to ₹2 lakh is required.
Edelweiss has an interesting revenue-sharing ratio that can be 50:50 or even as high as 70:30, this depends on the amount of business a sub broker brings to the table. The commission is the lowest in Edelweiss Elliance as only the client has to be shared and rest everything else is taken care of by them.
At Edelweiss they use Omnesys software for the trading that they do. They also provide 90 days of zero cost training in stock markets. The sub brokers are trained about softwares, platforms, given a lot of marketing support and backend support in the form of customer service.
Edelweiss has been awarded many awards of excellence including the best managed mid-cap company in India. They have a huge brand name. Edelweiss provides multiple services to its clients under one umbrella like mutual funds, stock investments, currency etc. They provide all possible support to enable sub brokers to thrive.
Zerodha is the fastest growing discount broking house in the country as they are growing at a rapid pace. They are headquartered in Bangalore. They have two kinds of sub broker programs that make Zerodha one of the Best Sub Broker Franchise brokers in India:
Partner or Remisier
From 2015 to 2019, Zerodha has acquired close to 100 partners. The partners don’t have to spend any security deposit when enrolling to the partner program and do not require any office space even. The revenue slabs range from 30% to 50%. In this program, Zerodha does not provide any other facilities for the company
Client to Client Model
This is a basic model in which anyone can earn a 10% commission by referring anyone to open a demat account with Zerodha
Zerodha sub broker commission model
The amount of revenue that will go to the sub broker will depend on how much brokerage is Zerodha making from that particular deal. If the franchises client generates less than ₹1 lakh brokerage then Zerodha gets 80% of it.
And if the franchise has generated ₹1 lakh to ₹3 lakh brokerage in the month then Zerodha gets 70%. If the amount in between ₹3 lakh to ₹5 lakh then Zerodha gets 60% and if it is above ₹5 lakh then Zerodha gets 50%.
In Zerodha program, the franchise does not have to shell out any security deposit amount to work with Zerodha. Similarly, any other investment like an office space is also not required. This is a huge advantage to join the Zerodha sub broker program. Zerodha provides help like back office support, and a relationship manager to the Franchise, they also have a best-in-class trading platform.
If you are looking to be a sub broker or franchise in the stockbroking space in India, let us assist you in taking the next steps ahead: