In the stock brokerage business, a broker serves as a representative of the financial market, dealing in securities. The primary activities of a stock broker include receiving and executing sell and buy orders from clients. As market participants, clients rely on a stock broker's knowledge and expertise to execute profitable transactions.
Who is an Authorised Partner and how does an Authorised Partner franchise work?
An Authorised Partner acts as an intermediary between a large and reputable broking house and the latter's clients. An Authorised Partner establishes a franchise in its local area, using the name of the reputable broking house. For using the name of that brokerage, the sub-broking firm in return has to give away a certain percentage of its income to the franchiser.
Like a stockbroker, an Authorised Partner must also register with the Securities and Exchange Board of India (SEBI) to ensure legal compliance. Once registered, the Authorised Partner is allowed to onboard clients and help them to take right investment decisions while fully adhering to the market regulator’s rules for stockbrokers. The primary responsibility of a is to attract clients for trading activities in the market. stockbrokers charge fees from clients for their services, and the more clients a stock broker has, the higher its profits.
What is the Authorised Partner's key responsibility?
An Authorised Partner is expected to ensure that its client is satisfied with the services offered while ensuring a robust portfolio for the client. The Authorised Partner franchise should adhere to all the conditions in the agreement while serving the clients. It is the responsibility of the franchisee to guide the client to take right investment/trading decisions to minimise losses and increase profits.
Advantages of Authorised Partner franchise business model
- The sub-broking firm or authorised partner uses the already established name and brand of the broker. This adds credibility to the business.
- The brokerage gets an opportunity to expand its business through the authorised partner franchise.
- The authorised partner’s knowledge about a locality and region helps the broking firm to spread its business into small towns.
- The brokerage provides all support to authorised partner franchises to grow business locally.
- Authorised Partner gets an opportunity to earn a large amount of money in the form of commission as it uses the brand and reputation of the franchisor.
- Authorised Partner gets opportunities to explore other services apart from stock broking if the franchisor is into other domains like advisory, PMS or wealth management.
- Franchise model helps new authorised partners to build their business with minimal investment and infrastructure as they can use the brand name, reach, reputation and expertise of the brokerage.
- The Authorised Partner also gets all support for marketing and advertising initiatives locally from the franchisor.
An Authorised Partner saves a lot of money as it has to spend less on spreading the word to the public. With little effort at the beginning, it starts generating revenue as onboarding the clients gets easier in the locality.
The best part of starting an Authorised Partner franchise is that it can be started with a low investment. One can begin a business with an investment of as low as ₹50,000. On top of that, this amount is fully refundable. The franchisor keeps the security deposit with it to cover all the training expenses. In certain situations, the franchiser under which the Authorised Partner franchise operates doesn't even seek the minimum deposits.
At the start, the Authorised Partner franchise also gets all the technical and logistical support apart from marketing and training assistance.