Last Updated on September 27, 2023 by BFSLTeam BFSLTeam
The stock market is currently experiencing a surge in the number of Demat accounts being opened, with people seeking better returns through market-linked investments. However, as trading moves increasingly to online platforms, there’s a technology gap for individuals not familiar with online trading. Sub-brokers play a crucial role in bridging this gap by providing a physical approach and guiding individuals in making informed financial decisions. This has led to a growing demand for sub-brokers, making it an attractive business opportunity. To understand how a sub-broker franchise works, let’s delve deeper.
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What’s a Sub Broker’s Role in a Sub-Broker Franchise?
A sub-broker operates within a franchise chain to provide products and services to clients locally. They offer comprehensive information on various market segments, including equity, currency, commodity, futures, and options. A sub-broker acts as an intermediary, helping investors deal with shares without being a direct stock exchange participant. The sub-broker franchise involves a three-party agreement between the stockbroker, the sub-broker, and the client.
Understanding the Stock Sub-Broker Franchise in India
Being a sub-broker isn’t just about handling calls and emails. It requires a willingness to take on risks and uncertainty. Sub-brokers face common risks like falling share prices, inflation, and market scepticism. However, these challenges underscore the importance of seeking a sub-broker’s guidance in the stock market, as they help clients navigate these risks.
Also Read: How to Become Sub Broker
Key Benefits of Being a Sub-Broker Franchise
- High Earnings: Sub-brokers earn a significant portion of the brokerage generated by their clients, while the franchiser takes a lower percentage.
- Affordable Investment: Starting a sub-broker franchise typically requires a minimum investment of Rs. 50,000, often refundable, with a security deposit to cover expenses. Some franchisers don’t demand a minimum deposit.
- Marketing and Training Support: Franchisers provide marketing materials and conduct workshops to educate sub-brokers on various aspects of the business.
- Advisory Support: Some franchisers offer guidance, stock tips, and suggestions to help sub-brokers enhance client satisfaction and increase sales.
- Access to Products and Services: Sub-brokers can offer new products, services, and deals introduced by the franchiser, keeping their clients engaged.
Also Read: Benefits of Being a sub broker
Requirements to Become a Sub-Broker
To become a sub-broker, candidates typically need:
- Minimum 12th-grade education, ideally a graduation degree.
- Knowledge of capital markets and financial transaction management.
- Basic computer skills.
- Strong communication skills.
- Current information on financial and economic policies.
- Basic knowledge of equity, commodities, mutual funds, currencies, etc.
- Good managerial abilities for office and staff management.
The Functions of a Sub-Broker Franchise
A sub-broker franchise is a business model that thrives on collaboration. In this arrangement, the franchisee pays a fee to the franchisor which is also known as sub broker franchise cost, gaining the right to operate independently under the established brand. Within the context of the stock market, a sub-broker plays a pivotal role. They are essentially individuals working on behalf of a stock brokerage firm, acting as intermediaries connecting clients with the firm. This multifaceted role entails the execution of buy and sell orders for shares, ensuring the seamless flow of trades, and bridging the gap between clients and brokers.
At its core, the primary function of a sub-broker franchise revolves around providing stock market services to the public while profiting from the spread between the bid (the highest price a buyer is willing to pay) and ask (the lowest price a seller is willing to accept) price of securities. However, the scope of functions within this business model extends far beyond the basic transactional aspects.
1. Financial Guidance and Advice: A fundamental role of a sub-broker franchise is to offer comprehensive financial guidance. This includes conducting in-depth research into market trends, providing stock recommendations tailored to individual client needs, and offering personalised investment advice. The aim is to empower clients with the information they need to make informed decisions in the complex world of finance.
2. Marketing and Promotion: Effective marketing and advertising are essential components of a sub-broker franchise’s functions. This involves promoting products and services related to stocks, creating awareness about the franchise’s offerings, and building a brand presence in the market. Marketing strategies are often designed to attract and retain clients.
3. Online Trading Platforms: In today’s digital age, creating a user-friendly online platform for investors is a crucial function. This platform allows clients to buy and sell stocks with ease, access real-time market data, and manage their portfolios efficiently. A seamless online experience enhances the accessibility of stock market services.
4. Educational Initiatives: Investing can be daunting for beginners, and a sub-broker franchise often steps in to fill this knowledge gap. Educational programs on investing and financial literacy are a part of their functions. These programs aim to empower clients with the knowledge and skills needed to navigate the world of finance confidently.
5. Building a Community: Establishing a community for investors is a unique function that fosters knowledge-sharing and collaboration. Clients who wish to share their insights, experiences, and expertise can do so within this network. This sense of community can strengthen client relationships and promote a sense of belonging.
6. Diversified Product Offerings: Beyond stocks, a sub-broker franchise may also offer a range of investment products. This can include mutual funds, exchange-traded funds (ETFs), and more. These products can be made available through various channels, such as the franchise’s website, telemarketing efforts, or print advertisements.
Also Read: Discount Broker vs Full-Service Broker: Which One Should You Choose?
Wrapping -Up
In conclusion, a sub-broker franchise isn’t merely a conduit for stock trading; it’s a multifaceted entity that strives to serve the financial needs of its clients comprehensively. By offering an array of services, educational resources, and investment options, best sub-broker franchises aim to make the world of finance more accessible and manageable for individuals seeking to navigate the complexities of the stock market.
