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Disclaimer: As per SEBI regulations, the term “Franchise Model” in stock broking is now officially referred to as Authorised Person (AP). In this article, wherever “Franchise Model” is mentioned, it refers to the Authorised Person (AP) structure.
The Indian broking ecosystem has evolved rapidly over the last decade. With rising retail participation, digitization, and expanding capital markets, many finance professionals are exploring entrepreneurship in this space.
But a critical decision often arises early on: Should you opt for a Franchise Model (Authorised Person/AP) or start your own brokerage?
The debate around franchise model vs own brokerage is not just about cost. It is about control, risk appetite, growth ambition, and long-term vision. In this blog, we break down the structure, advantages, and trade-offs of both models to help you make an informed choice.
A brokerage franchise, now formally known as the Authorised Person (AP) model, is a partnership structure where an individual or firm operates under the brand, technology, and regulatory umbrella of an established brokerage house.
In India, leading brokers such as IIFL Capital Services Limited offer Authorised Person (AP) under their Wealth Partner Program module.
Under this structure:
The parent brokerage holds exchange memberships and regulatory approvals.
The Authorised Person (AP) focuses on client acquisition, servicing, and relationship management.
Revenue is shared based on a pre-agreed structure.
A Franchise Model (Authorised Person/AP) typically provides:
Established brand credibility
Trading platforms and back-office infrastructure
Research and advisory support
Compliance and regulatory handling
Marketing and training assistance
Essentially, franchises operate as independent business within a ready-made ecosystem.
Starting your own brokerage means building an independent broking company from scratch. You obtain your own exchange memberships such as NSE, BSE, and MCX, comply directly with SEBI regulations, and create your own operational framework.
1. Regulatory Registration
SEBI registration as a stockbroker
Exchange memberships
Net worth requirements which can run into crores depending on segment
2. Infrastructure Setup
Trading platforms in-house or licensed
RMS and back-office systems
Compliance and audit teams
Cybersecurity and IT systems
3. Ownership Responsibilities
Complete compliance management
Risk management and capital adequacy
Branding and marketing from scratch
Hiring and training teams
Unlike a Franchise Model (Authorised Person/AP), you are the principal broker, fully accountable and fully autonomous.
When comparing brokerage franchise pros and cons, the Franchise Model (Authorised Person/AP) appeals to professionals who want faster entry with lower regulatory burden.
1. Lower Initial Capital Requirement
No need for exchange membership deposits or heavy infrastructure investment.
2. Faster Go-To-Market
You can start onboarding clients almost immediately.
3. Brand Leverage
Operating under a recognized brand builds trust instantly.
4. Regulatory Support
Compliance, audits, and risk management are handled centrally.
5. Technology Access
You get access to tested trading platforms and research tools.
1. Revenue Sharing
You do not retain 100% of brokerage earnings.
2. Limited Strategic Freedom
Product pricing and policies are often standardized.
3. Dependency on Parent Brand
Any reputational issue at the central level can affect you.
4. Growth Ceiling
Scaling is tied to the structure and support of the parent firm.
In the debate of start your own brokerage vs franchise, the Franchise Model (Authorised Person/AP) offers lower risk but relatively limited control.
If you are ambitious and capital strong, starting your own brokerage provides unmatched independence.
1. Complete Ownership
You control branding, pricing, business model, and expansion.
2. 100% Revenue Retention
No revenue sharing with a principal broker.
3. Long-Term Asset Creation
You build enterprise value that can scale or be acquired.
4. Strategic Flexibility
You can design niche products, fee models, or digital-first strategies.
1. High Capital Requirement
Exchange deposits, net worth norms, infrastructure, and technology costs can be substantial.
2. Regulatory Complexity
Direct SEBI and exchange compliance responsibilities.
3. Operational Risk
Technology failures, compliance lapses, or risk mismanagement can be costly.
4. Longer Setup Time
It may take months or longer before becoming fully operational.
While the upside is significant, so is the exposure to financial and operational risk.
Choosing between franchise model vs own brokerage depends on your experience, capital, and ambition.
You are a relationship manager or sub-broker transitioning into entrepreneurship.
Your capital is moderate.
You want structured support and lower compliance burden.
Your focus is client acquisition rather than infrastructure building.
You have strong capital backing.
You possess deep regulatory and operational expertise.
You aim to build a scalable financial services brand.
You want full autonomy in product, pricing, and strategy.
The choice between start your own brokerage vs franchise is not about which model is universally better. It is about which model aligns with your business DNA.
A Franchise Model (Authorised Person/AP) offers speed, structure, and lower risk. An independent brokerage offers control, ownership, and long-term enterprise value.
For many professionals, the Authorised Person (AP) route acts as a stepping stone, providing industry exposure before eventually transitioning into a full-fledged independent brokerage.
Ultimately, the right decision balances ambition with preparedness.
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