Franchise Partner vs Business Associate

In stock broking, partnership models are designed to help brokers expand their client reach while keeping investor protection and supervision at the centre of operations. Within this structure, two terms are often used in business discussions: “Franchise Partner” and “Business Associate.” While both may contribute to client acquisition and servicing, there is a substantial difference between business associates and franchise partners.

At the same time, exchanges and SEBI-recognised frameworks clearly define the concept of a franchise business model, and an Authorised Person (AP), which is a regulated way for a broker to extend access to the trading platform through appointed agents. 

[Note: NSE describes an Authorised Person as a person/entity appointed by a stock broker who provides access to the exchange trading platform as an agent of the stock broker.​]

Becoming a Business Associate with a Broker

A Business Associate is commonly understood as an individual or entity that supports a broker’s business development by introducing prospects, assisting with documentation coordination, and supporting relationship management. 

• In many broker-led models, a Business Associate operates with limited authority, focusing more on lead generation and coordination than on formally providing market access.
• From a governance perspective, when the activity crosses into “providing access to the trading platform,” SEBI’s recognised structure becomes relevant. 
• SEBI’s circular on market access through Authorised Persons establishes that market access can be provided through Authorised Persons appointed by stock brokers, along with conditions for appointment and responsibilities.​

Roles and responsibilities

• Client acquisition support and relationship facilitation, based on the broker’s internal partner structure and agreements.
• Coordinating KYC and account-opening support as permitted by the broker’s process, without handling client funds or securities. 
• Acting within the boundaries of what the broker authorises, since the broker remains responsible for acts of omission and commission of the appointed agent under the AP framework.​

Transition from Business Associate to Authorised Person

The important shift is not merely a change in title; it is a movement toward a defined, exchange-approved appointment framework. Under NSE’s AP framework, the stock exchange’s approval is required for the appointment of an Authorised Person, and the broker applies through the exchange process with prescribed documentation.​

SEBI’s “Market Access through Authorised Persons” framework is the reference point that allows brokers to extend market access through appointed agents, while keeping accountability and supervision with the stock broker.​

Why are Business Associates now considered Authorised Persons (AP)?

In many operating models, Business Associates were already performing functions similar to an authorised channel partner – especially where they were responsible for client acquisition and enabling trading access through the broker’s infrastructure. Since NSE defines an AP specifically as an agent of the stock broker providing access to the trading platform, brokers often align such partner roles to the AP framework to ensure the activity sits within a recognised structure.​

Prior Definition vs New Definition

Below is an illustrative franchise partner vs business associate differentiation for understanding how they are commonly positioned in the market.

Area	Franchise Partner	Business Associate
Regulatory position for exchange trading	Structured as an Authorised Person appointment/registration through the broker and exchange route.	Not a SEBI-defined category by itself; whether AP registration is needed depends on activities performed.
Core role	Recruiting customers and managing the sub-brokerage business under a registered stockbroker. ​	Typically focused on leads/referrals and relationship support, as per broker agreement.
Onboarding steps	Includes sign-up, KYC submission, verification and e-signing, and getting registered as an Authorised Person. ​	Usually agreement-based; AP registration applies only if the role expands into AP-type functions.

Does a Business Associate Have to Register as an AP with a Broker?

In the business associate model, the associate’s activities amount to “only generating business leads” for the stockbroker. If the operations of a Business Associate go beyond generating leads and providing access to the trading systems of the stockbroker to the investors – then, operating under the Authorised Person appointment framework becomes necessary in practice because NSE requires exchange approval for the appointment of an AP and specifies eligibility and conditions.​

Older Benefits Vs New Benefits

The benefits change from being largely commercial (referral/lead-based arrangements) to being structured around a recognised appointment model that enables scalable operations.

• Clearer operating scope: AP conditions define what can and cannot be done, including restrictions on handling client money/securities and charging clients directly.​
• Formal recognition and continuity: NSE provides a defined process for appointment, cancellation, and changes in details, which makes ongoing compliance more structured.​
• Broker accountability and oversight: The broker is responsible for AP actions, which typically result in more training, monitoring, and documented processes.​

Becoming a Business Associate or an AP with IIFL Capital Services Ltd

Start early and start smart with IIFL Capital Services Ltd by choosing to become an Authorised Person (AP). As an IIFL Capital Partner, you can access higher revenue sharing, dedicated relationship manager support, and a diverse product suite. The model is low-cost to start, with a ₹1 lakh refundable deposit, ₹0 fixed setup cost, no hidden charges, monthly payouts, and end-to-end support across tech, training, marketing, and operations.