Sub-Broker vs Franchise: Understanding the Differences

Sub-Broker vs Franchise: Understanding the Differences

Sub-Broker vs Franchise: Understanding the Differences

When it comes to the world of stockbroking partnerships, two models often create confusion: the Authorized Person (earlier known as Sub-Broker) and the Franchise. While both help brokerage firms expand their reach, they differ significantly in their operations, requirements, and benefits. This blog will help you clearly understand the distinctions, with references from AGSSL’s knowledge center and other industry perspectives.

Who is an Authorized Person (Sub-Broker)?

An Authorized Person (AP), previously called a sub-broker, is an individual or entity that works as an agent of a broking house. They are not directly registered with the stock exchange.

• Earlier, SEBI registration was mandatory, but now APs only need to register with a broking house like AGSSL.
• The eligibility requirements are minimal—anyone with a 10+2 qualification can become an AP.
• The AP earns income through commissions on trades executed via their clients. This offers flexibility, as earnings scale with performance.
• They enjoy autonomy but must build trust and reputation independently without leveraging an established brand.

What is a Franchise?

A Franchise operates under the brand and license of a large broking house, like AGSSL, following defined commercial terms.

• Franchises recruit APs (sub-brokers) and provide them with structured training, technical support, and marketing resources.
• Onboarding requirements are stricter compared to APs. A franchise typically needs office space, infrastructure, and sometimes additional certification or deposits.
• Revenue is guided by commercial agreements and depends on negotiation, experience, and the initial investment.
• Franchises benefit greatly from brand recognition, credibility, and ongoing support from AGSSL, making it easier to attract clients.

Comparative Analysis: Authorized Person vs Franchise

Aspect	Authorized Person (Sub-Broker)	Franchise
Registration	Registers only with the broking house; SEBI registration not required	Registers as AP and signs commercial agreement with broker
Branding	Operates under own name	Operates under AGSSL’s brand
Support & Training	Limited or self-managed	Extensive training, marketing, and technical support
Onboarding Needs	Minimal requirements, just registration and basic capability	Requires office, infrastructure, deposits, and agreements
Earnings Model	Earns commission per trade, highly flexible	Income depends on contract and commercial terms
Reputation	Must build credibility independently	Leverages AGSSL’s established reputation

Industry Context

Other broking industry players highlight the distinction in similar ways:

• Branding & Support: Franchises resemble branches of the broker, with structured support, while APs operate more independently.
• Operational Style: Franchises provide consistency through systems and frameworks, whereas APs enjoy flexibility and independence.
• Income Source: APs earn commission shares on trades, while franchises work under negotiated commercial contracts.

Other Business Partner Models

Apart from APs and Franchises, AGSSL’s ecosystem includes other models:

• Master Franchise: A step above a franchise, with the authority to recruit and manage other franchisees in a region while earning fees and royalties.
• Remisier: An independent agent who introduces clients to a broker and earns commissions. Often, a remisier may work with multiple brokers.

Final Thoughts

Both the Authorized Person and Franchise models offer unique advantages.

• If you value independence, low entry barriers, and flexibility, becoming an Authorized Person may be the right path.
• If you prefer brand leverage, structured support, and higher growth potential, a Franchise offers more stability—though it requires more investment and compliance.

Your choice ultimately depends on your long-term business goals—whether to grow independently or scale under the strong network of a reputed firm like AGSSL.

Join AGSSL as a Partner

At AGSSL, we provide multiple business partnership opportunities tailored for ambitious professionals. Whether you wish to start small as an Authorized Person or build a larger presence as a Franchise, our strong brand, training support, and modern tools will empower your journey.

Take the next step toward financial growth with AGSSL.

[Become a Partner with AGSSL Today →]

Frequently Asked Questions (FAQs)

1. What is the main difference between a Sub-Broker (Authorized Person) and a Franchise?
A Sub-Broker or Authorized Person registers with a broking house and earns commissions per trade. A Franchise, on the other hand, works under the broker’s brand (like AGSSL), with stricter onboarding requirements and more structured support.

2. Which model is more profitable: Sub-Broker or Franchise?
Profitability depends on scale. Sub-Brokers have lower entry costs and flexible earnings, while Franchises, with higher investment, can benefit from brand power and structured growth, often leading to higher long-term income.

3. Do Sub-Brokers need SEBI registration?
No. Under current regulations, Sub-Brokers (Authorized Persons) only need to register with a broking house like AGSSL, not directly with SEBI.

4. Can I start as a Sub-Broker and later become a Franchise?
Yes. Many individuals start as Sub-Brokers to understand the business, build a client base, and then scale up to a Franchise model when ready for greater investment and expansion.

5. Why should I choose AGSSL for partnership?
AGSSL offers strong brand credibility, advanced trading platforms, marketing support, and comprehensive training, making it an ideal partner for both Sub-Brokers and Franchises.