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Soumik Kar
high five
“Don’t Hesitate To Shut Unprofitable Franchisees”
Motilal Oswal, chairman, Motilal Oswal Financial Services, on five ways to manage a successful broking franchisee
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  1. Get the right franchisee: Ensure your franchisee has an in-depth knowledge and experience of the markets, so as to handle client queries and concerns to their satisfaction. The person should also have the appropriate infrastructure and should be able to afford the technology required to run a franchise.
  2. Geography matters: Don’t have multiple franchises in a city or region where equity penetration is low. A good rule of thumb is one franchisee to 1 sq km; in towns with population under 20,000, though, we don’t open more than one franchise. More importantly, don’t hesitate to shut down franchisees if they don’t turn profitable in a year or two.
  3. Don’t push, give right advice: Communicate directly with investors and direct sub-brokers to clarify risk factors with new customers. Offer existing and genuine long-term customers extensive and detailed advice.
  4. Money proposition: We normally work with a 60:40 profit sharing model as this ensures that the franchisee is also equally involved in the business. Ensure that a franchisee has adequate margin before he sets up the business.
  5. Enhance knowledge: Knowledge and expertise are the most important assets of a broking business. With franchisees spread all over, it is important to conduct regular training programmes, especially for sub-brokers, in specialised technical skills and on how the market works.

—As told to Aditi Saxena

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