Even as the global recession and the market meltdown are casting shadows over the country, the broking industry has chalked out plans to weather the storm.
To survive in stiff competition, several big broking houses are taking various measures to shield themselves from further downturn and have started opening more franchise outlets throughout the country, rather then go on their own, to reduce investment outlay and yet expand their businesses.
Broking houses such as Enam Securities, Motilal Oswal Securities, Indiainfoline have started focusing more on taking the franchise route rather than opting for their own branches.
Motilal Oswal, chairman and managing director of Motilal Oswal Financial Services said, ?Our company has always followed the franchise model, in the last two year we have opened over 1,500 franchises all over the country. We believe that franchise targets the people in the semi-urban areas to enter the markets.?
Likewise, Enam Securities has also given out six franchises recently and is also looking at opening more franchise centres in the country. At present, they have only four branches. ?We are quite satisfied with the response of people and will continue to open more franchises of our companies in the coming days,? added Oswal.
According to some of the players in the market, the broking business in the country has hit severely during the past few months due to the financial tsunami and if the situation continues to remain bad, they might be faced with difficult business conditions.
For Indiainfoline, while there were around 607 franchise outlets at the end of September 2008, in March-end the number stood at 151. Harshad Apte, VP (strategy) at Indiainfoline said, ?Franchises model is next big thing in the Indian broking business. Say, suppose I want to start my branch at a semi-urban location in the country and I know it has a huge potential. But I don?t want to invest in infrastructure to set-up the branch, so I team-up with the local broker and give him my brand-name to start up the franchise, which reduces my cost of opening up a branch and he gives me the local network.?
The broking house also increased their branch base and by the end of September, they had 625 branches compared to 261 in March. However, Apte feels that they are extremely bullish on the franchise model in the broking business and have received huge response and are happy that this model is doing wonders for the broking house.
