The Charles Schwab Corp. is getting set to ramp up its franchised branch program.
With 36 franchised offices up and running, Schwab thinks it has found the right formula: Find high-quality franchisees with strong ties to local communities and put them in highly visible retail outlets.
The program targets smaller cities and suburban areas where the company has clients but no traditional offices.
After rolling out its first franchise in 2011, Schwab added nearly two dozen more over the next two years. After that, the openings slowed while the company got its legs under the program, said Craig Taucher, senior vice president of independent branch services at the company.
Next year, he’s shooting for 10 new franchise locations.
“We wanted to make sure the model was correct” before growing, he said.
Franchisees (called “independent branch leaders”) brought in three to four times the $10 million in assets yearly that Schwab planned for. With better-than-expected flows, “we wanted to make sure we had the support structure in place,” he said.
Taucher declined to disclose asset levels at the franchised branches, but he says franchisees averaged $41 million in net new assets last year and have easily exceeded the $100 million-in-assets goal.
'Unheard Of' Growth
That level of growth “is absolutely unheard of,” said Nick Shepherd, an independent branch leader in Abilene, Texas, who opened in December 2013. “There are local advisors who’ve been in business 20 years whose books aren’t that big.”
“In the beginning, honestly, I was intimidated by that $10 million” goal, said Mary Murphy, who opened Schwab’s first franchised branch in December 2011 in Nashua, N.H.
In past stints with UBS and MML Investors, the most Murphy ever raised was $7.5 million. She said her Schwab location has attracted several times the $10 million bogey every year, and she’s considering opening a second branch.