Charles Schwab Franchise
Audited FinancialsRisk Score
Pending analysis
Investment Range
$65,520 - $191,430
Franchise Fee
$12,500
Total US Locations
382
Business Summary
Charles Schwab & Co., Inc. offers a franchise opportunity for Independent Branch Leaders (IBLs) to operate a retail branch office under the Charles Schwab® brand. These Independent Branches provide non-discretionary investment advice and access to various approved financial products and services to retail clients. The franchise is presented as a 'turnkey' opportunity, where Charles Schwab & Co., Inc. handles the construction, furnishing, and equipping of the office space.
Corporate History
Charles Schwab & Co., Inc. was founded in 1971 as a California corporation, initially operating as a broker-dealer. Its founder, Charles Schwab, opened the first Charles Schwab® branch office in 1975, pioneering a new type of retail securities brokerage focused on client service. Charles Schwab & Co., Inc. expanded its operations by beginning to offer franchises for Independent Branches in July 2011. As of December 31, 2023, Charles Schwab & Co., Inc. continues to own and operate 288 Company Managed Branches across 45 states, the District of Columbia, and Puerto Rico, in addition to its franchised network.
Financial Overview
Investment Range
$65,520 - $191,430
Franchise Fee (Low)
$12,500
Franchise Fee (High)
$50,000
Working Capital
$1,800
Audited Financials
Yes
Offers Financing
Yes
Audit Opinion
Unqualified opinion
Financial Health Notes
Charles Schwab & Co., Inc. appears to be in a strong financial position, with its audited financial statements as of December 31, 2023, 2022, and 2021 receiving an unqualified opinion from its independent public accounting firm. The company reported net incomes of $1,591 million in 2023, $1,948 million in 2022, and $1,449 million in 2021, along with substantial total assets and stockholder's equity. While Charles Schwab & Co., Inc. is incurring significant exit and restructuring costs related to the integration of TD Ameritrade and other streamlining efforts, including impairment losses and severance, these activities are part of a large-scale integration and do not indicate a threat to its overall financial health.
Financing Details
Charles Schwab & Co., Inc. does not directly offer financing arrangements for new franchisees to purchase or operate an Independent Branch. However, it does participate in a non-exclusive Loan Support Program with Live Oak Banking Company, an unaffiliated third-party lender. Under this program, Charles Schwab & Co., Inc. may guarantee commercial loans from Live Oak to *transferee franchisees* (those purchasing an existing Independent Branch) to cover transfer-related expenses, including branch updates. This guarantee is not available for new franchisees. A $50,000 Loan Support Fee is payable to Charles Schwab & Co., Inc. by the qualified borrower at closing for this program, applicable only to the initial financing round. Franchisees who default on these guaranteed loans would be responsible for the entire remaining balance, accruing interest, and all collection costs, including attorney's fees.
Performance Metrics
Total US Locations
382
Franchised Units
94
Corporate Units
288
Avg Square Footage
1,700
Franchising Since
2011
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
11
Litigation Summary
Charles Schwab & Co., Inc. has a history of several regulatory and civil legal matters. Recently, in June 2022, Charles Schwab & Co., Inc. and its subsidiaries faced SEC allegations concerning false and misleading statements in robo-advisor disclosures from 2015-2018, resulting in a cease-and-desist order and payments totaling $187 million. Also in June 2022, a class action lawsuit was filed alleging that Charles Schwab & Co., Inc.'s acquisition of TD Ameritrade violated antitrust laws, creating an anticompetitive market; this case is ongoing with discovery proceeding. Another case, initially filed in 2016 (Crago Order Routing Litigation), alleging a breach of best execution duty, saw a renewed motion for class certification denied in February 2023, with individual claims directed to arbitration, though the likelihood of a material impact is deemed remote. Older cases, now resolved, included a $50,000 fine from Nasdaq in 2020 for inadequate order routing controls, a $2.8 million civil penalty from the SEC in 2018 for failing to file suspicious activity reports, a $300,000 fine from CBOE in 2018 for inaccurate options reporting, and a $50,000 FINRA fine in 2017 for untimely transaction reporting. Other resolved matters included a Texas State Securities Board consent order in 2016 with a $90,000 penalty, a $2 million FINRA fine in 2015 for net capital violations, a 2015 settlement with the New York Attorney General regarding auction rate securities, and a 2014 SEC order with a $61,800 fine for bond sales issues.
Bankruptcy History
Charles Schwab & Co., Inc. has no bankruptcy history to report.
Agreement Terms
Initial Term
7 years
Renewal Term
7 years
Renewal Conditions
To renew their franchise, Charles Schwab & Co., Inc. franchisees must provide written notice 13 to 14 months before the current term ends. They must be in good standing, meaning no outstanding defaults and having received no more than three default notices during the current term. The primary lease for the location must allow for an extension for the renewal term. Franchisees are responsible for all costs to update their branch to Charles Schwab & Co., Inc.'s then-current imaging and technology standards. They must sign either an extension of their existing Sublease or a new Sublease, typically for another 7 years, and enter into Charles Schwab & Co., Inc.'s current form of Franchise Agreement, which may have different terms, though no renewal fee is charged. Lastly, franchisees must execute a general legal release and complete any specific training required for renewing franchisees.
Training & Support Program
Franchisor Assistance
Before opening, Charles Schwab & Co., Inc. helps with site selection, negotiates the primary lease for the location, and provides a 'turnkey' office setup, handling construction, furnishing, and installing the Schwab Technology System. They also offer an initial training program and opening marketing support, reimbursing 100% of the first $10,000 and 50% of the next $10,000 in approved marketing expenses during the first 180 days. Ongoing support includes assigning Seeded Clients, the right to offer Charles Schwab & Co., Inc.'s products and services, handling client communications, serving as the Office of Supervisory Jurisdiction (OSJ) until the franchisee qualifies, and providing broker-dealer, custodian, and clearing services. Charles Schwab & Co., Inc. manages Net Payout accounting, offers ongoing marketing assistance (a 50% match up to $6,000 annually), provides investment research tools, conducts periodic Network Meetings (mandatory up to 4 days per year), offers additional training through webinars and a learning management system, lists the branch on its website, recommends vendors, and covers maintenance for normal wear and tear of the physical premises and technology system.
Initial Training Hours
78
Training Location
Remote, franchisee's location, or one of several service centers (Phoenix, Denver, Indianapolis, Westlake, or Orlando)
Ongoing Support
After opening, Charles Schwab & Co., Inc. provides continuous support to its franchisees. This includes offering ongoing training programs via webinars and a learning management system for regulatory compliance and updates on Schwab Products & Services, with required annual hours for franchisees and their staff. Charles Schwab & Co., Inc. facilitates client acquisition by directing prospective New-to-Firm clients whose primary address is within the franchisee's market. Franchisees also receive regular consultation and guidance for administrative and operational issues. For marketing, Charles Schwab & Co., Inc. offers a 'Marketing Match' program, reimbursing 50% of approved expenses up to $6,000 annually. Franchisees benefit from access to Charles Schwab & Co., Inc.'s investment research, tools, and models, and may attend mandatory Network Meetings (up to 4 days per year) for training and networking. Charles Schwab & Co., Inc. handles client communications, back-office functions like accounting and collections, and maintains the physical premises and Schwab Technology System for normal wear and tear. Furthermore, Charles Schwab & Co., Inc. provides regulatory compliance oversight, supervises brokerage and investment advisory activities, and lists the Independent Branch on its official website.
Franchise Requirements
Ideal Candidate Profile
Charles Schwab & Co., Inc. seeks entrepreneurial financial services professionals who are committed to full-time, hands-on management as sole proprietors. Ideal candidates must obtain and maintain specific FINRA licenses, including Series 7 and Series 66/63&65 before opening, and Series 9/10 within six months of signing the franchise agreement. They must also secure and maintain state insurance licenses (within one year if not already held) and all required state and local business licenses. Franchisees are required to operate the branch personally, not through a business entity, and must use a personal bank account for receiving payments. While prior investment services experience is beneficial and may lead to better initial financial results, it is not explicitly stated as a prerequisite, but the ability to quickly obtain necessary licenses is crucial. All prospective employees will also undergo Charles Schwab & Co., Inc.'s background screening and approval.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
hands-on
Territory Type
Non-Exclusive
Territory Size Requirements
Charles Schwab & Co., Inc. defines each Schwab Branch Market as a non-exclusive geographic area that includes at least one or more zip codes. The exact boundaries are determined by Charles Schwab & Co., Inc. based on various factors like population demographic data, the presence of existing or planned Charles Schwab® branches, and local competitors. Charles Schwab & Co., Inc. maintains the right to unilaterally change these market boundaries at its discretion.