Charles Schwab’s new advisor “franchisee” program, which was announced in February and will be rolled out at the end of this year, aims to hire financial advisors with entrepreneurial drive, but not too much entrepreneurial drive. The franchisee program would operate out of individual branches, turnkey operations largely funded by Schwab, located in areas that are underserved by the company’s existing network of employee-staffed offices that cater to retail investors, Chief Executive Walt Bettinger said during a conference call convened to talk about the program today. He was adamant about one aspect of the project: Each branch will operate in a single location and will be run by a single advisor.

“We are not interested in setting up relationships with someone who wants to open three, five, 10, 15 locations. … We are also not looking at making these arms of some other business, arms of another brokerage firm or arms of an RIA or anything of that nature. These are single location franchises who are interested in building a business in partnership with us,” Bettinger said. The firm plans to recruit advisors for the program across a broad range of channels.

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Bettinger repeated the point later in the conference call when pressed to explain why single branch franchises would be more lucrative than multiple branch franchises. “Philosophically, we don’t want to get into a situation as a franchisor where we have franchisees whose power or influence becomes disproportionate to our corporate goals and strategies. And one way to manage that is to limit them to one location,” he said. “We’re looking at working with individual financial services professionals who have a philosophy of serving clients that is consistent with our culture, and our brand, and what we have done for the last four decades. You find those people one at a time. You don’t find them in clumps or groups or corporations.”

One participant in the conference call told Bettinger that such a setup would “dramatically” narrow the potential pool of people who could own such a franchise. “How do you get it so an individual owner can survive off this?” he asked.

“All I can say right now is the economics do work and are attractive for a person who is committed to building something,” Bettinger replied. “It’s not someone who expects to walk in and on Day One is going to maybe make the same income they might expect to make in Years Three, Four and Five.”

Schwab plans to sweeten the deal by providing 25 to 50 “seed” clients for the advisor, and a “significant” amount of training and field support, Bettinger said. There would be no distribution of third-party or off-platform products, he added. The products would be the same as offered at other Schwab operations, and at the same pricing.

To determine whether the plan works, Schwab will open control branches in different geographic locations that have similar demographics to those of the independent branches, Bettinger said. Schwab assumes that the independent branches will generate more wealth than the employee branches that are designed to service existing clients, “but we may be wrong,” he said. The overall goal is to diversify Schwab’s ability to acquire new households. About half of its new clients currently come from referrals, a third are generated by advertising, and the rest are produced through corporate service programs such as 401(k) plans.

Schwab last week posted higher revenues from growth in fees and client trading. Bettinger said investors’ cash is down to 14 percent of assets, the lowest level since 2007. Clients are also looking for more assistance in managing their assets. (So far 100,000 have downloaded Schwab’s iPhone app, he said.)

And in an apparent reference to TD Ameritrade’s announcement Monday that it had seen a 36 percent increase last quarter in breakaway broker signups year over year, Bettinger sounded a note of caution about the cost of recruiting that talent. “That is a fairly low-revenue business per dollar of client assets,” he said. “If you’ve got a $100 million advisor and you’re going to gross $150,000 to maybe $200,000 a year, even at a significant margin, if you’re writing checks for a few hundred thousand dollars you’re setting a break-even period quite a long way out into the future. We’re winning the breakaway brokers we think that we want to win, and we’re doing it in a responsible way for the long-term economics for our shareholders.”