What is a 'Branch Office'

A branch office is a location, other than the main office, where business is conducted. Most branch offices are comprised of smaller divisions of different aspects of the company such as human resources, marketing, accounting, etc. A branch office will typically have a branch manager who will report directly to and take orders from, a management member of the main office.

Many retail investment companies, Edward Jones, for example, use a hub and spoke method to serve their clients. The hub, or home office, serves the spokes (branch offices) by carrying out many of the administrative functions best suited for scaling operations. For instance, an investment company’s home office will perform and make available to branch offices many services including portfolio management, security analysis, branding, legal and a host of other services required to run a full-scale operation.

BREAKING DOWN 'Branch Office'

Branch offices are useful in that they allow many of the client-specific administrative considerations to be conducted closest to clients. Many customers may prefer a local representative they can call on rather readily. For example, Starbucks has branch offices to better serve their retail stores' district managers in a more cost-effective manner. They can also cater to and be more informed about the needs of specific locations.

There’s no universal model a branch office setup may take on, but many are located based on geographic need. In more populated urban centers, it’s not uncommon to see many branches within proximity to one another. In more rural areas, it may make sense to operate fewer branches which are further apart.

A branch office may include a single representative, or it could be staffed with many individuals based on business need. Advances in telecommuting and other methods of communication have greatly driven down the cost of setting up operations. The “pop-up” shop is now a fairly common event for retail and other event-driven commerce opportunities. In the future, it’s not unthinkable that financial service providers will use a pop-up model to quickly deploy temporary branch locations to meet an always-on or on-demand marketplace.

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