What is a 'Satellite Operation '

A satellite operation is a small office or branch office in a different location from a company or government agency's main office. Reasons for opening a satellite operation may include reaching an underserved area, expanding market share and lifestyle/quality of life factors for employees. Satellite operations can be used in all kinds of businesses, such as financial advisor and brokers, doctor's offices, Department of Motor Vehicles offices, political offices and corporate offices.

Breaking Down 'Satellite Operation '

Satellite operations are valuable because they can facilitate client interactions, foster more efficient sales and ease the burden of customer service. Many customers may prefer having a local representative they can call on.

A satellite operation may operate with some degree of autonomy but is not a separate legal entity or subsidiary of the parent company. This structure could open up a foreign parent company to tax liability based on the location of the satellite operation, as well as legal liability.

Most satellite operations will typically be led by a branch manager who will report directly to and take orders from a management member of the main office. A satellite operation may constitute a large office space housing several workers or a home office with a single worker and no sign displayed. Satellite offices may be used by agents of a broker dealer working out of their home, but cannot be marketed to the public as the same as an actual office of the broker dealer. Registered representatives of a broker dealer working out of a satellite office must fall under the supervision of a branch office, have the branch office address on their business card, and all emails must go through the branch's email server.

Satellite operations are common in a variety of industries, such as banking (branches), sales and retail operations. The thousands of Starbucks stores could be considered satellite operations of their Seattle-based parent.

Satellite Operation Considerations

In deciding whether to establish a satellite operation, companies must consider factors such as the cost of renting and furnishing another office, the cost of hiring additional staff to work in that office, and whether existing employees will be burdened by the need to travel to and from the main office to the satellite operation.

When weighing whether to open a satellite operation or branch office the following issues should be considered:

  • Where the office should be located
  • How much rent makes sense given the needs and objectives
  • How the branch office will be laid out
  • How its infrastructure and facilities be managed
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