A branch office is a unit of a parent company established in a foreign market or otherwise separate location with the aim of conducting business. A branch office is not an independent entity in a legal or functional sense — it is established as an extension of the parent company, which is responsible for its liabilities and taxes.

Branch office activities
As branch offices are extensions of the parent company, they can be used to perform all of the same activities, including but not limited to:

Selling goods and services
Manufacturing products
Storing products
Collecting data
Performing market research
Launching advertising campaigns
In other words, a branch office acts as an agent of the parent company although physically separate from the main office. This aspect of physical presence in a foreign or otherwise remote market is the main benefit of a branch office. It provides a tangible presence and also acts as a base or hub in the parent company’s logistics network.

Another major role of a branch office is to serve as a contact point for customers. In addition to selling a product or service, a branch office, depending on what the company produces, can be used to perform repairs, store goods for on-the-spot transactions (i.e. act as a retail store) and generally serve as a customer support centre.

Furthermore, a branch office is an important element in a company’s market research and business expansion strategy. A branch office may hire local residents to gain insight into the culture and environment of a foreign market, as well as to draw on knowledge of the market itself. The parent company’s home office cannot do this, and would require mediators or consultation with experts on the foreign market. Depending on its distance from the home office, a branch may also be advantageous when reacting to certain business-related events, as it is likely to receive information sooner.