# branch

A branch (also branch business ) is understood in the economy to be a legally and economically dependent point of sale that is geographically separate from the headquarters of a company .

## General

Branches, branches , branch offices or branch offices are geographically separate from the company's headquarters, but legally and economically dependent asset components of a company. A branch is therefore a sales point subordinate to a central office, which represents an organizationally independent unit and reaches a minimum company size . Branches differ from branches or branch offices primarily in that the latter are granted their own competencies, for example in procurement or sales , by the company headquarters . The idea of not only a single corporate location to entertain at the headquarters of the company, all resulted for business sectors of the marketing strategy , customer proximity at the residence to have a presence of customers. Its purpose is to improve customer reach. With regard to the target group , the customer range provides information about how many potential customers can actually be reached by a branch:

${\ displaystyle {\ text {Customer range}} = {\ frac {\ text {Number of existing customers}} {\ text {Number of possible customers}}}}$

The more customers there are in a branch, the greater the customer reach. When choosing a location for a branch, the number of possible customers ( market potential ) is therefore the most important criterion.

## history

The word branch comes from the Latin filia , "daughter" and initially referred to a church ( branch church ) from the 16th century that did not form an independent parish , but is dependent on one (daughter church, Latin filia ecclesia ). Dependency was therefore a decisive criterion for branches from the start. Since the late 19th century, the term has shifted from the ecclesiastical to the commercial area as a branch, branch of a chain of stores or a bank or insurance company. One of the first branch banks was the Second Bank of the United States , founded in Philadelphia on January 7, 1817 , which had a total of 25 branches in the United States in 1832. In 1819 there were 39 banks with 97 branches in Scotland .

The department store - corporations began their sales concept has branches to organize. Rudolph Karstadt started his first branch in Lübeck in 1884, and Leonhard Tietz's fame grew with the opening of a branch in Cologne on Hohe Strasse in April 1891. In the food retail sector , Josef Kaiser opened his first branch of an Kaiser's coffee shop in 1885 , followed by the 100th branch 1897 in Bamberg, the 200th in 1898, in 1899 in Regensburg the 400th, the 500th branch was in 1900 in Duisburg. Cornelius Stüssgen began setting up the first branch in Brühl in 1899 . The grocery store companies joined forces in the Arbeitsgemeinschaft der Lebensmittel-Filialbetriebe (ALF), founded in 1905 , before it merged with the Federal Association of Self- Service Department Stores (BdSW) to form the Federal Association of Filialbetriebe and Self- Service Department Stores (BFS) in June 1988 . Starbucks opened its first branch in Seattle in 1912 , the first McDonald’s branch opened in Des Plaines in 1955 , but it took until December 1971 for the chain to open its first branch in Germany in Munich .

The sales channel through branches aims to cover the market potential of a geographically definable catchment area. The opening of a branch is usually preceded by a detailed location analysis based on a thorough market analysis . The Business Administration defines the branch company as "an operating with at least five spaced-apart branches, which are under common control." Some sources assume there are more than 10 points of sale. If there are more than 10 branches, it is a branch system or branch network as an organizational combination of all sales outlets under uniform management and administration. Branch companies are referred to in technical terms as chain stores , in banking they are called branch banks . Typical criteria for chain stores are wholesale purchasing , the characteristic central warehouse , a uniform range and central administration .

There are branches around the world, particularly in the retail sector and at companies for which proximity to the customer plays a decisive role. In 2004, Edeka led the chain of branches in Germany with 8,513 branches, followed by Tengelmann (7,362), Aldi (4,264), Metro (2,235), Douglas (1,579), Rossmann (1,100), Karstadt had 520 branches. However , it is not the number of branches that plays a role as a component of key business figures , but rather their sales area .

Branches create spatial preferences for customers ( location advantage due to short distances from the apartment to the branch), this applies in particular to regular customers . The random walk-in customers , on the other hand, only reach branches through locations where there is a high footfall ( shopping centers , pedestrian zones , train stations , ports or airports ). However, branches are increasingly losing importance due to the emergence of electronic forms of distribution. Thus, online shopping and mail-order retail and electronic banking and the advance of direct banks , the main causes of the branch loss in trade and banks . The decline in sales outlets in food retailing alone from 51,145 (2006) to 35,731 (2016) illustrates this trend .

The branching out in Germany is nevertheless at a high level. The resulting level of chain stores as the share of branch operations in all retail outlets is very high in the large German cities with an average of 64.9%. In 2011, the branch share in Dortmund accounted for 74.6% of all retail businesses, followed by Bremen (72%), Nuremberg (70.3%), Berlin (69.5%), Düsseldorf (69%), Frankfurt (67, 2%), Hamburg (66%) or Cologne (59.9%).

There is a specific branch calculation for branch companies , which aims to measure the profitability of branches. Stores are doing as a separate cost center considered the cost of a branch office ( personnel costs , material costs , occupancy costs and prorated overheads ) and the cost of sales the achieved revenues are compared (sales per sqm of retail space).

## Demarcation

Colloquially, the commercial business model of chain stores is often confused with the concepts of franchising , the retail chain , the voluntary chain or the cooperatively organized sales outlets . For consumers , it is often impossible to distinguish whether it is a branch system or other forms of distribution. This is also due to the fact that the operators - who are not bound by instructions - appear under a common external appearance . In contrast to the branches, which are each managed by an employed branch manager, the franchise operations and member operations are subject to a voluntary chain or a cooperative of independent merchants . Therefore, they are neither legally nor economically branch chains in the narrower sense. Pure branch systems operate among others Aldi , Lidl or Kaufhof ; There are both branches and franchisees at Obi , for example , Spar operates a pure franchise system , and there are branches and cooperative sales outlets at Sky, Plaza , Rewe and Edeka .

In contrast to a branch, the branch is not equipped with competencies for operational functions , in particular does not have its own procurement , production or financing ; only their original function of sales is clearly present. The advertising measures are also organized centrally. The subsidiary is an economically dependent, but legally independent company of a group and, because of its legal independence, cannot be referred to as a branch.

In terms of legal and linguistic comparative law, the “filiale” in German legal parlance is to be distinguished from the French “filiale”: While the former is legally dependent, the latter has an independent legal personality. The French “filiale” corresponds to the German “subsidiary”. The German branch is translated into French as “succursale” and in English as “branch”.

Wiktionary: Branch  - explanations of meanings, word origins, synonyms, translations

## Individual evidence

1. ^ Stephan Paul, Lenkungssysteme in Filialbanken , 1987, p. 3
2. ^ Heinrich Joseph Wetzer / Benedict Welte, Kirchen-Lexikon , 1850, p. 69
3. Otto Basler, German Foreign Dictionary , Volume 5, 2004, p. 863
4. ^ Yearbooks of Literature , January to March 1837, 1838, p. 169
5. ^ Friedrich Mauke-Verlag, Yearbooks for Economics and Statistics , Volume 79, 1902, p. 13.
6. ↑ In 2002 the BFS was merged into the Main Association of German Retailers .
7. Gabler Wirtschaftslexikon, 14th edition 1997, Sp. 1313
8. Arbeitsgemeinschaft der Lebensmittelfilialbetriebe e. V., The development of grocery stores in 1964 , 1965, p. 4
9. Joachim Zentes (Ed.), Handbook Retail: Strategies - Perspectives - International Competition , 2006, p. 362 f.
10. Statista The statistics portal, number of branches in food retail in Germany from 2006 to 2016
11. Independent companies linked to one another via a cooperation agreement