Branch vs Representative Office in Iran: Which Route Is More Suitable?
Choosing between a foreign branch and a representative office is a strategic decision before entering Iran.
These two routes differ in legal nature, liability, documents, management, reporting duties and parent-company connection.
A local unit connected to the foreign parent company.
A contractual route through an Iranian representative.
The route should match activity, liability, documents and expansion plan.
What is a foreign branch in Iran?
A foreign branch is a local unit connected to the parent company and may perform part of the parent company’s activities in Iran.
- Directer parent-company presence in Iran
- Operational connection with the parent company’s activity
- Requires parent company records, financial report and justification report
What is a representative office?
A representative office is usually based on an agency agreement between the foreign company and an Iranian natural or legal person.
- Suitable for market testing and after-sales services
- Requires a clear agency agreement
- Authority and liability are defined by contract
Full comparison
| Subject | Foreign Branch | Representative Office |
|---|---|---|
| Legal nature | Local unit of parent company | Contractual relationship with Iranian representative |
| Liability | More direct parent-company responsibility | Based on agency terms |
| Key documents | Articles, latest changes, financial report and justification report | Agency agreement, representative documents and foreign company documents |
| Common use | Direct presence and broader operations | Market research, after-sales and business development |
| Main risk | Direct parent company liability | Unclear authority and representative liability |
When is a branch more suitable?
- When the parent company wants direct presence under its own name.
- When the activity closely follows the parent company’s main operations.
- When a more formal operational structure is needed.
When is a representative office more suitable?
- When the goal is market research or controlled entry.
- When after-sales services or business development are the main focus.
- When the company does not want to start with a heavier structure.
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Frequently asked questions
What is the difference between branch and representative office?
A branch is a local unit of the parent company, while a representative office is based on an agency relationship with an Iranian representative.
Which route creates more parent company liability?
A branch usually creates stronger direct responsibility for the parent company.
Does a representative office require an agency agreement?
Yes. The agency agreement is a core document defining authority, liability, term and territory.
Choose the right route for entering Iran
Before action, review the entry objective, business activity, parent company documents and expected liability.