Franchise occurs when a company (franchisor) give his trade name (brand) and his bussines plan (system operations, know-how) and making available to any individual or group (Franchisees) who agrees to act in accordance with the terms of the franchise agreement. There are many divisions and types of franchise encountered in research and practice. The reasons for using the franchise business is usually described using the two theories: agency theory and the theory of the lack of potencials (resources). Franchising has a great impact on the economy in the world. In Croatia, franchising is in the early stage of development and we need to make influence on entrepreneurs, because we need to expand this business model as a means of growth and expansion of business (franchise), actually independent of entry into entrepreneurship (franchisees). The work consists of several parts. The first part looks at the franchising (definitions, theoretical framework and franchises in Croatia) and the rest of the shows an example of franchise business in Croatia and the franchise as a marketing tool for small and medium enterprises.