Franchise is a kind of agreement where a franchisor gives exclusive rights to a to a particular person or a franchise company for local distribution, in exchange for royalties payment and compliance with the agreed way of doing business. By entering a franchise business, a franchise buyer has easier access to the market because it has already been researched and familiarized with the products or services the franchisor offers and thus has less business expenses. On the other hand, the franchisor is expanding it's business to new markets and creating a competitive advantage. When asked whether there is a link between franchise business and entrepreneurship, the answers are different, however, most authors agree that there is a tight link between them. It can be assumed that franchisors are entrepreneurs who innovate and a franchise buyers are entrepreneurs who copy. Innovation is considered to be one of the most important factors that enables businesses to operate successfully and competitively. McDonalds was the first franchise system in Croatia at the beginning of the 1990s, which with its arrival re-launched the movement of using the franchise for business growth. At present, there are about 180 franchising systems in Croatia, franchise fashion brands being the largest share, followed by franchises for restaurants, fast food and rent-a-car franchises, respectively. Franchise business has a major impact on Croatia and the world economy, and its economic impact manifests itself through many factors, through development of small and medium-sized enterprises so it's becoming the fastest growing business in the global economic system.