Franchising is a way of expending business and distribution of products and services which gives an opportunity to run a business under a recognizable name. The main 3 elements of franchising are: franchisor allows the use of his name, he allows the use of his business system and his income comes in a single payment at the beginning of the contract or in more than one payment during the duration of the contract. Franchise is when a company gives its name (brand) and its way of doing business to a person or a company which is obligated to run a business according to the contract of franchising. The reasons to use franchising are mostly described with the use of 2 theories: the agency theory and the transaction cost theory. The franchising business has a great influence on the economy of the world. In the Croatia the franchising business is in an early phase of development and it requires a certain influence on the entrepreneurs so they could see this business model as a way of expanding business or even a good way of entering a business. Today, in the world, almost all of the great hotel owners are doing their business under a certain and recognizable brand, thus the presence of that brands is very important for the development of tourism in the Croatia. Franchise has a great influence on the work of hotels all over the world and it is one of the main ways of connecting hotel owners in a hotel chain. By connecting in chain franchisees minimise their risk through acquiring already successful business methods and strong marketing and distribution systems. In this paper I will show how the great hotel owners entered our market and how that influenced on the development of tourism in Croatia. Also I made a research on the influence of hotel brands on the creation of tourist arrangements in the tourist agencies in Zagreb, through which is proved that hotel brands have an influence on the creation and sales of tourist arrangements.