The business model known as franchise offers the opportunity to enter the world of entrepreneurship or expand an existing business. This business model involves a collaboration between the person offering the franchise and the person receiving it. Usually, the franchisor grants the other party the right to use his name and business method. In Croatia and Germany, for example, the franchisee takes over an already developed business model and uses an established brand. He also receives ongoing support from the franchisor. In return for the benefits received, the franchisee pays a fee to the franchisor and undertakes to comply with the conditions set out in the franchise agreement. In Germany, the franchise business model has a strong impact on the economy, while in Croatia the same concept is still in its early stages. France also holds a prominent position in the world of franchising, not only in Europe but also worldwide, along with the United States of America. The concept of franchising in Europe dates back to 1956 in France, while in Croatia franchising has existed only since 1969. In this paper, the concept of franchising, its history and development are analyzed. It also examines different types of franchising and highlights the advantages and disadvantages of such a business model. Using examples of franchising in Croatia and Germany, the author examines the impact of franchising on the economy of the selected country and compares it with the situation in the Republic of Croatia.