The research deals with basic features of franchise business model. Franchising is one of the most important strategies of expansion and internationalization of business. The specificity of the relationship between the franchisee and the recipient is a particular reason for choosing the subject of the research. The aim of the paper is to show the conceptual features and types of franchises and the elements of the franchise agreement as well as to point out the features of the franchise business in the Republic of Croatia based on the analysis of case studies. Research results show that franchise business is a flexible form of enterprise expansion strategy, and is suitable for reputable companies that have a we ll -developed brand awareness. Such companies as a franchise provider significantly reduce the risks of doing business to entrepreneurs who are franchise recipients. The obstacles to more systematic development of franchise business in the Republic of Croat ia are insufficient investment in brand awareness and differentiation strategy and inadequacy of financial compensation for entrepreneurs in the Republic of Croatia as potential recipients of the franchise.