Franchising is based on a marketing concept that an organization can adopt as a business expansion strategy. Following implementation, the franchisor licenses its knowledge, procedures, intellectual property, use of its business model, trademark and right to sell its branded products and services to the franchisee. In return, the franchisee pays certain fees and agrees to comply with certain obligations, usually set out in the Franchise Agreement. A franchise is not an equal partnership, especially because of the legal advantages that the franchisor has over the franchisee. When a company (franchisor) gives its trade name (brand) and its working methods (business systems, know-how) to certain individuals or groups (franchisors) who agree to do business in accordance with the terms of the franchise agreement, the franchise occurs . In our research and practice, we have encountered many different departments and types of franchises. The reasons for using the franchise business are most often described by two theories: the theory of agencies and the theory of lack of potential (resources). Franchising has a major impact on the world economy. In Croatia, franchising is at an early stage of development and it is necessary to take measures against entrepreneurs in order to expand this business model as a way of growth and expansion of business (franchisor) or independent entry into entrepreneurship (franchisor). Franchising is also used as a way to enter a foreign market. The aim of this paper is to define the term franchise and show its advantages and disadvantages. Likewise, the paper will contain all the challenges and risks that business entities face when choosing a franchise as a way to enter foreign markets. The paper also presents the franchise as a way to enter a foreign market on the example of McDonald’s.