Abstract

Strapped between 20th century that’s marked with permanently engraved suffering, and globally oriented 21^st century, BiH continues to evolve. Throughout its recent history, Bosnia went through  one-party, unitary system as part of the SFRY, trubulent war, post Dayton state of independency, up to its current status of economic, political and ideological transition – not an ideal market for private business growth. In order the combat this situation, a vigorous and dynamic economic injection is needed which will drive Bosnia toward economic prosperity, political stability, and ultimately ease the process of European integration.  One way to support and encourage a sustainable economy is through SME sector, particularly, through franchise model.  More specifically, for start up businesses, franchises can be viewed as an available instrument for encouraging, developing and nurturing entrepreneurial talent, promoting corporate governance and transparency, as well as attracting foreign investment resources and competencies – both tangible and intangible, to the country in transition. This paper is aimed at analyzing and proving that investments through franchising model are an excellent way of encouraging a sustainable regional economic development  and can serve as a mean of promoting and strengthening home country SME sector, with focus on BiH as a country in transition within SEE.  Nevertheless, franchising is not panacea, and it is clear that is has its downfalls; in fact, for the success of the economy, they can not be ignored.