Seminar paper from the year 2005 in the subject Business economics - General, grade: 1-, Lappeenranta University of Technology (Business administration), course: Internationalization of the firm, language: English, abstract: INTRODUCTION With the decision to carry out a business internationally, there are several issues arising which managers have to take into account and which they have to find an optimal solution to. One of the questions companies are facing while planning to spread their business is the question on the operation mode. What kind of possibilities of becoming international do we have, what are the advantages and disadvantages come along with the different kind of possibilities and which one, finally, fits best to our company? To goal of our term paper is to investigate one of the different operation modes companies can choose, also on their domestic market, but especially when carrying out operations on international markets. To introduce the method of franchising, we will present the most important knowledge on this topic in the next chapters. Beginning with the theoretical part, we are giving an overview on the history and development of franchising, "how did it start and where is it going?" Followed by that, the method of franchising as it is applied nowadays is explained very carefully. We are giving answers on what franchising is, what role it is playing in the process of the internationalization of a firm and the different modes of franchising. Additionally, the situation on the franchising market in three different regions, Europe, Germany and the United States are presented. Based on the theory, we are taking the subject a step forward by investigating a real franchising case from the practical life. The company we chose is the worldleading sandwich restaurant chain which is operating not less than 26,000 restaurants worldwide through franchising. The company will be introduced briefly before we start to show how franchising works at Subway, what comes along with becoming a franchisee of Subway, like requirements which have to be fulfilled and, probably the most interesting part, the financial flow between the franchisee and Subway as franchisor. So the reader gets especially a view on how Subway is earning money even though they are not running their restaurants directly by themselves. This will be followed by the explanation of the franchising mode used by Subway and the key success factors which are critical for Subway to become such a great example on the applicability of franchising to internationalize a company.