1. Short History and Current State of Bosnia and Herzegovina
1.1 Short History of Bosnia and Herzegovina
Bosnia and Herzegovina is a country with a very complex and turbulent past that continues toevolve. Throughout its recent history, Bosnia went through unitary system as part of theSFRY, four years of devestating war, post Dayton state of independency proposing quitedysfunctional system of municipalities, cantons, two entities, one district and a distant centralgovernment, up to its current status – which can perhaps best be described as transitional, withconstant atempts to regenerate its inert economy and move toward the European integration.
1.2 Current State of Bosnia and Herzegovina
As the result of war and due to non-satisfactory reconstruction and development after the war,BiH is a disintegrated community, and this is evident in demographic, administrative andeconomic structures of the country. Reforms resulting from Dayton Peace Agreement placedBosnia in a state of ineffective and complicated four-level Federation.This complex structure also hinders business development. “The current lack of legal andadministrative support for start-up companies presents a serious obstacle for re-integrationobjectives and economic prosperity”
. The burden of ‘red tape’ and inefficient administrationreflects on the business – and just the fact that it takes over 45 days to register a new businessin BiH is quite alarming. The single economic space must be established for desiredeconomic prosperity.
2. The Role of SME Economy and Franchise Business Model in BiH
There is quite a consensus when it comes to admitting the importance that SME have in postwar economy reconstruction, and so is the case in BiH. They play a crucial part in stimulatinggrowth, generating employment, and contributing to capital generation and povertyalleviation. One way to encourage the SME growth is through the franchise model.Specifically, using franchisers as an alternative growth pattern can significantly enhance SMEsector creation and sustainability.The word ―franchise comes from the Norman French word "fraunchise," which was derivedfrom the French word "frank" – free man, free to work something.
The English word"franchise" originally was used to describe liberation from any prohibition, permission, or privilege – by which a company is allowed to do or not to do something for which it wouldnormally not have rights. Franchising, described as “granting or licensing of specificintellectual property rights by one agent (franchisor) to another agent (franchisee)”
providesaccess to tangible and intangible benefits and privileges. As such venture, it is a businessstrategy between business partners acting in symbiotic and complimentary relationship,designed to maximize profits through increasing market share and minimizes risks to its participants. In its recent decades, franchise model has shown a remarkable resilience andcontinuity throughout the economic ups and downs – which is why it becomes an interesting part of the economic development strategy for the countries in transition, BiH being a perfectexample. At the very root of the franchising concept lies the method of interlacing the
Shilling, S., (2003)2 The Random House Dictionary of English Language, (1973)
Blair, R.D., Lafontaine, F., (2005)