Much of the research conducted in India in the area of entrepreneurship considers the relation between entrepreneurship and economic performance. However, the latest business strategy that has shown tremendous development in business arena has been ignored altogether. The present paper provides a theoretical framework of the relationship between franchising business and national economic performance. The main aim of this paper is to present the capabilities of applying the concept of franchising in the development of entrepreneurship in SME sector so as to trigger-economic performance. This article argues that there is a need to treat franchising not just a mere business expansion option but a powerful SME development strategy that has a capability to change the economic fate of the country like entrepreneurship does. The first part deals with some aspects of the recent economics literature on the relationship between entrepreneurship, small business, and economic growth. The second part a conceptual framework presents the links between franchising and economic growth at different levels of aggregation. In particular, it gives a summary of some research works across the world.