Abstract Franchising has become a very popular expansion approach for many entrepreneurs. This can be seen from the large number of franchises sprouting up all over the world. Franchising can be categorized as either trade name franchising or business format franchising. This research proposal examines franchising and SMEs in Kuwait. It seeks to determine the advantages and disadvantages of franchising, and to ascertain why local entrepreneurs in Kuwait are not franchising their businesses. Introduction Franchising refers to the license or right that a government or company grants to an individual (or group) to operate their markets in a given territory. A franchise can therefore be defined as a special form of licensing whereby the franchisee purchases intangible property from the franchiser. The franchiser insists on setting the rules for the franchisee on how to run this business. Franchising is therefore a system of doing business and at the same time a marketing tool for commercial entities to rapidly expand their market share using less resources. There are two main forms of franchising namely trade name franchising and business format franchising. Bill (2000) stated that there are two basic ingredients forming the basis of franchising, which include the license to the franchisee to operate under a trade name using trade or service marks, associated with the franchisor and the franchisor’s continuing control over the franchisee’s operations. Hence, it’s necessary to know why franchising became the dominant economic process. Some companies have pursued international franchising to expand beyond a saturated domestic market or to establish a presence in the international market before the competition can establish itself. Moreover, international franchising can also assist enterprises in distributing their costs and associated risks across the entire network of outlets. According to Burton et al (1955), international franchising is a mode of entering a foreign market which involves a relationship between the entity in the host country and the entrant. In this arrangement, the entrant transfers a business package developed by the host entity under contract. International franchising is therefore a unique mode of entry, and is different from foreign direct investment, licensing and exporting. It was adopted very fast in the developed countries and helped other countries economic to grow and expand their enterprises. The recent growth experienced in international franchising can be attributed to the emergence of newly industrialized countries in the global market, the establishment of regional trading blocs, diminishing profits in the domestic market, liberalization of eastern bloc countries, competition, and need (Alon, 2006). Background The Kuwaiti population is considered as a consumer-oriented population due to the fact that in the mid 1970s and 1980s its work force was working entirely in the government sector. The government sector gave Kuwaitis financial security and economic stability. A government job meant a secure job for life; this security played an important role in the inception of the financial institutions, competing banks, and financial companies. The Kuwaiti economy, on the other hand, has grown profoundly with its Gross Dom