Factory was the common name during the medieval and early modern eras for an entrepôt – which was essentially an early form of free-trade zone or transshipment point. At a factory, local inhabitants could interact with foreign merchants, often known as factors. First established in Europe, factories eventually spread to many other parts of the world. The origin of the word factory is from Latin factorium 'place of doers, makers'.

The Portuguese Empire, also known as the Portuguese Overseas or the Portuguese Colonial Empire, was composed of the overseas colonies, factories, and later overseas territories, governed by the Kingdom of Portugal. It was one of the longest-lived colonial empires in European history, lasting almost six centuries from the conquest of Ceuta in North Africa in 1415, to the transfer of sovereignty over Macau to China in 1999. The empire began in the 15th century, and from the early 16th century it stretched across the globe, with bases in Africa, North America, South America, and various regions of Asia and Oceania.