the year. In the results of similar studies of the international franchise Association
following is noted: the number of bankruptcies among franchising companies is, as a
rule, not more than 1% [15].
Analyzing the object of research the concept of "franchising" should be revealed.
In domestic legislation, this concept is not regulated. Today there are a number of
definitions that reveal this concept.
So, in legal encyclopedia it is stated that franchising (engl. franchisuig, originally
- granting honorary citizenship of the city, from the old French franchise - freedom,
sincerity, privilege) – a kind of contract under which one party (franchisor) provides
the other party (franchisee) for a fee for a certain period or without determining the
term of the right to use in business activities for the sale of own or produced by the
franchisor of goods or services of its skill and knowledge, organization of work,
technology, bargaining, name, trademark, emblem, style of exterior design of the
premises and etc[17].
The definition of franchising is also present on the websites of international,
German and British franchising associations.
Thus, the British franchising Association notes that franchising is a control license
issued by one person (franchisor) to another (franchisee) [1].
The German franchising Association notes that franchising is a sales system based
on a partnership in which the franchisor transfers for a fee the right of the franchisee to
sell products or provide services on its behalf and it is characterized by a common
program of the partner execution system to ensure indivisible behavior [12].
The international franchising Association defines franchising as a long – term
relationship in which the franchisor transfers exclusive rights based on the license
agreed to engage in business activities, plus assistance in training, marketing,
management in exchange for financial compensation from the franchisee [10].
Noteworthy definition of franchising and its role in the business organization is
provided by scientists, in particular, Zimovets V., Zubik S., Dergacheva V., Kostyuk
A., Kotler F., Mihnusha S.
Zimovets V., Zubik S. determine that under the franchise is understood the way
of business organization in which one economic entity (the franchisor) transfers to
another economic entity (franchisee) the right to sell its product or services [6].
Mihnusha S. notes that franchising is such organization of business in which the
company (franchisor) transfers to independent person or company (franchisee) the right
to sell the product or services of the company. The franchisee undertakes to sell this
product or service under the pre-established laws and business rules established by the
franchisor. In exchange for the implementation of all these rules, the franchisee
receives permission to use the name of the company, its reputation, product and
services, marketing technologies, expertise and support mechanisms [9].
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