Definition of Franchise tax
A tax upon the privilege of existing or the privilege of doing certain things. An annual tax on the privilege of doing business in a state; it is not a direct tax on income. Hoosier Engineering Co. v. Shea, 124 Vt. 341, 205 A.2d 821, 822. A tax on the franchise of a corporation, that is, on the right and privilege of carrying on business in the character of a corporation, for the purposes for which it was created, and in the conditions which surround it. City of Poplar Bluff v. Poplar Bluff Loan and Bldg. Ass’n, Mo.App., 369 S.W.2d 764, 766.
Though the value of the franchise, for purposes of taxation, may be measured by the amount of business done, or the amount of earnings or dividends, or by the total value of the capital or stock of the corporation in excess of its tangible assets, a franchise tax is not a tax j on either property, capital, stock, earnings, or dividends, j Greene v. Louisville & I. R. Co., 244 U.S. 499, 37 S.Ct. 673, 678, 61 L.Ed. 1280.
That's the definition of Franchise tax in Black's Law Dictionary 6th Edition. Courtesy of Cekhukum.com.