Definition of Franchise

A special privilege to do certain things conferred by government on individual or corporation, and which does not belong to citizens generally of common right; e.g., right granted to offer cable television service. Artesian Water Co. v. State, Dept, of Highways and Transp., Del.Super., 330 A.2d 432, 439. In England it is defined to be a royal privilege in the hands of a subject.

A privilege granted or sold, such as to use a name or to sell products or services. The right given by a manufacturer or supplier to a retailer to use his products and name on terms and conditions mutually agreed upon.

In its simplest terms, a franchise is a license from owner of a trademark or trade name permitting another to sell a product or service under that name or mark. More broadly stated, a "franchise” has evolved into an elaborate agreement under which the franchisee undertakes to conduct a business or sell a product or service in accordance with methods and procedures prescribed by the franchisor, and the franchisor undertakes to assist the franchisee through advertising, promotion and other advisory services. H & R Block, Inc. v. Lovelace, 208 Kan. 538, 493 P.2d 205, 211. Term also refers to such business as owned by franchisee. State and Federal laws regulate business franchising. See also Franchised dealer.

Corporate franchise. See that title. See also Charter. Elective franchise. The right of suffrage; the right or privilege of voting in public elections. Such right is guaranteed by Fifteenth, Nineteenth, and Twenty-fourth Amendments to U.S. Constitution.

Exclusive franchise. See Exclusive agency.

General and special. The charter of a corporation is its "general” franchise, while a "special” franchise consists in any rights granted by the public to use property for a public use but with private profit.

Sports franchise. As granted by a professional sports association, it is a privilege to field a team in a given geographic area under the auspices of the league that issues it. It is merely an incorporeal right.

Tax treatment. A franchise is an agreement which gives the transferee the right to distribute, sell, or provide goods, services, or facilities, within a specified area. The cost of obtaining a franchise may be amortized over the life of the agreement. In general, a franchise is a capital asset and results in capital gain or loss if all significant powers, rights or continuing interests are transferred pursuant to the sale of a franchise.

That's the definition of Franchise in Black's Law Dictionary 6th Edition. Courtesy of