Also known as:franchise · franchises · franchised · franchising · grant a franchise
Written by attorneys · grounded in primary & secondary sources — see below
To confer upon another the right to operate under a brand or exercise specified powers. The grant may be pledged or mortgaged as security for corporate obligations.
Sources & Authorities· 8 primary sources
Select any source to read its text and confirm it supports the definition.
Cases
Uniform Acts
Model Codes
How it applies
Common Examples
6
Pledging Franchise Rights
Foster Forge borrowed funds to expand its manufacturing line. To secure the loan the corporation franchised several retail outlets to local operators and pledged the resulting franchise rights as collateral under its corporate powers.
Franchise Contract Dispute
Burger King franchised a restaurant location to Rudzewicz in Michigan. When the franchisee refused to pay royalties the franchisor sued in Florida and the court examined whether the franchise relationship created sufficient minimum contacts for personal jurisdiction.
Burger King Corp. v. Rudzewicz471 U.S. 462, 474 (1985)
State Franchise Regulation
A city ordinance restricted the ability of corporations to franchise new retail outlets. The court assessed whether the restriction incorporated fundamental rights against the states through the Fourteenth Amendment.
McDonald v. City of Chicago, Illinois561 U.S. 742 (2010)
Franchise Advertising Limits
A utility company franchised service territories and then advertised the benefits. The commission banned promotional ads and the court evaluated whether the ban violated commercial speech protections under the First Amendment.
Central Hudson Gas & Electric Corp. v. Public Service Commission of New York447 U.S. 557, 100 S. Ct. 2343, 65 L. Ed. 2d 341 (1980)
Franchise Ownership Proof
A juvenile was accused of operating an unlicensed franchise business. The court required proof beyond a reasonable doubt that the accused had franchised the operation before imposing liability.
In re Winship397 U.S. 358, 364, 90 S.Ct. 1068, 1073, 25 L.Ed.2d 368 (1970)
Franchise Voting Rights
A state limited voting rights in elections that affected local franchise holders. The court determined whether the apportionment claim presented a justiciable controversy under the Equal Protection Clause.
Baker v. Carr369 U.S. 186, 211
Common questions
Frequently Asked
3
What corporate power allows a company to pledge its franchise rights?+
Model Business Corporation Act section 3.02(g) expressly authorizes a corporation to secure its obligations by mortgage or pledge of any of its property, franchises, or income.
Does franchising a business create minimum contacts for personal jurisdiction?+
A franchise relationship that involves ongoing contractual obligations and payments to an out-of-state franchisor can establish sufficient minimum contacts for jurisdiction in the franchisor's home state.
How does the beyond-a-reasonable-doubt standard apply when a franchise operation is at issue in a criminal case?+
The prosecution must prove every element, including that the defendant franchised the unlawful activity, beyond a reasonable doubt before a conviction may stand.
397 U.S. 358, 90 S. Ct. 1068, 25 L. Ed. 2d 368 (1970)Criminal Procedure
…reinforced and confirmed these basic freedoms. In 1350 a statute declared that "it is contained in the Great Charter of the Franchises of England, that none shall be imprisoned nor put out of his Freehold, nor of his Franchises nor free Custom, unless it be by the Law of the Land . . . ."[^maj-18] Four years later another…