Primary tabs

Franchise has different meanings under the law: 

  • Franchise is commonly used to refer to a relationship wherein a business organization, called a franchiser, in exchange for a fee and with the franchisor's guidance, allows another business, called the franchisee, to operate under the franchiser's trade name and offer the franchiser's products or services.
  • A franchise may refer to a right granted by the government to a corporation, to operate as a legal business entity or provide some service of a public nature in a certain geographic region.
    • Examples of such a right are taxi permits, bus routes, an airline's use of a public airport, a business license, or a corporate existence. 
  • The right to vote in a public election is also referred to as a franchise.
  • In the context of petroleum marketing practices, 15 U.S.C § 2801, defines franchise as “any contract between a refiner and distributor, a refiner and a retailer, a distributor and another distributor, or a distributor and retailer under which a retailer or distributor uses the trademark of an oil company in connection with the sale of motor fuel.”

[Last updated in March of 2022 by the Wex Definitions Team]