Franchise or Privilege?
SOURCE: Government Instituted Slavery Using Franchises, Form #05.030, Section 2.4
In law, all franchises are privileges but not all privileges are franchises:
“A “franchise” resulting from a contract made through an exercise of the city’s legislative or ordinance-making power is fundamentally different from a “privilege” granted by the city under its power to regulate the use of its streets, as delegated in Tex. Rev. Civ. Stat. Ann. art. 1175, § 16 (1963). A “franchise” may grant a “privilege,” but a “privilege” is not necessarily a “franchise.” The word “privilege” is also used, for example, to signify the special right that may be enjoyed only under authority of a license, that is, a right not possessed by persons generally. A “license” has the purpose of regulation under the police power.”
[Johnson v. Austin, 674 S.W.2d. 894 (3rd Court of Appeals, Date: July 5, 1984)]
So the main difference between a privilege and a franchise is the nature of the property granted and whether the conveyance is a contract in the case of a franchise or a license/permit in the case of a privilege. Privileges temporarily convey or grant use of PUBLIC property while franchises convey PRIVATE, constitutionally protected property:
36 Am Jur 2d Franchises from Public Entities § 1
§ 1 Definitions
A franchise constitutes a private property right. [5]Similarly stated, a “franchise” is the special privilege awarded by government to a person or corporation and conveys a valuable property right. [6]To be a “franchise,” the right possessed must be such as cannot be exercised without the express permission of the sovereign power. [7]It is a privilege conferred by the government on an individual or a corporation to do that which does not belong to the citizens of the country generally by common right. [8]
[36 Am.Jur.2d, Franchises from Public Entities §1]
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FOOTNOTES:
5. Central Waterworks, Inc. v. Town of Century, 754 So.2d. 814 (Fla. Dist. Ct. App. 1st Dist. 2000).
A governmental franchise is deemed to be privately owned, with all of the rights attaching to the ownership of the property in general, and is subject to taxation the same as any other estate in real property. In re South Bay Expressway, L.P., 434 B.R. 589 (Bankr. S.D. Cal. 2010) (applying California law).
6. Montana-Dakota Utilities Co. v. City of Billings, 2003 MT 332, 318 Mont. 407, 80 P.3d. 1247 (2003) (holding modified on other grounds by, Havre Daily News, LLC v. City of Havre, 2006 MT 215, 333 Mont. 331, 142 P.3d. 864 (2006)); South Carolina Elec. & Gas Co. v. Town of Awendaw, 359 S.C. 29, 596 S.E.2d. 482 (2004).
A governmental “franchise” constitutes a special privilege granted by the government to particular individuals or companies to be exploited for private profits; such franchisees seek permission to use public streets or rights-of-way in order to do business with a municipality’s residents and are willing to pay a fee for this privilege. South Carolina Elec. & Gas Co. v. Town of Awendaw, 359 S.C. 29, 596 S.E.2d. 482 (2004).
8. New Orleans Gas-light Co. v. Louisiana Light & Heat Producing & Manufacturing Co., 115 U.S. 650, 6 S.Ct. 252, 29 L.Ed. 516 (1885); City of Groton v. Yankee Gas Services Co., 224 Conn. 675, 620 A.2d. 771 (1993); Artesian Water Co. v. State, Dept. of Highways and Transp., 330 A.2d. 432 (Del. Super. Ct. 1974), judgment modified on other grounds, 330 A.2d 441 (Del. 1974); City of Poplar Bluff v. Poplar Bluff Loan & Bldg. Ass’n, 369 S.W.2d. 764 (Mo. Ct. App. 1963); Dunmar Inv. Co. v. Northern Natural Gas Co., 185 Neb. 400, 176 N.W.2d. 4 (1970); Petition of South Lakewood Water Co., 61 N.J. 230, 294 A.2d. 13 (1972); Shaw v. City of Asheville, 269 N.C. 90, 152 S.E.2d. 139 (1967); Rural Water Sewer and Solid Waste Management, Dist. No. 1, Logan County, Oklahoma v. City of Guthrie, 2010 OK 51, 2010 WL 2600181 (Okla. 2010); Borough of Scottdale v. National Cable Television, Corp., 28 Pa.Commw. 387, 368 A.2d. 1323 (1977), order aff’d, 476 Pa. 47, 381 A.2d 859 (1977); Quality Towing, Inc. v. City of Myrtle Beach, 345 S.C. 156, 547 S.E.2d. 862 (2001); State/Operating Contractors ABS Emissions, Inc. v. Operating Contractors/State, 985 S.W.2d. 646 (Tex. App. Austin 1999); Tri-County Elec. Ass’n, Inc. v. City of Gillette, 584 P.2d. 995 (Wyo. 1978).
Below is a table summarizing the differences between franchises and privileges:
Table 2: Franchises and privileges compared
| # | Characteristic | Franchise | Privilege |
| 1 | A contract? | Yes | No |
| 2 | Type of right conveyed | Private | Public |
| 3 | Implemented with a revocable grant/rental of property or rights? | Yes | Yes |
| 4 | Implemented with civil statutory law? | Sometimes | Always |
| 5 | Implemented between exclusively private parties | Yes. McDonald’s Franchise is an example. | No. Always governmental |
| 6 | Acquires the “force of law” through | Written contract Quasi-contract (income tax is “quasi-contractual”) | Filling out a government application for a license or permit |
| 7 | Taxable within the borders of a constitutional state on land protected by the constitution? | No for federal government (see License Tax Cases, 72 U.S. 462, 18 L.Ed. 497, 5 Wall. 462, 2 A.F.T.R. 2224 (1866)) | Yes for state government |
| 8 | Requires domicile to be enforceable? | Not always (because a contract). Contracts are not territorial. | Yes (see Federal Rule of Civil Procedure 17(b)) |
| 9 | Recipient of property occupies a public office? | Yes (if grant is legislative, but not if contractual) | Yes |
| 10 | Constitutional authority for regulating those in receipt of the property? | Article 4, Section 3, Clause 2 | Article 4, Section 3, Clause 2 |
| 11 | Implemented with | A franchise mark | A license number (SSN/TIN/ITIN etc) |
As far as line 8 above regarding domicile, the annotated version of Federal Rule of Civil Procedure 17 by Lexis+ says the following:
“Rule 17(b)(1) exception is not applicable when action is based upon state common law rather than state statute, constitutional rights, or laws of United States. Oyler v. National Guard Asso., 743 F.2d 545, 39 Fed. R. Serv. 2d (Callaghan) 1372, 1984 U.S. App. LEXIS 18769 (7th Cir. 1984).”
[USCS Federal Rule of Civil Procedure 17, Lexis+]
As far as line 9 above goes, the reason that both franchises and privileges share in common that the participant a public office is that only public officers can handle public property:
“Public office. The right, authority, and duty created and conferred by law, by which for a given period, either fixed by law or enduring at the pleasure of the creating power, an individual is invested with some portion of the sovereign functions of government for the benefit of the public. Walker v. Rich, 79 Cal.App. 139, 249 P. 56, 58. An agency for the state, the duties of which involve in their performance the exercise of some portion of the sovereign power, either great or small. Yaselli v. Goff, C.C.A., 12 F.2d. 396, 403, 56 A.L.R. 1239; Lacey v. State, 13 Ala.App. 212, 68 So. 706, 710; Curtin v. State, 61 Cal.App. 377, 214 P. 1030, 1035; Shelmadine v. City of Elkhart, 75 Ind.App. 493, 129 N.E. 878. State ex rel. Colorado River Commission v. Frohmiller, 46 Ariz. 413, 52 P.2d. 483, 486. Where, by virtue of law, a person is clothed, not as an incidental or transient authority, but for such time as de- notes duration and continuance, with Independent power to control the property of the public, or with public functions to be exercised in the supposed interest of the people, the service to be compensated by a stated yearly salary, and the occupant having a designation or title, the position so created is a public office. State v. Brennan, 49 Ohio.St. 33, 29 N.E. 593.
[Black’s Law Dictionary, Fourth Edition, p. 1235]
Most of the time, the great mystery in distinguishing which category a specific statute falls in is identifying EXACTLY what type of property or right is conveyed that would otherwise be illegal to use or possess. This is a third rail issue that very few people in government are willing to talk about because it threatens their food source.
Courts also have a tendency to blur these two sides to make it difficult to distinguish them. For instance, the income tax is described as “quasi-contractual”:
“Even if the judgment is deemed to be colored by the nature of the obligation whose validity it establishes, and we are free to re-examine it, and, if we find it to be based on an obligation penal in character, to refuse to enforce it outside the state where rendered, see Wisconsin v. Pelican Insurance Co., 127 U.S. 265, 292, et seq. 8 S.Ct. 1370, compare Fauntleroy v. Lum, 210 U.S. 230, 28 S.Ct. 641, still the obligation to pay taxes is not penal. It is a statutory liability, quasi contractual in nature, enforceable, if there is no exclusive statutory remedy, in the civil courts by the common-law action of debt or indebitatus assumpsit. United States v. Chamberlin, 219 U.S. 250, 31 S.Ct. 155; Price v. United States, 269 U.S. 492, 46 S.Ct. 180; Dollar Savings Bank v. United States, 19 Wall. 227; and see Stockwell v. United States, 13 Wall. 531, 542; Meredith v. United States, 13 Pet. 486, 493. This was the rule established in the English courts before the Declaration of Independence. Attorney General v. Weeks, Bunbury’s Exch. Rep. 223; Attorney General v. Jewers and Batty, Bunbury’s Exch. Rep. 225; Attorney General v. Hatton, Bunbury’s Exch. Rep. [296 U.S. 268, 272] 262; Attorney General v. _ _, 2 Ans.Rep. 558; see Comyn’s Digest (Title ‘Dett,’ A, 9); 1 Chitty on Pleading, 123; cf. Attorney General v. Sewell, 4 M.&W. 77. “
[Milwaukee v. White, 296 U.S. 268 (1935)]
Below is the meaning of “quasi-contract” from the above quote:
“Quasi contact. An obligation which law creates in absence of agreement; it is invoked by courts where there is unjust enrichment. Andrews v. O’Grady, 44 Misc.2d. 28, 252 N.Y.S.2d. 814, 817. Sometimes referred to as implied-in-law contracts (as a legal fiction) to distinguish them from implied-in-fact contracts (voluntary agreements inferred from the parties’ conduct). Function of “quasi-contract” is to raise obligation in law where in fact the parties made no promise, and it is not based on apparent intention of the parties. Fink v. Goodson-Todman Enterprises, Limited, 9 C.A.3d. 996, 88 Cal.Rptr. 679, 690. See also Contract.”
[Black’s Law Dictionary, Sixth Edition, p. 1245]
Thus, what might in fact be a privilege is TREATED by the courts as contractual and therefore a franchise by judges, even though the legislation implementing it does not identify it as such. This is what we call “legislating from the bench”, and it is a violation of the separation of powers, as we describe in Form #05.023.
Because of the deliberate confusion between these two sides and a refusal throughout the government and especially the courts to use proper terminology in distinguishing the two, we group them together in this document and describe them BOTH as “franchises”. We do this to make it easier for the common man to understand, because franchises have become so prevalent in private industry and are well-understood in how they operate.