Franchise Fee

Definition

A Franchise Fee is a legally mandated operational taxation charge levied by municipal entities against a utility provider for the fundamental right to utilize public lands and infrastructure to deliver commodity services.

Business Purpose and Architecture

City governments demand revenue for the right-of-way required to run water pipes beneath public streets. Architecturally, this maps directly. In SAP, the Regional Structure physically isolates a customer’s postal code. Upon moving in, the system determines the city and maps the specific Franchise Contract to the new Installation. During billing, the rating engine evaluates the Franchise rules (Net, Gross, or Maximum Gross procedures) and mathematically deducts or explicitly charges the appropriate municipal rate without requiring manual intervention.