What is Franchise Tax?

Legal Definition
A franchise tax is a government levy (tax) charged by some US states to certain business organizations such as corporations and partnerships with a nexus in the state. A franchise tax is not based on income. Rather, the typical franchise tax calculation is based on the net worth of or capital held by the entity. The franchise tax effectively charges corporations for the privilege of doing business in the state.
-- Wikipedia
Legal Definition
A state law levied on businesses or corporations chartered within that state. The tax is typically based on the net worth of the taxpaying entity, rather than on income.
Legal Definition
A tax on the franchise of a corporation, that is, on the right and privilege of carrying on business in the character of a corporation, for the purposes for which it was created, and in the conditions which surround it. Though the value of the franchise, for purposes of taxation, may be measured by the amount of business done, or the amount of earnings or dividends, or by the total value of the capital or stock of the corporation in excess of its tangible assets, a franchise tax is not a tax on either property, capital, stock, earnings, or dividends. See Home Ins. Co. v. New York, 134 U. S. 594, 10 S. Ct. 593, 33 L. Ed. 1025; Worth v. Petersburg R. Co., 89 N. C. 305; Tremont & Suffolk Mills v. Lowell, 178 Mass. 469, 59 N. E. 1007; Chicago & E. I. R. Co. v. State, 153 Ind. 134, 51 N. E. 924; Marsden Co. v. State Board of Assessors, 61 N. J. Law, 46i, 39 Atl. 638; People v. Knight, 174 N. Y. 475, 67 N. E. 65, 63 In R. A. 87.
-- Black's Law Dictionary
Legal Definition
A tax on the privilege of doing business as a corporation. See 84 Vt. 167, Ann. Cas. 1912D, 22, 78 Atl. 944.
-- Ballentine's Law Dictionary