Franchised Monopoly

DEFINITION of 'Franchised Monopoly'

Monopoly status given by the government to a company. A franchised monopoly is sheltered from competition by virtue of an exclusive license or patent granted to it by the government. Franchised monopolies are legal.

BREAKING DOWN 'Franchised Monopoly'

In most nations, franchised monopolies can be found in essential sectors such as transportation, water supply and power. In many countries, primarily developing nations, natural resources such as oil and gas, and metals and minerals are also controlled by government-sanctioned monopolies. While one argument in favor of franchised monopolies is that they ensure that control over essential industries remains in the hands of the public, opponents of such monopolies claim that they promote favoritism and introduce market distortions.