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 Nys Ct 636  Form 2012

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A lot of people think of a franchise and they think of McDonald's, or a fast food restaurant, or some other type of franchise. Franchise tax has nothing to do with franchising, instead it's a privilege fee. It's a privilege to be incorporated in a state which you're incorporated. The state, in other words, gives you access to the legal system in that state and it's a fee that's paid to that state regardless of income. So it's not dependent on your total business in the state or your total business anywhere; it's just on whether you continue to be in good standing as a corporation or LLC of that particular jurisdiction. They call it a franchise tax, which is really just an annual report fee whether or not you're doing business; just for the privilege of keeping the company going. If you fail to pay the franchise tax, you will lose good standing status, which means you'll lose the corporate shield to protect

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