In many communities, the cable television franchise held by the cable operator is adopted by ordinance, and the agreement ordinance is itself the only ordinance addressing cable television issues. There may not be any general ordinance that describes how a company should apply for a cable franchise, or how a franchise application will be processed. The absence of a general law can be quite risky, at least in states where there is no general state statute that addresses the matter. In addition, the federal Cable Act establishes some limits on local governments. For example, a franchisor may not "unreasonably refuse to award" a franchise. 47 U.S.C. §541(a)(1). Federal law also suggests grounds upon which a request for a franchise could be denied. 47 U.S.C. §541(a)(2)-(4). The absence of a local, general franchising ordinance may make it impossible to require a second cable operator apply for a franchise or agree to reasonable terms prior to the award of a franchise. At a minimum a community should adopt some form of local franchising ordinance, separate from the franchise itself, unless state law renders such an ordinance unnecessary.

In adopting a general franchise ordinance that will apply equally to all overbuild applicants, communities will face a number of significant questions. In some communities, a franchise can only be adopted by referendum. In other cases, franchises can only be issued after a competitive bid process.

Even more troubling, however, are questions as to the financial, technical and legal qualifications of applicants. Traditionally localities have applied a rigorous test to avoid opening the streets to an entity that may well go bankrupt. Many newly created overbuild applicants cannot pass such a rigorous test. Often the over-builder plans to use the grant of a franchise as a mechanism to induce additional equity and debt capital needed to build the network. Many of the new overbuilders refuse to perform any engineering work before obtaining a franchise, thereby putting communities in a position where it is impossible to determine the impact of the construction project on the rights-of-way. Many communities have learned to their regret that poor financial guarantees may leave a partially built, and expensive to remove set of facilities in the streets. It is important to know the financial risks the applicant is asking the local government to assume if the business plan of the over-builder is not successful.

• Overview
  
• Who Are The Overbuilders? Can Localities Franchise Them?
  
• Should the Franchise be Obtained Before Construction Begins? Or Before the Operator Begins to Provide Service?
  
• How Does a Company Apply for a Franchise? How Does A Community Decide Whether the Franchise Should be Granted?
  
• What Key Franchise Issues Arise and How are Public Obligations Balanced?
  
• In a Competitive Environment, How Do I Protect the City and Its Citizens from Harm?