FRANCHISE CONDITIONS (4-280-060 et seq.)

Municipal Code of Chicago tit. 4, ch. 4-280, art. IV

in effect

Municipal Code of Chicago § 4-280-060 Term and nonexclusivity.

4-280-060 Term and nonexclusivity. A. The term of an original franchise shall be up to 15 years from the date the franchise is accepted by a grantee. The term of a renewed franchise shall be no more than fifteen years. No franchise granted pursuant to this chapter shall give any exclusive right to a grantee and every such franchise shall be deemed to reserve the right to grant other franchises to use and occupy the public ways of the city for cable service or any other purpose on such terms as the city may then deem appropriate. (Prior code § 113.1-6; Amend Coun. J. 12-9-92, p. 25465; Amend Coun. J. 4-24-12, p. 23998, § 1)

Municipal Code of Chicago § 4-280-070 Notice to grantee.

4-280-070 Notice to grantee. A. Except as otherwise provided in this chapter, the city shall not take any final action involving the revocation or termination of the grantee's franchise unless the city has: (1) Advised the grantee in writing, at least 30 days prior to the meeting at which such action shall take place, as to its time, place and purpose; and (2) Published a notice, at least once, ten days before the meeting on the City's website or in a newspaper of general circulation within the city. (Prior code § 113.1-7; Amend Coun. J. 12-9-92, p. 25465; Amend Coun. J. 4-24-12, p. 23998, § 1)

Municipal Code of Chicago § 4-280-080 Review and modification.

4-280-080 Review and modification. A. It shall be the policy of the city to amend a franchise upon application of the grantee, when necessary to enable the grantee to take advantage of advancements in the state-of-the-art which will afford it an opportunity to more effectively, efficiently or economically serve its subscribers; provided, however, that this section shall not be construed to require the city to make any amendment. Further, within the term of the franchise, either upon the request of the mayor, the cable administrator, or upon its own motion, the council may adopt a resolution setting forth the time and the place of a special council meeting, the purpose of which will be to consider system performance, system design modifications and the possible need for the adoption of reasonable and appropriate modifications in a franchise of a nature that would not result in effectively terminating same. (Prior code § 113.1-8; Amend Coun. J. 12-9-92, p. 25465; Amend Coun. J. 4-24-12, p. 23998, § 1)

Municipal Code of Chicago § 4-280-090 Performance evaluation sessions.

4-280-090 Performance evaluation sessions. A. Upon 90 days advance written notice, the cable administrator may require a grantee to participate in performance evaluation sessions. B. Evaluation sessions may be held at any time during the term of the franchise. C. All evaluation sessions shall be open to the public and announced by the city in accordance with the public notice requirements of Section 4-280-070. Grantee shall notify subscribers of all evaluation sessions by announcements on appropriate channel(s) on the system as determined by the cable administrator, commission, between the hours of 7:00 a.m. and 9:00 p.m. for five consecutive days preceding each session. D. Topics which may be discussed at any scheduled or special evaluation session may include, but not be limited to, service rate structures, franchise fees, penalties, free or discounted services, applications of new technologies, system performance, services provided, programming offered, customer complaints, privacy amendments to this chapter, judicial and FCC rulings, line extension policies and grantee or city rules. E. During a review and evaluation by the city, the grantee shall fully cooperate with the city and shall provide such information and documents as the cable administrator may need to reasonably perform the its review. F. If at any time during a review and evaluation by the city, the cable administrator determines that reasonable evidence exists of inadequate cable system performance, the city may require a grantee to perform tests and analyses directed toward the suspected inadequacies. The grantee shall fully cooperate with the cable administrator in performing such testing and shall prepare results and a report if requested within 30 days after notice. Such report shall include the following information: 1. The nature of the complaint or problem which precipitated the special tests; 2. What system component was tested; 3. The equipment used and procedures employed in testing; 4. The method, if any, in which such complaint or problem was resolved; 5. Any other information pertinent to said tests and analyses which may be required; 6. The cable administrator may require the test to be supervised at grantee's expense by a professional engineer not on the permanent staff of the grantee, to be approved by the cable administrator. The engineer shall sign all records of special tests and forward to the commission such records with a report interpreting the results of the test and recommending actions to be taken. G. The city's right under this section shall be limited to requiring tests, analysis and reports covering specific subjects and characteristics based on said complaints or other evidence when and under such circumstances as the cable administrator has reasonable grounds to believe that the complaints or other evidence require that tests be performed to protect the public against substandard cable service. (Prior code § 113.1-9; Amend Coun. J. 12-9-92, p. 25465; Amend Coun. J. 4-24-12, p. 23998, § 1; Amend Coun. J. 11-8-12, p. 38872, § 131)

Municipal Code of Chicago § 4-280-100 Renewal.

4-280-100 Renewal. A. To the extent required by federal law, requests for franchise renewal will be received and reviewed by the city in a manner consistent with Title VI of the Federal Communications Act of 1934. 47 U.S.C. § 546, as amended, and any implementing regulations. B. A grantee may submit to the cable administrator an informal proposal for renewal of a franchise, pursuant to 47 U.S.C. § 546(h). Such an informal proposal may be submitted at any time during the term of a franchise and the city may, after affording the public adequate notice and opportunity for comment, grant or deny such informal proposal at any time (including after proceedings have been commenced in accordance with 47 U.S.C. § 546(a)). An informal application for renewal may be denied by the city for any reason. C. If the council determines that a grantee has been in reasonable compliance with the terms and conditions imposed by this chapter and the franchise, the council may, by ordinance, renew the grantee's franchise, with any modifications it deems reasonable, for a period of time not inconsistent with the provisions of Section 4-280-060 of this chapter. D. The council may determine not to renew a franchise in accordance with 47 U.S.C. § 546. E. To the extent permitted by existing law, the city shall have the right to recoup from a grantee all direct expenses incurred pursuant to its consideration of renewal of the franchise whether or not the franchise is renewed. (Prior code § 113.1-10; Amend Coun. J. 12-9-92, p. 25465; Amend Coun. J. 4-24-12, p. 23998, § 1)

Municipal Code of Chicago § 4-280-110 Revocation conditions and procedures.

4-280-110 Revocation conditions and procedures. A. A franchise may be revoked by the city council whenever a grantee shall refuse, neglect or willfully fail to: 1) construct, operate or maintain its cable systems; 2) provide cable service to its subscribers in reasonable accordance with the terms of this chapter and the franchise; 3) comply with the conditions of occupancy of any public ways; 4) make required extensions of service; 5) substantially comply with the terms and conditions of this chapter, the franchise, or any applicable rule or regulation; 6) maintain its eligibility to do business with the City under Article I of Chapter 1-23 of this Code; or 7) pay franchise fees when due. A franchise may also be revoked by the city council whenever a grantee: 1) practices any fraud or deceit upon the city or its subscribers; 2) becomes insolvent, or unable or unwilling to pay its uncontested debts; 3) adjudged bankrupt, or seeks relief under the bankruptcy laws. B. In the event the mayor or the cable administrator believes that grounds for revocation exist or have existed, the mayor or the cable administrator shall notify a grantee, in writing, setting forth the nature and facts of such noncompliance. If, within 30 days following such written notification, the grantee has not furnished reasonably satisfactory evidence that corrective action has been taken or is being actively and expeditiously pursued, or that the alleged violations did not occur, or that the alleged violations were beyond the grantee's control, the mayor or the cable administrator shall thereupon refer the matter to the council. C. Upon referral from the mayor or the cable administrator or by its own motion, the council may revoke a franchise pursuant to subsection A of this section. Provided, however, that if grounds for revocation exist under Article I of Chapter 1-23 of this Code, the recommendation of the mayor or the cable administrator shall be required for the city council to take action on such grounds as required by Section 1-23-040. D. The council shall not revoke a franchise pursuant to subsection C of this section, until it has given notice to the grantee that it proposes to take such an action and the grounds therefor. Further, the council shall not revoke a franchise until the grantee, or its representative, has had reasonable opportunity to be heard before the council and show that the proposed grounds for revocation did not or do not exist, as the case may be. E. A grantee shall not be subject to the sanctions of this section for any act or omission wherein such act or omission was beyond the grantee's control. An act or omission shall not be deemed to be beyond a grantee's control if committed, omitted, or caused by a corporation or other business entity which holds a controlling interest in the grantee, whether held directly or indirectly. Further, the inability of a grantee to obtain financing for whatever reason shall not be an act or omission which is "beyond the grantee's control". F. Upon revocation of a franchise the grantee shall be obligated to cease using the cable system for the purposes authorized by the franchise. The city may either take temporary possession of some or all of the grantee's facilities in the public ways, effect the transfer of ownership of the cable system to the city or another person subject to and in accordance with federal law, or require the grantee to remove some or all of the grantee's facilities from the public ways and restore the public ways to the condition required by applicable provisions of the city code and city regulations. Should the grantee neglect, refuse, or fail to remove such facility, the city may remove the facility at the expense of the grantee. The obligation of the grantee to remove shall survive the termination of the franchise for a period of two years; provided, that this provision does not permit the city to take possession of, or require the grantee to remove, any facilities that are used to provide another service for which the grantee holds a valid franchise issued by the city or for which grantee is otherwise authorized by existing law to provide in the city. G. The termination of a grantee's rights under a franchise shall in no way affect any other rights the city may have under the franchise or under any provision of law. (Prior code § 113.1-11; Amend Coun. J. 12-9-92, p. 25465; Amend Coun. J. 6-30-10, p. 95061, § 5; Amend Coun. J. 9-8-10, p. 99116, § 5; Amend Coun. J. 4-24-12, p. 23998, § 1)

Municipal Code of Chicago § 4-280-120 Arbitrary and capricious action - Remedies.

4-280-120 Arbitrary and capricious action - Remedies. A. If a grantee arbitrarily and capriciously discontinues cable service to a substantial number of its subscribers, the grantee's franchise may be revoked by an ordinance of the council following notice to the grantee and an opportunity to be heard. Notwithstanding the provisions of Section 4-280-070, notice to the grantee under this section may be less than 30 days. Provided further, the city may seek appropriate judicial or other relief and/or may proceed to exercise its rights and powers as provided for herein. (Prior code § 113.1-12; Amend Coun. J. 12-9-92, p. 25465; Amend Coun. J. 4-24-12, p. 23998, § 1)

Municipal Code of Chicago § 4-280-130 Franchise fee and other compensation.

4-280-130 Franchise fee and other compensation. A. A grantee, in consideration of the privilege granted under the franchise for the operation of a cable system within the public ways of the city, the expense of regulation pursuant to the franchise incurred by the city and for other costs and considerations, shall pay to the city a franchise fee of not less than five percent of its annual gross revenues during the period of its operation under the franchise. B. The grantee shall file with the city, within 30 days after the expiration of each of the grantee's fiscal quarters, a financial statement clearly showing the gross revenues received by grantee during the preceding quarter and shall simultaneously tender payment of the quarterly portion of the franchise fee. The grantee shall also file, upon request by the city, within 120 days following the conclusion of the grantee's fiscal year, an annual report prepared and audited by a certified public accountant acceptable to the city, clearly showing the yearly total gross revenues. C. At any time during the term of a franchise, the city shall have the right, consistent with the provision of Section 4-280-190 to inspect a grantee's income records, the right of audit and the recomputation of any amounts determined to be payable under this chapter and the franchise. Any additional amount due the city as a result of the audit shall be paid within 30 days following written notice to the grantee by the city which notice shall include a copy of the audit report. The cost of said audit shall be borne by the grantee if it is properly determined that the grantee's annual payment due to the city for the proceeding year is increased thereby by more than five percent. D. In the event that any franchise payment or recomputed amount is not made on or before the applicable dates heretofore specified, interest shall be charged from such due date at the rate of one percent per month. E. No acceptance by the City of any franchise fee shall be construed as an accord that the amount paid is in fact the correct amount, nor shall such acceptance of such franchise fee payment be construed as a release of any claim the city may have for additional sums payable. F. The franchise fee payment is not a payment in lieu of any tax, fee, or other assessment, except as specifically required by applicable law. By way of example, and not limitation, permit fees and business license fees are not waived and remain applicable. (Prior code § 113.1-17; Amend Coun. J. 3-27-85, p. 14767; 12-9-92, p. 25465; Amend Coun. J. 4-24-12, p. 23998, § 1) Editor's note – Coun. J. 4-24-12, p. 23998, § 1, repealed former § 4-280-130, which pertained to arbitration provisions, and renumbered this section, which was formerly § 4-280-170.

Municipal Code of Chicago § 4-280-140 Insurance - Bonds - Indemnity.

4-280-140 Insurance - Bonds - Indemnity. A. Upon the granting of a franchise and within 30 days following the filing of the acceptance required under Section 4-280-470 hereof and at all times during the term of the franchise, including the time for removal of facilities or management as a trustee as provided for herein, a grantee shall obtain, pay all premiums for and file with the city comptroller written evidence of payment of premiums and executed duplicate copies of the following: 1. A commercial general liability policy for bodily injury, personal injury and property damage arising in any way from the franchise or the installation or operation of the grantee's cable system, or alleged to have been so caused or occurred, with a minimum liability of an amount as established in the franchise; 2. The franchise shall indemnify, defend and hold harmless the city, its officers, boards, commissions, agents and employees from and against all claims by any person whatsoever for property damage occasioned by the installation or operation of the grantee's cable system, or alleged to have occurred or been so caused, with a minimum liability of an amount as established in the franchise; 3. A performance bond running to the city with good and sufficient surety approved by the city comptroller in the amount specified in the franchise, conditioned upon the faithful performance and discharge of the obligations imposed by this chapter and the franchise awarded hereunder from the date thereof including, but not limited to, faithful compliance with the construction timetable proposed by a grantee in its application as incorporated into the franchise, unless appropriate extension is approved by the commission. The city's right to recover under the bond shall be in addition to any other rights retained by the city under this chapter and other applicable law. Any proceeds recovered under the bond may be used to reimburse the city for the loss of expected payments of the franchise fee and other valuable consideration given for the grant of the franchise and such additional expenses as may be incurred by the city as a result of grantee's failure to comply with the obligations imposed by this chapter and the franchise including, but not limited to, attorney's fees and costs of any action or proceeding, the cost of refranchising and the cost of removal or abandonment of any property, or other costs which may be in default. B. The bond and all insurance policies called for herein shall be issued by companies licensed to do business in Illinois and shall be in a form satisfactory to the corporation counsel and shall require 30 days' written notice of any cancellation to the cable administrator, the corporation counsel, and the grantee. A grantee shall, in the event of any such cancellation notice, obtain, pay all premiums for and file with the cable administrator (with a copy to the corporation counsel) written evidence of the issuance of replacement bond or policies within 30 days following receipt by the city or the grantee of any notice of cancellation. C. With regard to a renewal franchise agreement applicable to a Grantee that has completed construction of its cable system, the bond required by this section may be conditioned on the resumption of construction or other circumstances that, in the reasonable judgment of the cable administrator, requires such additional security to adequately protect the city. D. A grantee shall, at its sole cost and expense, indemnify and hold harmless the city, its officials, boards, commissions, consultants, agents and employees against any and all claims, suits, causes of action, proceedings and the resulting losses, costs, expenses, liabilities, damages, orders, judgments, or decrees, sustained by the City arising out of the acts, errors, or omissions of the grantee, its agents, independent contractors, or employees related to or in any way arising out of the award of franchise to the grantee and its installation and operation of the cable system under the franchise. These damages shall include, but not be limited to, penalties arising out of copyright infringements and damages arising out of the failure by grantee to secure consents from the owners, authorized distributors or licensees of programs to be delivered by the grantee's cable system whether or not any act or omission complained of is authorized, allowed, or prohibited by the franchise. Indemnified expenses shall include, but not be limited to, all out-of-pocket expenses, such as attorney fees and shall also include the reasonable value of any services rendered by the corporation counsel or his assistants or any consultants, agents and employees of the city. (Prior code § 113.1-18; Amend Coun. J. 12-9-92, p. 25465; Amend Coun. J. 11-8-12, p. 38872, § 132; Amend Coun. J. 11-16-16, p. 37901, Art. II, § 19) Editor's note – Coun. J. 4-24-12, p. 23998, § 1, repealed former § 4-280-140, which pertained to transfer of ownership to grantor, and renumbered this section, which was formerly § 4-280-180.

Municipal Code of Chicago § 4-280-150 Letter of credit.

4-280-150 Letter of credit. A. Within ten days after the award of a franchise, a grantee shall deposit with the city a letter of credit from a financial institution approved by the city comptroller in an amount as specified in the franchise. The form and content of such letter of credit shall be approved by the corporation counsel. The letter of credit shall be used to insure the faithful performance by the grantee of all provisions of the franchise and this chapter; and compliance with all orders, permits and directions of any agency, commission, board, department, division or office of the city having jurisdiction over its acts or defaults under the franchise or this chapter and the payment by the grantee of any penalties, claims, liens and taxes due the city or other governmental entities which arise by reason of the construction, operation or maintenance of the system. B. If a grantee fails to pay to the city any compensation due the city within the time fixed herein; or, fails after ten days' notice to pay to the city any taxes due and unpaid; or fails to repay the city within ten days, any damages, costs or expenses which the city is compelled to pay by reason of any act or default of a grantee in connection with the franchise; or, fails after three days' notice of such failure by the grantee to comply with any provisions of the franchise or this chapter while the city reasonably determines can be remedied by demand on the letter of credit, the city may immediately request payment of the amount thereof, with the interest and any penalties, from the letter of credit. Upon such request for payment, the city shall notify the grantee of the amount and date thereof. C. The letter of credit shall be maintained at the amount specified in the franchise during the entire term of the franchise. In the event that amounts are withdrawn pursuant to subsection A or B of this section, a grantee, if necessary, shall take any action required to maintain the letter of credit at said full amount within three days of the notification by the city of its withdrawal against the letter of credit. D. The rights reserved to the city with respect to the letter of credit are in addition to all other rights of the city, whether reserved by the franchise or authorized by law and no action, proceeding or exercise of a right with respect to such letter of credit shall affect any other right the city may have. E. The letter of credit shall contain the following endorsement: It is hereby understood and agreed that the surety will not cancel or refuse to renew this letter of credit without giving to the City Comptroller written notice, by registered mail, of its intention to cancel or not to renew, at least thirty (30) days prior to such action. (Prior code § 113.1-19; Amend Coun. J. 12-9-92, p. 25465; Amend Coun. J. 4-24-12, p. 23998, § 1) Editor's note – Coun. J. 4-24-12, p. 23998, § 1, repealed former § 4-280-150, which pertained to grantor's right to assign, and renumbered this section, which was formerly § 4-280-190.

Municipal Code of Chicago § 4-280-160 Remedies cumulative.

4-280-160 Remedies cumulative. All remedies under this chapter and any franchise are cumulative unless otherwise expressly stated. The exercise of one remedy shall not foreclose use of another, nor shall the exercise of a remedy or the payment of liquidated damages or penalties relieve a grantee of its obligations to comply with its franchise. Remedies may be used singly or in combination; in addition the city may exercise any rights it has at law or equity. Recovery by the city any amounts under insurance, the performance bond, any security fund or letter of credit, or otherwise, does not limit a grantee's duty to indemnify the city in any way; nor shall such recovery relieve a grantee of its obligations under a franchise, limit the amounts owed to the city, or in any respect prevent the city from exercising any other right or remedy it may have. (Added Coun. J. 4-18-12, p. 23998, § 1) Editor's note – Coun. J. 4-24-12, p. 23998, § 1, repealed former § 4-280-160, which pertained to grantee's obligation as trustee.

Municipal Code of Chicago § 4-280-170 Transfer of franchise.

4-280-170 Transfer of franchise. A. A franchise granted under this chapter shall be a privilege to be held in personal trust by a grantee. It shall not be assigned, transferred, sold or disposed of, in whole or in part, by voluntary sale, sale and leaseback, merger, consolidation or otherwise or by forced or involuntary sale, without prior consent of the council expressed by resolution and then on only such conditions as may therein be prescribed. Any sale, transfer or assignment not made according to the procedures set forth in this chapter shall render the franchise void. The sale, transfer or assignment in bulk of the major part of the tangible assets of the grantee shall be considered an assignment and shall be subject to the provisions of this section. B. Any sale, transfer or assignment authorized by the council shall be made by a bill of sale or similar document, an executed copy of which shall be filed with the city within 30 days after any such sale, transfer or assignment. The council shall not withhold its consent unreasonably; provided, however, the proposed assignee agrees to comply with all the provisions of this chapter and the franchise and reasonable amendments thereto and must be able to provide proof of legal, technical, financial and character qualifications as determined by the city. The proposed assignee must further agree that it will assume the obligations, liabilities, and responsibility for all acts and omissions, known and unknown, of the previous grantee unless the City, in its sole discretion, expressly waives this requirement in whole or in part. C. No such consent shall be required for a transfer in trust, mortgage, or other instrument of hypothecation, in whole or in part, to secure an indebtedness except when such hypothecation shall exceed 75 percent of the fair market value of the property used by the grantee in the operation of its cable system. Prior consent of the council, expressed by resolution, shall be required for such transfer and said consent shall not be withheld unreasonably. D. Prior approval of the council shall be required where ownership or control of 20 percent or more of the right of control of a grantee is acquired during the term of the franchise in any transaction or series of transactions by a person or group of persons acting in concert, none of whom owned or controlled 20 percent or more of such right to control, singularly or collectively on the effective date of the franchise. By its acceptance of a franchise, a grantee specifically grants and agrees that any such acquisition occurring without prior approval of the council shall render the franchise void. E. The consent of the council to any sale, transfer, lease, trust, mortgage or other instrument of hypothecation shall not constitute a waiver or release of any of the rights of the city under this chapter and the franchise whether arising before or after the date of the a transfer. F. The grantee's application for approval submitted pursuant to this section shall be processed in accordance with procedures consistent with applicable federal law. (Prior code § 113.1-20; Amend Coun. J. 12-9-92, p. 25465; Amend Coun. J. 4-24-12, p. 23998, § 1) Editor's note – Coun. J. 4-24-12, p. 23998, § 1, renumbered former § 4-280-170 as § 4-280-130, and renumbered this section, which was formerly § 4-280-200, as § 4-280-170.

Source: City of Chicago, Municipal Code of Chicago (American Legal Publishing, codelibrary.amlegal.com)URL: https://codelibrary.amlegal.com/codes/chicago/latest/chicago_il/0-0-0-2636976Fetched: 10/24/2026