AbstractThis article examines the structural relationship between national nonprofit organizations and their local affiliates. For a substantial number of nonprofits, the national‐local relationship can be modeled as a franchise relationship. The author considers ways in which the franchise system serves to mitigate a number of the organizational and economic problems facing nonprofits. Finally, particular devices used by franchises are examined, focusing on the ways in which national organizations tax their local affiliates and the extent of territorial restrictions placed on local affiliate