Franchise fees also benefits the taxi companies. It constrains the supply to taxis, thus shielding the taxi companies from potential competition. They're paying for protection from competition.
> Franchise fees also benefits the taxi companies.
In the presence of a substitute service not subject to them, they do not.
Actually, since there seems to be both a non-automatic approval process and a franchise fee, they don't really even without such competition; the approval process shields them from competition, the franchise fee is a pure cost. (Of course, there is a linkage between the two, but as long as the process is in place, incumbent taxi firms benefit from minimizing the fee.)
