Franchising activities of public utilities directly affect the vital interests of the general public， and the institutional design of public participation in such activities should aim to prevent and rectify government regulatory failure. In current legal practices concerning public utility franchises， public participation is basically structured around democratic procedures in administrative processes， lacking substantive constraints on franchise activities. This has objectively restricted the effective exertion of its supposed functions. As consumers of public utilities， the general public should have the legal status of stakeholders in specific links of franchise activities and enjoy the right to substantially participate in government regulation. Therefore， it is necessary to conduct a comprehensive legal review of the public participation system in public utility franchises， redefine the basic structure of public participation， and on this basis， improve the corresponding institutional design. This will help fully unleash its intended functions and effectively safeguard the legitimate rights and interests of the public.