Answer:
A city charter or town charter (generically, municipal charter) is a legal document (charter) establishing a municipality such as a city or town. The concept developed in Europe during the Middle Ages.
Traditionally the granting of a charter gave a settlement and its inhabitants the right to town privileges under the feudal system. Townspeople who lived in chartered towns were burghers, as opposed to serfs who lived in villages. Towns were often "free", in the sense that they were directly protected by the king or emperor, and were not part of a feudal fief.
Today the process for granting is determined by the type of government of the state in question. In monarchies, charters are still often a royal charter given by the Crown or the authorities acting on behalf of the Crown. In federations, the granting of charters may be within the jurisdiction of the lower level of government such as province.