Final answer:
Franklin Corp. cannot use the fair value option for an investment initially classified as available-for-sale unless specific reclassification criteria under accounting standards such as IFRS or GAAP are met, which typically requires more than the simple passage of time.
Step-by-step explanation:
Whether Franklin Corp. can use the fair value option for an investment originally classified as available-for-sale depends on specific accounting standards such as International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP). Under IFRS, the fair value option can typically only be applied at initial recognition or if certain reclassification criteria are met. Since the question states that the investment has been held for 'several years', it implies that the initial recognition of the asset has long passed, and therefore, the choice to apply the fair value option may no longer be available unless there has been a significant change that would allow for reclassification. Under GAAP, once an investment is classified, it cannot be reclassified in subsequent periods, except in specific circumstances which generally do not include simply opting for fair value measurement.
The answer would more likely lean towards option 2: No, Franklin Corp. cannot use the fair value option for this investment, with the caveat that there might be exceptional circumstances under certain accounting frameworks that would allow such a change.