Grandfathering

Your friend opens a gym in his basement. You are his first customer, basically just lifting heavy things he has lying around and carefully doing jumping jacks so that you don't hit your head on the basement ceiling.

Because you are the gym's only client, there aren't many rules. Your friend lets you work out without wearing a shirt or shorts. Just underwear and the dream of better health.

Over time, though, your friend gets more customers. The workout center moves out of his basement and into a state-of-the-art facility downtown. He eventually puts a new rule in place that everyone has to wear shirts and shorts.

But the new regulation only applies to new members. You are grandfathered in. Because you joined before the rule was put in place, you don't have to comply. You're the last remaining underwear jock allowed at your friend's gym.

When new rules or regulations are put into place, some actions or activities that took place prior to the new rules are allowed to continue going on. This is the essence of grandfathering.

Sometimes grandfathered practices can go on forever; sometimes they expire after a predetermined amount of time.

One more plausible example that might come up in real life: a bank decides to put in place a $5 monthly service fee for savings accounts. However, accounts that existed prior to the policy change don't have to pay the fee. Those customers are grandfathered into no-fee status.