Franz began his acting career at Chicago's Organic Theater Company. Although he has in the past performed Shakespeare, his "look" led to his being typecast early in his career as a police officer. (By Franz's own count, the character of Detective Andy Sipowicz was his 27th role as a police officer). He has also guest-starred in shows such as The A-Team. Other major roles were on the television series Hill Street Blues in which he played two characters over the run of that show. Franz first played the role of Detective Sal Benedetto, a corrupt cop in the 1983 season, who later kills himself. Due to his popularity with fans, he returned in 1985 as Lt. Norm Buntz, remaining until the show's end in 1987. He starred in the short-lived Beverly Hills Buntz as the morally questionable Norman Buntz.
Franz had a small role as a grouchy movie director in Body Double (1984).
Franz went on to win four Emmy Awards for his portrayal of Andy Sipowicz on NYPD Blue. The character of Sipowicz was ranked #23 on Bravo's 100 Greatest TV Characters list.
In 1994 Franz made a cameo appearance as himself in The Simpsons episode "Homer Badman" - when Homer is accused of sexually harassing a babysitter, the case becomes tabloid fodder, generating an exploitative Fox telemovie, Homer S.: Portrait of an Ass-Grabber, in which Franz portrays Homer.
He starred as "Earl", the abusive husband, in the Dixie Chicks' music video "Goodbye Earl", as the obnoxious Captain Carmine Lorenzo in the 1990 action film Die Hard 2 and as Nathaniel Messinger in the 1998 film, City of Angels.
Franz has stayed out of the acting spotlight since 2005 to focus on his private life. He has told Access Hollywood he would be interested to return to acting if given the right opportunity.