Franklin, 69, told Al Roker on Friday's edition of NBC's "Today" show she had just finished watching the movie "The Descendants" in a North Carolina hotel room when she heard the news.
"It came across the screen," Franklin recalled.
"I jumped up off the side of the bed ... I just said: 'Oh my God. That's not good.' "
Franklin went on to say she hopes Houston's legacy will be her contribution to music, not her battle with drug addiction and her erratic behavior in recent years.
"She was having her problems, she was having her challenges, but a lot of people have challenges of all kinds," Franklin said. "You cannot define a person on just one thing. You can't just forget all these wonderful and good things that a person has done because one thing didn't come off the way you thought it should come off. ... She left home with all the right things. ... She just kind of lost her way along the way somewhere."
Franklin is expected to sing at a funeral for the 48-year-old recording star Saturday in the Newark, N.J., church where she sang as a child and teen. Her Feb. 11 death in a Los Angeles hotel remains under investigation and officials have not yet announced what caused it. Police have said there is no evidence of foul play.