• Journal of Distribution Research
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• v.17 no.1
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• pp.37-63
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• 2012

In franchise business, exclusive sales territory (sometimes EST in table) protection is a very important issue from an economic, social and political point of view. It affects the growth and survival of both franchisor and franchisee and often raises issues of social and political conflicts. When franchisee is not familiar with related laws and regulations, franchisor has high chance to utilize it. Exclusive sales territory protection by the manufacturer and distributors (wholesalers or retailers) means sales area restriction by which only certain distributors have right to sell products or services. The distributor, who has been granted exclusive sales territories, can protect its own territory, whereas he may be prohibited from entering in other regions. Even though exclusive sales territory is a quite critical problem in franchise business, there is not much rigorous research about the reason, results, evaluation, and future direction based on empirical data. This paper tries to address this problem not only from logical and nomological validity, but from empirical validation. While we purse an empirical analysis, we take into account the difficulties of real data collection and statistical analysis techniques. We use a set of disclosure document data collected by Korea Fair Trade Commission, instead of conventional survey method which is usually criticized for its measurement error. Existing theories about exclusive sales territory can be summarized into two groups as shown in the table below. The first one is about the effectiveness of exclusive sales territory from both franchisor and franchisee point of view. In fact, output of exclusive sales territory can be positive for franchisors but negative for franchisees. Also, it can be positive in terms of sales but negative in terms of profit. Therefore, variables and viewpoints should be set properly. The other one is about the motive or reason why exclusive sales territory is protected. The reasons can be classified into four groups - industry characteristics, franchise systems characteristics, capability to maintain exclusive sales territory, and strategic decision. Within four groups of reasons, there are more specific variables and theories as below. Based on these theories, we develop nine hypotheses which are briefly shown in the last table below with the results. In order to validate the hypothesis, data is collected from government (FTC) homepage which is open source. The sample consists of 1,896 franchisors and it contains about three year operation data, from 2006 to 2008. Within the samples, 627 have exclusive sales territory protection policy and the one with exclusive sales territory policy is not evenly distributed over 19 representative industries. Additional data are also collected from another government agency homepage, like Statistics Korea. Also, we combine data from various secondary sources to create meaningful variables as shown in the table below. All variables are dichotomized by mean or median split if they are not inherently dichotomized by its definition, since each hypothesis is composed by multiple variables and there is no solid statistical technique to incorporate all these conditions to test the hypotheses. This paper uses a simple chi-square test because hypotheses and theories are built upon quite specific conditions such as industry type, economic condition, company history and various strategic purposes. It is almost impossible to find all those samples to satisfy them and it can't be manipulated in experimental settings. However, more advanced statistical techniques are very good on clean data without exogenous variables, but not good with real complex data. The chi-square test is applied in a way that samples are grouped into four with two criteria, whether they use exclusive sales territory protection or not, and whether they satisfy conditions of each hypothesis. So the proportion of sample franchisors which satisfy conditions and protect exclusive sales territory, does significantly exceed the proportion of samples that satisfy condition and do not protect. In fact, chi-square test is equivalent with the Poisson regression which allows more flexible application. As results, only three hypotheses are accepted. When attitude toward the risk is high so loyalty fee is determined according to sales performance, EST protection makes poor results as expected. And when franchisor protects EST in order to recruit franchisee easily, EST protection makes better results. Also, when EST protection is to improve the efficiency of franchise system as a whole, it shows better performances. High efficiency is achieved as EST prohibits the free riding of franchisee who exploits other's marketing efforts, and it encourages proper investments and distributes franchisee into multiple regions evenly. Other hypotheses are not supported in the results of significance testing. Exclusive sales territory should be protected from proper motives and administered for mutual benefits. Legal restrictions driven by the government agency like FTC could be misused and cause mis-understandings. So there need more careful monitoring on real practices and more rigorous studies by both academicians and practitioners.

• Tuberculosis and Respiratory Diseases
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• v.53 no.4
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• pp.401-408
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• 2002

Background : Tuberculin skin test is a method to examine M. tuberculosis infection and has been used all over the world. But various factors make it difficult to understand testing results. In 2000, the American Thoracic Society recommended that skin test results should be decided by considering risk factors of the tested. In Korea, high tuberculosis infection rate and BCG vaccination rate make it difficult to differentiate current infection, past infection, and no infection by the skin test. This study was attempted to examine a negative predictive value of the skin test to understand how the skin test acts on deciding administration of anti-tuberculosis drug. Methods : From Mar. 1 to Jul. 31 in 2001, the test was performed for patients hospitalized in Department of Internal Medicine, Hallym University College of Medicine, Chunchon, Korea by administering Tuberculin PPD RT23 2 TU (0.1 ml)to them that has been currently used in Korea based on Mantoux method. They were decided to be infected with tuberculosis bacilli by following diagnostic standard: 1) tuberculosis bacilli was cultured in sputum by microbiological diagnostic standard or Acid-fast bacilli was proven on a microscopic examination or 2) tuberculosis bacilli was not proven in the aforesaid microbiological test by clinical diagnostic standard, while there was opinion or symptom suitable for tuberculosis by radiographic or histological standard so the doctor decided to apply the tuberculosis treatment. Results : In this study, total 210 patients except 20 patients (8.7%) among 230 hospitalized patients were evaluated. Their average age was 60±16.8 years, and male-female rate was 1.28 : 1 (male: 118, female: 92). Number of patient, who was diagnosed and decided as tuberculosis, was 53(25.2%). Pulmonary tuberculosis was found in 45 patients (84.9%); 22 patients were decided to be positive in the Acid-fast bacilli smear test by microbiological examination (culture positive: 13, culture negative: 9), and 23 patients were decided to be tuberculosis patients by clinical diagnosis standard. Tuberculosis pleuritis was found in 8 patients (15.1%); 4 patients were diagnosed and decided by histological standard, and 4 patients were decided and treated by clinical standard. In differentiating patients into 'Negative' and 'Positive' by the skin test standard of the American Thoracic Society, negative predictive value 92.3%, positive predictive value 47.3%, sensitivity and specificity were 83%, 68.8%, respectively. Conclusion : In hospitalized respiratory patients, there was high negative predictive vlaue 92.3% by tuberculin skin test, therefore skin test would be a important factor for deciding administration of anti-tuberculosis drug on negative skin test patient.