• Journal of Distribution Research
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• v.15 no.5
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• pp.217-235
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• 2010

In franchise industry, territorial restraint is a system that imposes exclusive right to franchisers in a certain business area. To the franchisers, this system guarantees monopoly profits in a local market and exclusive rights during the contract periods. In such a way, franchisee generates a big revenue at once on the basis of franchiser's initial investment such as interior cost and franchise fee, it must have supervised franchiser's moral hazard for the territorial restraint agreement. Rather than territorial restraint can be a system to give exclusive right to franchiser's so that they neglect their own sales and too much rely on headquarter's brand and marketing activities without their own efforts. This paper assesses the implication of territorial restraint by examining the effect on brand extension, degree of contract termination. Drawing on research in transaction cost agreement and opportunism, the authors suggest that franchisee is highly likely to launch similar brand which is not effected on previous contract when territorial restraint is set out in the contract system. Moreover, the authors find that the degree of contract termination will be high in the existence of territorial restraint due to the franchisee's opportunism. The results imply that territorial restraint induces franchisee's opportunistic strategy more aggressively so that the possibility of brand extension or new brand launching will be increased. At the same time, franchisee is aggressively seeking for the reason for contract termination due to the pursuit of its profit maximization. Based on some empirical findings, this paper concludes with policy implications and some necessary fields of future studies desirable.

• Proceedings of KOSOMES biannual meeting
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• 2003.11a
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• pp.35-44
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• 2003

Considering possible legal and policy problems with regard to the Cheju Strait, a central issue is whether the Cheju Strait should be treated as Korean territorial sea or an international strait The claim that the strait is territorial sea has been based on the use of a straight baseline method of dermarcation With the use of straight baseline, Korea claims that the breadth of the Cheju Strait is only 20.7 miles at its narrowest point and therefore the strait becomes the territorial sea of Korea. The consideration cf marine pollution has weighed heavily in claiming the Cheju Strait as territorial sea. Pollution resulting from the accidents cf tankers caused by fire, collision, or stranding in the Cheju Strait and the Korea Strait would be enormous, affecting the entire coastal waters of the south coasts cf Korea's mainland and Japan's Tsushima Islands areas. Catastrophic pollution in the Cheju Strait could also come from the accidents cf large-size oil tankers passing through the Korea Strait from the Malacca Strait Although the Korean government considers the geographic and socioeconomic conditions sufficient to justify Korea's claim of the Cheju Strait as territorial sea, it believes that declaring it so would raise considerable legal conflicts with maritime states. In view of the legal difficulties and the need to meet the problems arising from the growing vessel traffic in the Cheju Strait, the sea lanes and traffic separation schemes may be considered an alternative to the internationalization of the Cheju Strait Even if the Korean government dose not do so, the regime of innocent passage should be applied to vessels passing through the Strait and should not suspend innocent passage through the Strait. Therefore, the Korean government needs to have a more legal, pragmatic, functional and managerial approach than a purely sovereign and selfish approach to the solution of legal matters of the Cheju strait For this purpose, the UN Convention on the Law of the Sea would serve as a guide and also self-restraint and cooperative approaches would become norms governing the resolution of the law of the sea issues in the Cheju Strait.