T ERRITORIAL restrictions often play an important role in agreements between franchisors and franchisees. That is, franchisees may obtain exclusive rights to market the franchisor's brand(s) within a given geographical area; these rights thereby give the franchisees monopoly positions with respect to these brands. From a marketing strategy perspective, such restrictions frequently make sense, because the franchisor is more concerned with the ability of his franchisees to win competitive battles against other brands than he is with their ability to do battle among themselves, thereby cannibalizing one another's sales volume. In the early stages of brand development and growth, such restrictions can be viewed as a needed incentive to secure adequate market penetration vis-a-vis established brands within the same product category. From an antitrust perspective, however, such restrictions are highly questionable because they are a blatant means of prohibiting intrabrand competition. Thus, the issue of territorial restrictions provides an example of a classic confrontation between a marketing strategy that seeks to promote interbrand competition and antitrust programs that seek to promote competition among all brands, including those owned by specific franchisors. Since the Supreme Court's 1967 decision in the Schwinn case (which found territorial restrictions in distribution to be illegal on a per se basis),' many industries have been operating in limbo with regard to their distribution systems. For the most part, these industries have continued to use past practices pending final clarification of the issue of territorial restrictions.2 This article assesses the various factors surrounding territorial restrictions in the distribution of soft drinks. The soft drink industry has been isolated for analysis because segments of the industry have been particularly vocal in urging Congress to pass legislation designed to override the Schwinn decision. As a result of the assessment presented in this article, the authors take a position opposing the use of territorial restrictions in this industry. A similar analysis to the one presented here can, it is believed, be applied to other product classes in the food and beverage industries (e.g., bread and beer), where such restrictions are prevalent.