The franchising market in Kenya is steadily growing and evolving from single-unit owners to multi-unit operators employing professional staff of field and unit managers, while they focus on strategy and growth. There are several franchise companies in Kenya that cover almost every industry, from well-known national brands to smaller and local opportunities but is most common in the Hospitality industry. Other common franchising industries in Kenya include the clothing industry and the fuel industry. Franchise businesses seem to exhibit the pattern of establishing franchising outlets within major shopping malls around the country.

Some of the popular food franchises in Kenya include Wimpy, Debonairs, Pizza Inn, and Steers. Franchising is also now beginning to take hold because investment in services that meet basic needs is lucrative. For example, a UK-based chicken Cottage Ltd recently signed a franchise agreement with Express Kitchen Ltd following a similar deal with international pizza brand Papa John’s. Hass petroleum currently operates more than 150 petrol stations across 10 countries in Africa and aims to leverage this retail footprint to grow its brand

Businesses have to pay some royalties to the franchisor and a certain portion of revenue annually. When a party has a proven business model, an interested party basically says they would like to use that business model, in a nutshell.

Requirements and Legal Framework

There are no specific franchise laws in Kenya; therefore, investors must rely heavily on existing commercial laws and various applicable business laws, which include:

• Common-Law;
• Law of Contract Act 0f 2002(revised 2012) ;
• Copyright Act of 2011 The Trade Marks Act (Cap. 506) makes specific provisions in section 31 for the “recognition of license user agreements” and most franchisors have exploited this legal avenue. The registered user (licensee) would be the franchisee while the franchisor is actually the legal owner or proprietor of the trademark;
• Competition Act of 2010;
• Intellectual Property Law; and
• Consumer Protection Act 2012

The primary hurdle involves formalizing remittance procedures for fees and royalties to the franchisor or licensor. Legal forms of the business are governed by the Companies Act of 2015. Immigration laws and work permits governing foreign investors also apply. Additionally, there are licensing requirements that are peculiar to particular businesses. It would therefore be wise for the franchisor to protect his intellectual property by registering the patent, trademark or trade name, or any other intellectual property of the franchise.

There are significant guarantees against expropriation of private property under the Constitution of Kenya, which require due process along with full and adequate compensation in the event of expropriation. The 1995 abolition of the Exchange Control Act and the guarantees against expropriation except with due process and compensation have encouraged many local and foreign investors as well as franchisors to invest in the Kenyan market.