The Franchise Boom in Kenya and the Regulatory Framework
Kenya is experiencing a spectacular franchise boom, attracting both local and international brands. Discover how this dynamic market can boost your expansion in East Africa.
What if we take a closer look at what is happening elsewhere in franchising across Africa to inspire our projects? Kenya is experiencing remarkable growth in the franchise sector, fueled by a rapidly expanding middle class, increasing urbanization, and digital penetration. Local and international brands, particularly in fast food, retail, and services, are multiplying, reflecting strong consumer demand.
Concrete examples of franchise appeal in Kenya
The Kenyan market has proven to be particularly favorable for franchise development in the hospitality and food service sectors. Well-known international brands have entered the market and are thriving, including:
- Fast food and cafés: Giants such as KFC, Domino's Pizza, Burger King, and Subway have established a strong presence, often setting up in major shopping malls in key cities like Nairobi, Mombasa, and Kisumu. They capitalize on Kenyans’ evolving consumption habits, especially the trend of dining out. Local brands like Java House have also expanded their footprint through the franchise model.
- Hospitality: The hotel industry is another growth driver. Global chains such as Marriott International, Radisson, and Kempinski have opened franchised or licensed establishments, catering to growing demand for quality services from both tourists and business travelers.
- Other sectors: Success is not limited to food and hospitality. Other industries, such as furniture (Ashley Furniture), real estate (Re-Max Real Estate), and cleaning or wellness services, are also embracing franchise models, demonstrating the diversity and potential of the Kenyan market.
ABC EXPAT: a strategic partner for franchise development in East Africa
In a market as dynamic as Kenya, building a strong local presence is essential. ABC EXPAT supports foreign companies in their expansion into Africa, offering comprehensive operational expertise: entity creation, legal and tax compliance, HR management, administrative coordination, and operational structuring. With its cross-sector experience and proven franchise model, ABC EXPAT delivers a rigorous, ethical, and locally adapted approach. For franchisors looking to secure their growth in East Africa, ABC EXPAT is a reliable and effective growth partner.
Summary of franchise regulations in Kenya
- Contract law: The Law of Contract Act governs franchise agreements, which are primarily contracts. The terms of these agreements must comply with the basic principles of contract law.
- Competition law: The Competition Act is a key regulation. It prohibits anti-competitive agreements, and franchise contracts must be structured to comply with this law.
- Intellectual property:At the heart of franchising is intellectual property, which is protected by several laws:
- Trademarks Act: For the protection of trademarks. Registration with the Kenya Industrial Property Institute (KIPI) is crucial.
- Copyright Act: For operations manuals and other works protected by copyright.
- Taxation:
- Withholding Tax: Applies to royalties paid by the franchisee to the franchisor. The rate is 5% for a resident franchisor and 20% for a non-resident.
- VAT: A 16% Value Added Tax applies, particularly on imported franchise services.
- Consumer protection: The Consumer Protection Act can provide franchisees with safeguards against unfair business practices by franchisors.
Companies are advised to seek local legal counsel to navigate this regulatory landscape.