Open 5 shops without managing them? Franchising is your solution

Here's why franchising is your solution:

🏢 1. Franchising: a game-changing growth lever

Franchising enables rapid expansion with little equity capital. 99.13% of restaurants in Kenya are single-location, founder-managed establishments. Yet chains like Pizza Hut and CJ's have exploded, while local restaurants of 40 years stagnate at a single address . Kenyan SMEs are massively underusing this growth lever .

Concrete example: Afrofit, a Kenyan gym chain, is opening its fourth club in 2024 and launching franchising to accelerate growth across East Africa .

🤝 2. Two models: classic or social franchising

Classic franchising is a commercial partnership: you sell the right to use your brand, methods, and systems in exchange for royalties. Social franchising adds a social mission to the model. Farm Shop, with its network of 74 agricultural shops, demonstrates that franchising can improve food security and smallholder farmer incomes .

Concrete example: MWINGI, a Kenyan company, operates 150 franchised shops, all run by local women. They supply 2,500 independent retailers in rural areas .

⚖️ 3. The legal framework: what you need to know

Kenya has no specific franchise law. Agreements are governed by general contract law, the Competition Act, the Consumer Protection Act, and intellectual property law .

Key takeaways:

• A franchise agreement may be considered a restrictive trade practice and must be declared to the Competition Authority .
• Royalties paid to a non-resident franchisee are subject to 20% withholding tax .
• 16% VAT applies, even if the franchisor has no establishment in Kenya .

Tip: A successful franchise rests on a clear concept, rigorous franchisee selection, and a trusting relationship. Franchisees seek a partner who supports them, not just a contract .

Do it now: Document your concept. Record your processes, suppliers, and revenue. Then contact the Kenya Franchise Association (KEFRA) or a specialised law firm to structure your first agreement.

Sources: Strathmore University – Franchising as SME Development Strategy; Choice Hotels – Africa Expansion Plan 2026; Afrofit Franchise Launch 2024; CR Advocates – Franchise Law in Kenya 2024; Farm Shop Social Franchise Study 2024; MWINGI Network Expansion 2024.

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