ADVENTIST GROUP

COURSE: LAW OF BUSINESS ASSOCIATIONS

COURSE CODE: GPR323

INSTRUCTOR: DR. VALENTINE ATAKA

TASK: Franchising

Date of submission: 3rd August, 2021

TABLE OF CONTENTS

INTRODUCTION .......................................................................................................................... 1

DEFINITION OF FRANCHISING ................................................................................................ 1

Competitive factors that influence the franchise business .......................................................... 2

HISTORY OF FRANCHISING ..................................................................................................... 3

TYPES OF FRANCHISES ............................................................................................................. 4

Business Format Franchise.......................................................................................................... 4

Manufacturing Franchise............................................................................................................. 5

Product Franchising..................................................................................................................... 5

Social Franchising ....................................................................................................................... 6

Job/Home Based Franchise ......................................................................................................... 6

FORMATION OF A FRANCHISE................................................................................................ 7

FEATURES OF A FRANCHISE ................................................................................................... 8

ADVANTAGES AND DISADVANTAGES FOR THE FRANCHISOR ................................. 9

Advantages .................................................................................................................................. 9

Disadvantages.............................................................................................................................. 9

ADVANTAGES AND DISADVANTAGES FOR THE FRANCHISEE ................................ 10

Advantages ................................................................................................................................ 10

Disadvantages............................................................................................................................ 11

RIGHTS AND DUTIES OF A FRANCHISOR AND A FRANCHISEE .................................... 11

The Franchisee .......................................................................................................................... 11

Rights of a Franchisee ........................................................................................................... 12

Duties of a Franchisee ........................................................................................................... 12

Franchisor .................................................................................................................................. 13

i
 Rights of a Franchisor............................................................................................................ 13

Duties of a Franchisor ........................................................................................................... 13

Liabilities of a franchisor and franchisee .................................................................................. 15

Instances where an agency relationship arises in a franchise relationship ................................ 16

Franchisor tax liabilities ............................................................................................................ 16

Franchisee tax liabilities ............................................................................................................ 17

TERMINATION OF A FRANCHISING AGREEMENT ........................................................... 17

DISPUTE RESOLUTION IN FRANCHISING ........................................................................... 20

CHALLENGES FACING FRANCHISING IN KENYA ............................................................ 21

LEGAL REFORMS REQUIRED IN FRANCHISING ............................................................... 23

CONCLUSION…………………………………………………………………………………..27

BIBLIOGRAPHY ............................................................................................................................ i

ii
INTRODUCTION
This paper entails an analysis of the franchising business model in the Kenyan legal framework.
The first part of the paper entails the definition, history and types of franchising. Secondly, the
paper encompasses the features of a franchising agreement, advantages and disadvantages that
accrue to both the franchisor and franchisee. Thirdly, the paper explores the formation,
dissolution, rights and duties conferred by a franchising agreement to the respective actors.
Lastly, the paper entails an analysis of the adequacy of the franchising legal and regulatory
framework while also providing possible recommendations.

DEFINITION OF FRANCHISING
There is no standard definition of franchising. However, various scholars have attempted to
describe it. The Blacks’ Law Dictionary1 defines franchising as a contractual selling or renting of
a business model around specific products or services at specific locations under specific
arrangements. It has also been defined as a relationship wherein a business organization, called a
franchiser, in exchange for a fee and with the franchisor's guidance, allows another business,
called the franchisee, to operate under the franchiser's trade name and offer the franchiser's
products or services.2 Benjamin Klein defines franchising as just one of the many ways a firm
can chose to distribute its product or services.3 A franchise is a type of business model in which a
firm (the franchiser) licenses independent businesses (franchisees) to operate under its brand
name.4 International Franchising Association, Glossary of Franchise Terms defines franchising
as an a arrangement whereby a franchisor grants franchisees the right to operate a business that:
(i) is identified with the franchisors trade mark (ii) is subject to the franchisor’s significant
control and or assistance (iii) in exchange for which, the franchisee pays a franchise fee to the
franchisor or its affiliate.5

1
Blacks ‘Law Dictionary, 2nd edn
2
'Franchise' (LII / Legal Information Institute, 2018) <https://www.law.cornell.edu/wex/franchise> accessed 31 July
2018.
3
Benjamin Klein, ‘The Economics of franchise Contracts’
4
Jeff Rustler, Chiaki Yamamoto and Khama Rogo, 'Franchising In Health' (2003)
<https://openknowledge.worldbank.org/bitstream/handle/10986/11298/265830VP0REPLA0th0YAMAMOTO0Jun0
2003.pdf?sequence=1> accessed 31 July 2018.
5
(IFA, A Glossary of Franchise Term) <https://www.franchise.org/what-r-commom-franchise-terms accessed on
31 July 2018.

1
The definitions depict that a franchising agreement is a contract. Therefore, the key elements of
contract have to be adhered to as discussed. The parties to a franchising contract are the
franchisor and the franchisee. The franchisor refers to the seller of a business model or a product
or a service to another business.6 The franchisee is the purchaser of another business’ model,
product or service.7 Most importantly, the franchising company and the franchisee are two
independent businesses yet interdependent on each other.

Are trade agreements fundamental to the franchise industry?

Affirmatively, the role played by such agreements in franchising cannot be ignored. These
include: reduction of trade barriers and regulatory burdens, provision of protection for
intellectual property as well as increasing transparency.

Competitive factors that influence the franchise business

• Regulation or government intervention- transparent policymaking and legal frameworks
encourage the establishment of franchise businesses.
• Skills and labour force- the industry must have the muscles to facilitate capacity building
for purposes of running the franchise
• Infrastructure- there is a direct proportionality between infrastructure and the success of
a franchise. To that effect, the infrastructure should be sufficient and capable of
effectuating reliable distribution of the product or service.
• Demand or consumer base- the market’s potential size and prospective customers must
also be taken into consideration while setting up a franchise.

The salient features of a franchise include: - a) immediate name recognition, b) tried and tested
product, c) standard design or décor, d) detailed techniques in running and promoting the
business, e) training of employees, and f) ongoing help by franchisor in promoting and
upgrading the products. It is noteworthy that the franchise relationship is largely in the nature of
a commercial relationship and should therefore not be construed to be that of an employer-
employee relationship.

6
Ibid 2
7
Ibid 1

2
There are currently a considerable number of international franchisors with established
operations in the Kenyan market, for example, KFC, Subway, Papa John’s and Dubai-based
Baby Shop or South African Mr. Price,8 Pizza Hut, Domino’s Pizza and Cold Stone Creamery.

HISTORY OF FRANCHISING
The concept of franchising arises from an entrepreneurial spirit and mostly comprises of small
and medium-sized concepts. ‘Franchise’ is derived from Anglo-French word ‘franc’ meaning
‘free’. A franchisee is obliged to pay an initial fee and ongoing royalties (a percentage of the
franchisee’s revenue) to warrant the right to trade under the franchisors trademark and business
systems. Most franchises began as small firms which later grew into giant multinational
businesses.9

The concept of franchising in the Middle Ages entailed the grant of a legal right by a sovereign
to a subject to perform a public service (such as charging tolls for the use of a railroad or ferry) at
a consideration. In Lasher v People10, the court stated that “a right which belongs to the
government when conferred upon the citizen is a franchise”. Following subsequent developments
in the commercial sector, franchising was later incorporated in commercial agreements in
relation to the distribution of products or services. There is no literary evidence as to when or
why the word “franchise” was first applied in commercial arrangements, yet the conceptual link
arising from it is a perfect fit.11

Subsequent to the incorporation, a number of franchising businesses mushroomed. For instance,

the 1850 Singer Sewing Machine Co. Isaac M. Singer initiated the modern use franchising model
whereby his intention was to widen his distribution network though he lacked the finances to
increase manufacturing. Consequently, Singer began to charge licensing fees to persons while
conferring upon them rights to sell his products in certain locations, thereby availing funds for
8
John Syekei, Philip Coulson and Babette Marzheuser- Wood: Franchising In Africa, Kenya p. 363-375
9
ITA, 2016 Top Markets Report: Franchising, A Market Assessment Tool For U.S. Exporters May 2016

10
Lasher v People [1899] supreme court of Illinois, 55 NE (Supreme Court of Illinois).

11
David Gurnick and Steve Vieux, ‘Case History of The American Business Franchise’ (1999).

3
manufacturing. His network of sales and service agents provided a prototype to modern
franchising; an arrangement which created the first ever commercially successful sewing
machine franchise.12 Other businesses such as General Motors, Henry Ford and Coca-cola
followed suit giving rise to the modern day market, manufacturing or product based franchise.

With the steady growth of franchise business, the necessity for legislation and consumer
protection heightened. Thence, the International Franchise Association was founded in 1960 as a
membership organization. IFA later adopted a Code of Ethics for the implementation of best
practices in the franchise relationships of its members. As at now, at least 33 countries have an
explicit legal framework regulating franchising, with the rest of the countries (Kenya inclusive)
using legislations that have either direct or indirect impact on franchising.

TYPES OF FRANCHISES
Franchising businesses may be categorized into various types based on their size, mode of
operation, services offered and the person/body managing the said franchise.

Though there may be numerous types of franchising business, the core features of a franchise
still remain. This means that the franchisee-franchisor agreement must still subsist. The various
types of franchising businesses available are as discussed below.

1. Business Format Franchise

Business format franchising is the simplest and vastly known type of franchise business. In
business format franchise, the franchisor that holds exclusive rights to the trademark of the
business enters into a legally binding agreement with a second party called the franchisee. The
franchisee is thus required to make payments to the franchisor regularly as a fee for using their
trademark.

Usually, there is total incorporation of the franchise by the franchisor13. This means that the
franchisor lays out the business format for the franchisee and then he/she is required to adopt the
mode of operation in the same way as the franchisor and the same procedures of conducting

12
Franchise Casebook Chapter 1 available at
http://apps.americanbar.org/abastore/products/books/abstracts/5620145_Franchise%20Casebook%20Chapter%201_
abs.pdf> accessed on 31st July 2018
13
Ralph Masseti, 'Types of Franchise | The Franchise Builders' (The Franchise Builders, 2018)
<https://www.thefranchisebuilders.com/2013/09/20/types-franchise-2/>accessed 30 July 2018.

4
business. The franchisee is obligated to take up the franchisor’s name, products and services,
procedures, manuals and standards as well as support facilities. All these arrangements are made
through a legally binding agreement.

Though the franchisor holds most rights, the franchisee operates the business independently. This
type of franchise majorly deals in fast foods and beverages, offering products and services to end
consumers. In Kenya, there are various examples of business format franchise, these include;
KFC, Pizza Hut, Domino’s Pizza, JAVA among others.

2. Manufacturing Franchise
This type of franchise operates the same way the manufacturer/supplier-dealer relationship
works. The manufacturer or the supplier agrees to give the dealer who is a franchisee product to
distribute to other sublets. The franchisor who is a manufacturer enters into a contractual
obligation with the franchisee and he/she is required to operate within the required guidelines by
the franchisor14.

Though there might be terms and conditions within which this type of franchise may be required
to operate, they are more independent than business format franchises. In some cases, this type of
franchise may be allowed to distribute products from other companies unlike business format
where the franchisee is required to exclusively sell products offered by the franchisor.

Sometimes, the franchisor may not only license the franchisee to distribute its products, but it
may also license manufacturing process, giving the franchisee manufacturing rights. This type
of franchise deals in products required in large number such as motor vehicle companies.

3. Product Franchising
Product franchising operates in the same way manufacturing franchising works. The
manufacturers who are deemed to be the franchisor here enter into a contractual agreement with
retailers who are deemed to be the franchisee’s to. The franchisor controls how the franchisee

14
'Different Types Of Franchising And How They Are Operated - Company Bug' (Company Bug, 2018)
<https://www.companybug.com/types-of-franchises/> accessed 30 July 2018.

5
distributes products.15 The product franchisee is also required to operate within the standards
provided by the franchisor.

Based on the terms of contractual agreement, the franchisee may only deal with the products
provided by the franchisor exclusively or deal with other products as well. An example of a
product franchise in Kenya is Yana Tyre Centers.

4. Social Franchising
This is the most recent form of franchising. It applies all the business techniques and methods of
franchising in delivery of basic products and services to those who live at the base economic
pyramid. People who live at the base of economic pyramid refer to those who live below 2.50
dollars a day. This type of franchise basically concentrate in providing essential and basic
commodities such as water, healthcare services, authentic drug supply, energy among others at a
cheaper price16.

Conventionally, these products or services are offered by non-governmental organizations, but

many a time the quality and quantity offered by these organizations vary. Social franchising thus
come in to cure the inefficiencies of these organizations by offering quality products and services
at a cheaper price, solving many social needs and at the same time generating profit to the
franchisee. Just like other types of franchises, the distinctive features of a franchise are
maintained.

In Kenya, there is no known social franchising business but renowned social franchise is the
Trussell Trust, which is based in UK and provides basic needs at fair prices.

5. Job/Home Based Franchise

This refers to a small scale franchise business where the franchisor allows a franchisee to use its
trademark at a fee. This type of franchise is majorly operated by one person and home based. In
certain circumstances, the franchisee buys a small vehicle17and uses that as a shop and moves

15
‘Franchising | Boundless Business' (Courses.lumenlearning.com, 2018)
<https://courses.lumenlearning.com/boundless-business/chapter/franchising/> accessed 31 July 2018.
16
'About Social Franchises | Social Franchising For Health' (Sf4health.org, 2018) <http://www.sf4health.org/about-
social-franchises> accessed 30 July 2018.
17
Ed Teixeira (Forbes.com, 2018) <https://www.forbes.com/sites/edteixeira/2018/06/18/a-home-based-franchise-
requires-the-right-type-of-franchisee/#23235e555fec> accessed 30 July 2018.

6
with it from neighborhood to neighborhood offering products and services to consumers. The
vehicle or the shop must be branded and it must comply with various operational laws provided
by the franchisor though the rules are not always as stringent in comparison to other types of
franchises.

Examples of services or products offered by this type of franchise may include; travel agencies,
coffee vans, cell phones and accessories among others.

FORMATION OF A FRANCHISE
In a world that is shaped by economics and finance, the survival of a business remains key. As a
result, business models are always structured in the best way possible to gear them towards
longevity and profit making.

Franchising is one of the emerging business models in Kenya and across the globe. In
franchising, franchisor (a person or a company) grants a franchisee the license to trade and
conduct a business under their name and brand. The franchisee operates under the trademark and
brand of the franchisor. The franchisee is bound to operate the business based on the rules,
protocol and policies already established by the franchisor18.

In Kenya there are no specific laws regarding franchising. Investors and stakeholders alike rely
on the existing commercial laws and the various existing business laws such as: Common law,
Law of Contract Act of 2002 (Revised 2012), Copyright Act of 2011, Competition Act of 2010,
Intellectual Property Laws ,Companies Act , Consumer Protection Act 2012 and the Constitution
of Kenya 201019. Agency laws may also apply in the franchising establishment.

Franchising is a contractual relationship and is usually contained in a Franchise Agreement. The

franchise agreement outlines the contractual obligation of the franchisor and franchisee. The
agreement satisfies the principles of contracting in that, both the franchisor and franchisee are
legal persons hence posses the contractual capacity. The elements of a contract have to be

18
'What Is A Franchise - Franchise Opportunities | International Franchise Association' (Franchise.org, 2018)
<https://www.franchise.org/what-is-a-franchise> accessed 2 August 2018
19
Catherine Malinda, Microsoft Word - Franchise Kenya Report (The US Commercial Service 2013)
<https://www.franchise.org/sites/default/files/ek-pdfs/html_page/Franchise-Kenya-Report_1.pdf> accessed 2
August 2018.

7
adhered to. The franchisor has to make an offer before the franchisee accepts or rejects it. The
franchisor has to give the franchisee an opportunity to peruse the proposal before accepting it20.

The agreement has to provide the time frame under which the franchise will subsist as well as the
stipulations regarding the start-up fees and royalties. It also codifies the duties and
responsibilities that are conferred to each of the parties21.

In the event of a dispute arising out of the agreement, parties are at liberty to seek the court’s
determination on the matter. However, most international franchisors opt for International
arbitration before recognized arbitration institutes such as International Chamber for Commerce
(ICC) and United Nations Commission on International Trade Law (UNCITRAL).

FEATURES OF FRANCHISE
• The franchise relationship is based on an agreement. The franchise agreement lays
down the terms and conditions of the relationship22.
• Regular income for the franchisor. The franchisee agrees to pay the franchisor royalties
as they specified in their agreement23.
• A pre-established market for the franchisee. Due to the franchisor's stronger financial
muscle the franchisee finds an already established market courtesy of the customers who
are loyal to the brand.
• The franchisee uses the trademark of the franchisor. Franchising means selling and
offering of similar products and services while maintaining the same type of shop decor.
Franchisor also provides assistance to the franchisee in organizing, merchandising and
management. The franchisor virtually sets up the business for the franchisee.

20
'What Is A Franchise - Franchise Opportunities | International Franchise Association' (Franchise.org, 2018)
<https://www.franchise.org/what-is-a-franchise> accessed 2 August 2018.
21
'What Is A Franchise - Franchise Opportunities | International Franchise Association' (Franchise.org, 2018)
<https://www.franchise.org/what-is-a-franchise> accessed 2 August 2018.
22
Siddharth Sai, 'Franchise: Meaning, Features, Merits And Limitations | Business' (Your Article Library)
<http://www.yourarticlelibrary.com/business/franchise/franchise-meaning-features-merits-and-limitations-
business/69434> accessed 2 August 2018.
23
Siddharth Sai, 'Franchise: Meaning, Features, Merits And Limitations | Business' (Your Article Library)
<http://www.yourarticlelibrary.com/business/franchise/franchise-meaning-features-merits-and-limitations-
business/69434> accessed 2 August 2018.

8
 • It is based on mutual agreement between the franchisor and franchisee. Being a
contractual relationship, consensus ad idem has to be express. The franchisor and
franchisee have a contract which lays down the nature of their relationship.
• The franchisee follows the policies of the franchisor. The franchisee runs and
maintains the business in accordance with the mission statement and corporate protocol
of the franchisor24.

ADVANTAGES AND DISADVANTAGES FOR THE FRANCHISOR

Advantages

Ease of Management. The franchisor is able to avoid being entangled in management problems
because the franchisee is bound by the protocol rolled out by the parent company25.

Regular income. The franchisor benefits through the royalty payments remitted by the
franchisee as per the terms of the franchise agreement.

Ease of market. New goods and services can be quickly and efficiently launched into the market
because of an already existing system and framework of management.

Market dominance. The franchisor is well poised to have a tighter grip on a particular market
due to the availability of many outlets with the same product and brand.

Improved brand value. The quality and value of the brand is improved because of the increased
scope of operations at remote locations.

Disadvantages

High cost. Buying a franchise is very costly to the franchisor due to the initial and on-going
costs like startup expenses, rent, employees and taxes.

24
Siddharth Sai, 'Franchise: Meaning, Features, Merits And Limitations | Business' (Your Article Library)
<http://www.yourarticlelibrary.com/business/franchise/franchise-meaning-features-merits-and-limitations-
business/69434> accessed 2 August 2018.
25
Mitchell Holt, 'What Are The Steps Of Forming A Franchise?' [2018] Chron <https://smallbusiness.chron.com/steps-forming-
franchise-197.html> accessed 2 August 2018.

9
There is an increased difficulty in maintaining trade secrets due to the multiplicity of
franchisees. This can lead to competitors getting an upper hand.

Risk of loss of reputation. The franchisor's once reputable image may be tarnished as a result of
failure of franchisee to maintain the quality and standards.

The franchisee may submit false information thereby creating a wrong market impression.
This would be detrimental in ascertaining business development and profits.

ADVANTAGES AND DISADVANTAGES FOR THE FRANCHISEE

Advantages

Starting a new business can be a tedious and has a lot of thought process, trading under an
established brand has quite a number of advantages.

• Investors are more willing to invest in a company operating under an established name
since it possesses lesser risk to their investment.
• Brand recognition-Operating under a known and trusted name will most likely translate
to more customers. It’s more likely that a lot of people will have trust in the business
hence ready customers for the franchisee26.
• There is a pre-existing relationship with other franchisees, suppliers, transporters and the
like thus easy to link up to a ready-made relationship and networks with others in the
same business27.
• Ease of acquiring financial support. Franchisees are well poised to get loans and
funding because financial institutions are aware of the fact that franchises have a low
failure risk.
• It is easier when recruiting staff to a reputable business name than in a startup company.
The staffs are the most essential to any business.

26
Mitchell Holt, 'What Are The Steps Of Forming A Franchise?' [2018] Chron
<https://smallbusiness.chron.com/steps-forming-franchise-197.html> accessed 2 August 2018.
27
Mitchell Holt, 'What Are The Steps Of Forming A Franchise?' [2018] Chron
<https://smallbusiness.chron.com/steps-forming-franchise-197.html> accessed 2 August 2018.

10
Disadvantages

A franchise due to its existing connection to many businesses will also have a number of
disadvantages born by the franchisee.

• Bureaucracy- Due to the many pre-existing protocols a franchisee is not able to react
fast enough to keep up with the emerging trends in the market thus inefficiency in service
delivery28.
• Limited control of the business. A franchisee relinquishes much of the control in the
business. This affects his ability to control his business as he would personally desire.
• There is a risk of damage to reputation. The franchise has many individual businesses
and an error or poor service delivery by any of the other businesses may damage the
reputation of the entire franchise29.
• The profits are shared. The franchisor expects a share of the profits made as well as
ongoing fees for support, equipment and training. This may prove strenuous to the
business as it reduces the business profit margin of the franchisee.
• Some franchises have long-term contracts. This may be disadvantageous to the
franchisee since he/she will be locked out from shifting businesses especially if he
realizes he is in the wrong franchise.
• Strict rules. This is disadvantageous because the franchisee own the business but they
are governed by the franchisor30.

RIGHTS AND DUTIES OF A FRANCHISOR AND A FRANCHISEE

THE FRANCHISEE

In a franchise, the franchisee is a party buying the rights to market or use the successful business
model of the franchisor31. The franchise agreement outlines the various rights and duties that
accrue to the franchisee as follows32:

28
Menekse Salar, Determining Pros And Cons Of Franchising By Using Swot Analysis (Elsevier 2014)
<https://www.sciencedirect.com/science/article/pii/S1877042814014025> accessed 2 August 2018.
29
Menekse Salar, Determining Pros And Cons Of Franchising By Using Swot Analysis (Elsevier 2014)
<https://www.sciencedirect.com/science/article/pii/S1877042814014025> accessed 2 August 2018.
30
Menekse Salar, Determining Pros And Cons Of Franchising By Using Swot Analysis (Elsevier 2014)
<https://www.sciencedirect.com/science/article/pii/S1877042814014025> accessed 2 August 2018.

11
Rights of a franchisee

Right to disclosure: The franchisee has the right to full disclosure as per the franchise
agreement from the franchisor. This entitles the franchisee to access any records which may be
relevant to the franchise. Consequently, this may influence the franchisee’s decision to sign a
franchisee agreement or remain in the franchise relationship.

Right to impose reasonable restraints: The franchisee has right to impose reasonable restraints
upon the franchisor’s ability to require changes within the franchise system as per the franchise
agreement (this relates to consent between the franchisee and the franchisor in decision making).
They also have the right to associate with other franchisees.

Right to terminate the franchising agreement: The franchisee also has the right to terminate
the franchise agreement if the grounds are reasonable and just. The franchisee also holds the
right not to face termination of the agreement, unless for just cause and not arbitrarily.

In light of the Consumer Protection Act, certain rights accrue to the franchisee who suffices as a
consumer within the meaning provided in the Act. These include right to quality goods and
services, right to disclosure and protection from unfair practices; which include false, misleading
or deceptive representations and unconcsionable conduct.33

Duties of a franchisee

In a franchise business, a franchisee is expected to carry out the following duties for the purpose
of smooth and effective operations34:

• Compliance with set systems and operations: A franchisee is expected to follow the
franchise’s system and operations as set by the franchisor as per the franchise agreement.
Failure to comply with the set systems may hinder the efficacy of the franchise business.

31
Stan Mack ‘The Difference in Franchisee and Franchisor’https://smallbusiness.chron.com/difference-franchisee-
franchisor-24303.html accessed 26 July 2018
32
Anna Dawson ‘The Franchisees Rights and Responsibilities'https://www.franchisedirect.ie/information/the-
franchisees-rights-and responsibilities accessed 26 July 2018
33
Consumer Protection Act No. 46 of 2012 (revised 2013) sec. 2(1)(d), 5,12-15
34
Tap Snap ‘The Franchisor and Franchisee Relationship: Key Roles and Responsibilities’
www.google.com/amp/blog.tapsnap.net/blog/the-franchisor-and-franchisee-relationship-key-roles-and-
responsibilities%3fhs_amp=true > accessed 26 July 2018

12
 • Marketing and upholding the brand’s image: The franchisee has the duty to market
the franchise in their assigned market areas as per the franchise agreement. They also
bear the responsibility of protecting and fostering the brand’s image as per the
franchisor’s policies when having their own marketing campaigns. The franchisee may
have to seek the franchisor’s approval when making certain decisions with regard to
marketing and promoting the brand.
• Duty to pay royalties and fee
• Duty to pay taxes-for instance, the non-resident tax shall be 20% of the gross amount
payable.35

FRANCHISOR

In a franchising business, it is very important to evaluate and understand the rights and duties
that will be undertaken as a franchisor.

Rights of a Franchisor

• Protection of their intellectual property rights- in this regard, the franchisee is duty
bound to act in a manner that preserves the franchisor’s intellectual property rights in
relation to patents, trademarks, copyrights or any other sui generis intellectual property
right envisaged in Article 40(5) and 11(2)(c) of the Constitution.36
• Right to receive consideration-The franchisor is entitled to receive the initial fees and
ongoing royalties’ payment from the franchisee(s). That is to say, the franchisor as the
owner of the patent (or trademark) to payment (in form of royalties and fee) for the use of
their intellectual property.

The Duties of a Franchisor

According to the Hohfedian scheme of jural relations, a right does not exist in a vacuum.
Attached to rights are corresponding duties that ought to be undertaken. Especial attention must

35
Income Tax Act, cap 470 Laws of Kenya, 3rd schedule s3
36
Constitution of Kenya, 2010

13
also be given to the duties of a franchisor in relation to the franchise establishment. They
include37:

• Duty of marketing. A franchisor may establish a marketing foundation focused on

promoting their brand. This will apply in market-based franchising38.

• Duty to manage the Brand Reputation and Growth of the franchise39: A franchisor is
responsible for maintaining the overall reputation, awareness and development of the
brand. They are expected to ensure that they legally protect their trademarks and establish
quality standards for their products and/or services. A franchisor is also expected to
provide effective and standardized operating procedures to guide and unify all franchise
businesses.
• Duty to identify the Market Area and Territory of Franchised Locations. A
franchisor is required to strategically identify areas that will be suitable for franchise
expansion. Influencing factors may include the ability to properly manage the
geographical market area among others.
• Duty to ensure that they supply the franchisee with the proprietary products of the
franchise. A franchisor has to identify and establish exclusive suppliers who will
produce and/or distribute their "propriety" products to the franchisees. For example a
secret ingredient/secret recipe that must be used, say in a restaurant or fast food franchise.
This is important to ensure that the franchisee provides exactly what is in accordance
with the brand.
• Relative duty to capacity building and technical assistance. A franchisor has the duty
to provide adequate training on a continual basis to franchisees. This duty extends also to
the employees of the franchisee who will be working in the franchise establishment. By
providing training, the franchisor is able to make sure that the franchisee runs the
franchisee exactly as they would have it run.

37
Charles N. Intern cola ‘Franchisor Responsibilities’www.franchiselawsolutins.com/franchsing/franchisor-
responsibilities.html accessed 26 July 2018

38
ibid
Tap Snap ‘The Franchisor and Franchisee Relationship: Key Roles and
39

Responsibilities’www.google.com/amp/blog.tapsnap.net/blog/the-franchisor-and-franchisee-relationship-key-roles-
and-responsibilities%3fhs_amp=true accessed 26 July 2018

14
 • Duty to provide On-going Support. Franchisors are required to provide on-going
support to franchisees. This includes listening and responding to queries, offering
technical and day-to-day operating advice and providing the necessary tools and
resources for the franchise business.
• Duty to oversee business expansion and innovation: It is the duty of the franchisor to
oversee the expansion of the franchise business and be innovative as well. This can be
done through introducing new products or even updating or upgrading them and also by
monitoring competitors and industry trends which will enable them to stay ahead of the
competition.

Liabilities of a franchisor and franchisee

Whether the franchisor can be held liable for the actions of the franchisee in running the business
depends on the degree of control retained by the franchisor over the operation of the business 40.
This was demonstrated in the civil appeal case of Equity Bank Limited v Naftal Anyumba & 2
others41. The issue in this in this case was whether the appellant could be held vicariously liable
for the acts and or omissions of the third respondent, its servants, agents or employees. The facts
were; a vehicle belonging to the third respondent had been involved in an accident causing injury
to the first respondent. The vehicle in question was part of a franchise establishment between the
second respondent and the third respondent, whereby the second respondent was the franchisor
while the third respondent was the franchisee. An issue in the case was to determine who was to
be held liable for the first respondent’s injuries. The court determined that both the second
respondent, the Kenya Bus Service Management, and the third respondent, Kimathi Gerrald,
were liable to pay the first respondent for his injuries and not the Equity Bank Limited, who was
the appellant.

Where there are strict set of policies that control the day to day operations of the franchisee,
whereby, these set of policies are put by the franchisor, it will imply that the franchisor has a
high degree of control and hence may have liability for the damages that result from the
franchisee’s implementation of the policies. In cases where a high degree of control exists, the

40
Jason Cheung ‘Liability of a Franchisor for Acts of a Franchisee’ www.legalmatch.com/law-
library/article/liability-of-franchisor-for-acts-of-franchisee.html accessed 26 July 2018
41
Equity Bank Limited v Naftal Anyumba Onyango & 2 Others [2014] eKLR

15
franchisee may be looked upon as an agent of the franchisor thus creating liability on the
franchisor.

Liability for actions by the Franchisee’s employees: A franchisor is liable for the actions of
the franchisee’s employees if the franchisee is an agent of the franchisor. This only applies where
the employee’s actions are within the scope of employment. The claims brought against a
franchisor are decided on the common law principles of agency. It is for the claimant to show
that there was an agency relationship created by the franchise agreement. The franchise
agreement should clearly state that there is no agency relationship. Moreover, the franchisee
should be required to display in its business premises and on all official correspondence a clear
statement that they are an independent business operated under license from the franchisor42.

Instances where an agency relationship arises in a franchise relationship

An agency relationship is not automatically created by a franchise agreement.

Evidence of an agency relationship includes:

i. Shared profits instead of royalty agreements(fixed percentage to be paid to the franchisor)

ii. Building and maintain facility in the manner specified by the franchisor
iii. Strict rules of operation
iv. Ability of the franchisor to cancel the agreement if rules are violated
v. Regular inspection of facility and operation by the franchisor
vi. Prices fixed by the franchisor
vii. Any actions that deprive the franchisee of independence in business operations
viii. Courts have also included control over the franchisee’s physical work by the franchisor

Franchisor tax liabilities

Local franchisors, resident in Kenya are liable to pay corporate tax at the rate of 5 per cent43. A
rate of 37.5 per cent is applicable to the taxable profits of non-resident foreign companies44. The

42
John Syekei, Philip Coulson and Babette Marzheuser-Wood, The Franchise Law Review (1stedn,Law Business
Research 2014)370
43
Income Tax Act Cap 470 3rd Schedule Section(2)(a)

16
 obligation to pay tax will fall on the franchisee operating the business in Kenya. This is done
before remittance of the royalties to an international franchisor.

Franchisee tax liabilities

It is the obligation of the franchisee to pay royalties to the franchisor 45. In Kenya, royalty
payments to a resident are subject to a 5 per cent withholding tax whereas the rate of 20 per cent
applies if royalties are paid to a non-resident. The franchisee is also has an obligation to pay
VAT in Kenya as per the Value Added Tax Act 46. Where the franchisor does not have a place of
business in Kenya and the franchisee is a registered person (invariably a Kenya-based business),
the franchise will be treated as an imported taxable service and VAT on it will be due from the
franchisee.

TERMINATION OF A FRANCHISING AGREEMENT

There is no law regulating franchising in Kenya. The terms and contents of the franchise are
contained in a Franchise Agreement, which has already been discussed above. Being a contract
between the franchisor and the franchisee, franchising in Kenya is majorly governed by the Law
of Contract Act. Lisus and Ship have given three arguments that can grant parties to a franchise
the right to terminate the contract:

i.if it is expressly provided for in the agreement; or

ii.if by implication it seems the parties intended to terminate it; or
iii.If one party fundamentally breaches the agreement.

Drawing from the Law of Contracts Act already stated above and from other jurisdictions, below
are some of the ways that a franchise agreement can be terminated.

1. Breach of contract

This mostly applies to a breach by the franchisee. It has been seen to give the franchisor
extensive powers as against the franchisee to terminate the agreement. To cure this effect, jurists

44
Ibid section(2)(b)
45
John Syekei, Philip Coulson and Babette Marzheuser-Wood, The Franchise Law Review (1stedn,Law Business
Research 2014)369

46
No. 35 of 2013

17
have argued that this breach must be a fundamental breach. The question of fundamental breach
is one of mixed fact and law, and must be looked at in relation to the terms of the contract, and
the surrounding circumstances.

Some of the reasons that may amount to a fundamental breach, (and which may lead a franchisor
to repudiate the contract) include: failure to pay the required fees and royalties, failure to achieve
the agreed minimum output, non-delivery of sales reports, not setting up the business as required
by the franchisor among many others.

A franchisee can also rely on fundamental breach to terminate the agreement. It is important,
however, to note that these cases are rarely successful. It is always the case that the franchisor
drafts the agreement. When signing, the franchisee normally has no power of bargain to change
the terms. Because of this reason, franchisors rarely create provisions that will expose them to

Liability.

2. Misrepresentation

Misrepresentation can either be innocent, negligent or fraudulent. The misrepresentation must be

of an existing fact and not opinion for one to rely on it to terminate the contract. The
misrepresentation must have been the main inducement by the franchisor to the franchisee to
enter the contract, that is, without it; the franchisee would not be convinced to ratify the
agreement.

The UK courts held in Peart Stevenson Associates Ltd v Brian Hollandeven if the terms of the
Franchise Agreement exclude liability on the basis of misrepresentation, the exclusion clause
cannot be upheld. In that case, a franchisor misrepresented to the franchisee the expected annual
turnover from the business, and that there were between 35-40 franchisees over the UK, and only
two had failed. The two, he said, had only failed because of their own shortcomings. All these
statements later turned out to be false. The franchisee was thus held to be entitled to repudiate the
agreement.

3. Sale

This is a way of ending the franchise that may prove desirable for both parties without raising
any conflicts, especially where the Franchise Agreement allows for sale. It mostly involves a
18
franchisee who wishes to bow out of the arrangement due to their various reasons, including loss
of interest. Due to the doctrine of privity of contracts, the vendor franchisee cannot transfer their
rights to the new franchisee. The new franchisee has to sign a new agreement with the franchisor.
This effectively ends the existing relationship between the franchisor and the franchisee.

4. Derogation from grant

This doctrine was first pronounced by Lord Denning MR in Molton Builders v City of
Westminster. He stated that the doctrine holds that, “… [I]f a man agrees to confer a particular
benefit on another he must not do anything which substantially deprives the other of the
enjoyment of that benefit: because that would be to take away with one hand what is given with
the other.”

In Jeffrey Stone and Lynn Ashwell (t/a Tyre 20) v Fleet Mobile Tyres, the issue was whether a
franchisee could terminate the agreement if the franchise substantially deprived him of profits.
The Franchisor’s business involved changing tyres for customers at their request. The franchisor
controlled the internet section (eTyres) through which orders were made and distributed to
franchisees. The franchisor later sought to rebrand the franchise as eTyres. The judge found that
this change was likely to inhibit earning of profits by the franchisees.

The franchisee can rely on this to terminate the contract.

5. Expiry of time

Most Franchise Agreements will provide for duration of time for which the agreement will run.
When this period is done, the contract expires. The renewal is also provided for in the
franchising contract, the franchisor may choose to renew the agreement upon the expiration of
that duration.

6. Reasonable notice
This requirement applies where there is intention to terminate the agreement without cause, upon
reasonable notice. It is a remedy that is available, albeit narrowly. The court can imply the
intention of parties to go this route where the agreement appears not to specify duration or where
there is automatic renewal, this renewal having no definite end. This principle was pronounced in
19
the case of Ontario Inc. v Boa Franc. In this case, the Ontario Court of Appeal stated,
“…distributorship agreements are the type of contract that involve mutual trust, and for that
reason the parties each have a right to terminate the contract unilaterally on notice, in the event
there is a breakdown of that trust…"

DISPUTE RESOLUTION IN FRANCHISING

Most franchising contracts will have a dispute resolution clause providing that any disputes
among the parties shall be referred to arbitration or mediation. However, the franchisor and
franchisee in a franchise agreement may opt for litigation on matters that call for the attention of
the courts.47

In most instances Kenyan courts will recognize and uphold foreign choice of law or
jurisdiction48In Skoda Export Limited v Tamoil East Africa Limited49 the issue was whether the
court had jurisdiction to entertain before it a matter concerning a Czech company that had
contracted with a Ugandan company. The plaintiff was a company owned by the Czech
government while defendant was a Ugandan company but had its place of business in Kenya.
The two entered into a contract for the extension of the Kenya-Uganda oil pipeline but the
defendant company breached the agreement by asking for invitations to tender from other
companies. The judge had to determine whether a company owned by a foreign sovereign state
and a company incorporated in another foreign country can resolve part of their dispute in a
manner contrary to their agreement. The court held that it was a stranger to the arbitration
agreement and since they had mutually agreed to refer any dispute arising between them to
international arbitration, none of them had any recourse to any municipal court.

In CMC Holdings Limited and CMC Motors Group Limited v Jaguar Land Rover Exports
Limited50 the issue was still whether the court had competent jurisdiction to listen to the
franchising dispute so as to grant the injunctive remedy that the applicant sought.CMC holdings
had entered into a franchising agreement with Land Rover Exports Limited in relation to the

47
'Dentons - Home' (Dentons.com, 2018) <http://dentons.com/> accessed 1 August 2018.
48
ibid 1
49
Skoda Export Limited v Tamoil East Africa Limited [2007] HIGH COURT, 645 eKLR (HIGH COURT).
50
CMC Holdings Limited and CMC Motors Group Limited v Jaguar Land Rover Exports Limited [2013] court of
appeal, 66 (court of appeal).

20
Land Rover franchise. The defendant interfered with the distributorship agreement. The judge
referred the parties to arbitration as provided for in their franchise agreement.

Courts will not interfere with franchise agreement s unless the nature of the dispute is so as to
warrant judicial intervention.

CHALLENGES FACING FRANCHISING IN KENYA

While the franchising industry has over the years recorded rapid growth within the Kenyan
market51, it is quite evident that a number of elements prevent the industry from reaching its full
potential. Kenya would reap more benefits from the franchise industry if only these challenges
were addressed once and for all.

Key impediments to franchising include lack of a specific legislation dealing with franchising.
The rights and obligations of franchisors, franchisees and end consumers of franchise products
and service have not been outlined in one single legal document. It is quite easy for a party with
a higher bargaining power to exploit and violate the rights of the other parties if clearly our laws
do not provide franchise-specific laws of engagement. There being no specific law, there is also
limited judicial support the judiciary can offer in protecting rights of persons involved in
franchising.52 This limited support from the judiciary makes it easier for the either the franchisor
or the franchisee to infringe on the other’s right by downplaying the agreement. For example,
due to the greater bargaining power of the franchisor, they may decide to exploit the franchisee
through the many loopholes in the contract. The infringed party, that is the franchisee, will find
it a bit difficult to get redress from the courts as the laws that would give statutory provisions for
such infringements are limited.53

51
'Dentons - Home' (Dentons.com, 2018) <http://dentons.com/> accessed 1 August 2018.
52
'Kenya - Franchising | Export.Gov' (Export.gov, 2017) <https://www.export.gov/article?id=Kenya-Franchising>
accessed 1 August 2018.
53
(Bing.com, 2007)
<http://www.bing.com/cr?IG=0076837C310E4A24BC13BBD819095E98&CID=2D7D95E5CD856C7933FD99DBCC78
6D3B&rd=1&h=RxVc835JXc1iwn9UIYYFQTHJ3jYN0QgPCm-
57_rx1XE&v=1&r=http%3a%2f%2ferepository.uonbi.ac.ke%2fbitstream%2fhandle%2f11295%2f7822%2fMboloi%2
52c%2520Martin%2520M_The%2520challenges%2520facing%2520the%2520pharmaceutical%2520industry%2520
franchising%2520in%2520kenya%2520the%2520case%2520of%2520franchisee.pdf%3fsequence%3d3%26isAllowe
d%3dy&p=DevEx.LB.1,5064.1> accessed 20 July 2018.

21
Lack of resources that meet the quality standards of the licensing franchisor is another setback to
the franchising industry.54 Franchisees may often have to outsource resources to meet the
franchise’s quality standards, thereby incurring extra importation costs and undermining local
resources. The franchisee may find themselves straining in maintaining their businesses as the
extra costs affect their profit at the end of the day A good example is the KFC franchise in Kenya
that insists on importing potatoes that meet ‘international quality standards’ from Egypt rather
than procuring ‘poor quality’ potatoes grown in Kenya. Some franchisors also require that the
staff that deals with their products have a specific level of training. This affects mostly the
franchisees that provide services. Another example is the CFW (Child and Family Wellness)
clinics whereby they require that the staff be trained in the CFW Know-how guidelines, which
may prove expensive to the CFW franchisees55.

There is limited knowledge about franchising and a consequent lack of understanding of the
concept of franchising. The existing knowledge of franchising activities in Kenya is inadequate.
The government, private entrepreneurs and donors are not sufficiently aware of the positive
impact that franchising can have on economic development and poverty reduction.56

The possibility of the franchisor contracting competing franchisees is a significant challenge in

the industry57. This is because franchisors and franchisees are two independent firms, and
therefore since the franchisee is not under the franchisor as a subsidiary or a branch, the
franchisor may grant two franchisee firms, a contract to do business within the same
geographical position. This will of course, bring upon the competition between two franchisees
hence affecting their businesses. The impact of this is flooding of the market with the same kind
of products and unfair competition practices between the rival franchisees. Competition is also

54
'Kenya - Franchising | Export.Gov' (Export.gov, 2017) <https://www.export.gov/article?id=Kenya-Franchising>
accessed 1 August 2018.
55
Dr. Rozenn Perringot’s article Franchising in the health care sector; the case of CFW in Kenya published in
February 2016. p. 36 par. 1 <www.cfwshops.org>reportOnCFWinkenya> accessed on 31st July 2018
56
(Afdb.org, 2018) <https://www.afdb.org/fileadmin/uploads/afdb/Documents/Generic-
Documents/003_FRANCHISING.pdf> accessed 1 August 2018.
57
'THE CHALLENGES FACING THE PHARMACEUTICAL INDUSTRY FRANCHISING IN KENYA: THE CASE OF FRANCHISEE
| School Of Business' (Business.uonbi.ac.ke, 2018) <http://business.uonbi.ac.ke/node/1502> accessed 28 July
2018.

22
faced between franchises. There is more than one franchise in the country and one of the
challenges that franchisees face is that they compete with other businesses for the same market 58.

Another challenge that mostly affects the franchisor more than the franchisee is the counterfeit
products introduced into the market by the unscrupulous traders. The counterfeits end up
degrading the standards of the original products that are produced by the franchisor. Since the
franchisor is trading in their trademark, the value of the trademark is very essential for the
franchisor’s business. Therefore, the counterfeit products will definitely impact negatively on the
franchisor’s ‘good name’, hence negatively affecting the franchisor’s business. This will also
face the franchisee in that the fake products will also derail the franchisee’s sales59.

A tax rate of 37.5 per cent is applicable to the taxable profits of non-resident foreign companies
and a rate of 30 percent to resident companies. Since most of the franchisors are non-resident, it
becomes difficult for the franchise industry to reach its full potential in the country. This is
because the nonresident companies or franchisors find it difficult to enter the Kenyan market due
to these high taxation rates, that is, if we compared to the lower rates in other countries.
Therefore, most of these franchisors will opt to invest in these other countries like Uganda which
charges 15 (fifteen) percent on the royalties remitted in order to save on costs. hence killing the
franchise business in Kenya60.

LEGAL REFORMS REQUIRED IN FRANCHISING

In light of the extensive expansion of the franchise industry in Kenya, it is time legislators came
up with franchise-specific laws. Currently there is neither a law nor policy specific to
franchising. Investors and consumers largely rely on existing commercial and business laws such
as common law, law of contract act, copyright act, competition act, intellectual property act and
consumer protection act.61 The effect of such a system is that the players might as well
completely disregard existing applicable laws with the excuse of the unique nature of franchising
and consequent lack of specific laws. Moreover, searching for laws applicable to franchising

58
ibid 6 p. 28 par 4.
59
ibid 8
60
'Dentons - Home' (Dentons.com, 2018) <http://dentons.com/> accessed 1 August 2018.
61
'Kenya - Franchising | Export.Gov' (Export.gov, 2018) <https://www.export.gov/article?id=Kenya-Franchising>
accessed 1 August 2018.

23
from a wide pool of laws may be tedious and a discouraging factor to investors. In addition, there
are loopholes with the applicable laws and not everything franchising is covered by the existing
business laws. A single law encompassing everything to do with franchising would go a long
way to amend all these loose ends.

Kenya should adopt a restriction of entry policy. Currently Kenya has an open door policy
meaning anyone and any company is free to enter into the Kenyan market as a franchise. The
effect of this is that there is an influx of foreign companies coming in to compete with local
industries as well as amongst themselves. An example is the flooding of food franchises like
KFC, Debonairs, and Subways within the same business category. Kenya should reconsider the
unrestricted entry and borrow the Indian policy on requirements for entry. India has a
requirement for joint venture partnerships with local firms for a franchise to carry out business
activities in the country62. This ensures development of local industries while reaping the
benefits of economy development franchising has to offer.

Protection of the franchisee as a consumer. According to the South African consumer

protection Act section 5(6) (b-e) a franchisee is a consumer who is protected from exploitation.
Also, according to section 7, a franchise agreement must be in writing and signed by or on behalf
of the franchise and must include any prescribed information, or address any prescribed
categories of information.

There is also the power accorded to the franchisees to cancel a franchise agreement without cost
or penalty within 10 business days after signing such agreement, by giving written notice to the
franchisor. This is a way of transferring power to the franchisees.

Also according to the regulation3, Consumer Protection Act Regulations, the franchisor must
provide the franchisee with a disclosure document dated and signed by an authorized officer of
the franchisor containing among other things number of individual franchised outlets and written
projections regarding potential sales, income, gross or net profits of the franchised business and
particulars of the assumptions on which these representations are made63. There is also need to

62
'India - Franchising | Export.Gov' (Export.gov, 2017) <https://www.export.gov/article?id=India-Franchising>
accessed 1 August 2018.
63
danie strachan, andre visser and adams adams, 'Franchising In South Africa: Overview'
(Uk.practicallaw.thomsonreuters.com, 2018) <https://uk.practicallaw.thomsonreuters.com/8-632-

24
attach a statement prepared by an accounting officer or auditor’s statement confirming that the
business is a going concern.64

All these provisions aim to promote transparency and accountability by ensuring that neither the
franchisor nor the franchisee holds too much unnecessary power over the other. It would thus be
crucial to the franchising sector if our consumer protection act would be amended so as to
incorporate some of the above provisions.

There is also need to come up with a franchise registry as is the case with South Africa that will
deal with the registration of franchised outlets.

CONCLUSSION

Conclusively, franchising is indeed a business model that facilitates expansion of markets.

Furthermore, the franchisee runs his or her business separately from the franchisor thereby
creating employment opportunities. Therefore, both the franchisee and the franchisor contribute
positively towards the development of the Kenyan economy. To this effect, a comprehensive
legal and regulatory framework is needed in governing the franchise establishment for the
achievement of even more exquisite results in Kenya.

7998?transitionType=Default&contextData= (sc.Default) &firstPage=true&comp=pluk&bhcp=1> accessed 1 August

2018
64
Ibid 12.

25
BIBLIOGRAPHY

1. <https://www.afdb.org/fileadmin/uploads/afdb/Documents/Generic-
Documents/003_FRANCHISING.pdf> accessed 1 August
201826isAllowed%3dy&p=DevEx.LB.1,5064.1> accessed 20 July 2018

2. 1193430 Ontario Inc. v. Boa-Franc (1983) Ltee., [20051 O.J. No. 4671, 260 D.L.R. (4th)
659 (C.A.)
3. 'About Social Franchises | Social Franchising For Health' (Sf4health.org, 2018)
<http://www.sf4health.org/about-social-franchises>accessed 30 July 2018
4. Consumer Protection Act
5. CMC Holdings Limited and CMC Motors Group Limited v Jaguar Land Rover Exports
Limited [2013] court of appeal, 66 (court of appeal)

6. David Bigmore, 'Grounds For Terminating A Franchise Agreement'

(Whichfranchise.com, 2018)
<https://www.whichfranchise.com/feature_template.cfm?FeatureID=291>accessed 31
July 2018
7. 'Dentons - Home' (Dentons.com, 2018) <http://dentons.com/> accessed 1 August 2018
8. 'Different Types Of Franchising And How They Are Operated - Company Bug'
(Company Bug, 2018) <https://www.companybug.com/types-of-franchises/>accessed 30
July 2018
9. 'Franchise' (LII /Legal Information Institute, 2018)
<https://www.law.cornell.edu/wex/franchise> accessed 31 July 2018
10. 'Franchising | Boundless Business' (Courses.lumenlearning.com, 2018)
<https://courses.lumenlearning.com/boundless-business/chapter/franchising/>accessed 31
July 2018

11. Gurnick D and Vieux S,‘Case History Of The American Business Franchise’ (1999)
12. Holt M, 'What Are The Steps Of Forming A Franchise?' [2018] Chron
<https://smallbusiness.chron.com/steps-forming-franchise-197.html> accessed 2 August
2018

i
13. 'India - Franchising | Export.Gov' (Export.gov, 2017)
<https://www.export.gov/article?id=India-Franchising> accessed 1 August 2018
14. 'Is Kenya Being Shortchanged In The Franchising Sector? | Nairobi Business Monthly'
(Nairobibusinessmonthly.com, 2016) <http://www.nairobibusinessmonthly.com/is-kenya-
being-shortchanged-in-the-franchising-sector/> accessed 1 August 2018

15. Jeffrey Stone and Lynn Ashwell (t/a Tyre 20) v Fleet Mobile Tyres [2006] EWCA Civ
1209
16. 'Kenya - Franchising | Export.Gov' (Export.gov, 2017)
<https://www.export.gov/article?id=Kenya-Franchising> accessed 1 August 2018
17. Lasher v People [1899] Supreme Court of Illinois, 55 NE (Supreme Court of Illinois)
18. Law of Contract Act, Cap 23 Laws of Kenya
19. Malinda C, Microsoft Word - Franchise Kenya Report (The US Commercial Service
2013) <https://www.franchise.org/sites/default/files/ek-pdfs/html_page/Franchise-Kenya-
Report_1.pdf> accessed 2 August 2018
20. Masseti R, 'Types of Franchise | The Franchise Builders' (The Franchise Builders, 2018)
<https://www.thefranchisebuilders.com/2013/09/20/types-franchise-2/>accessed 30 July
2018

21. Molton Builders Ltd v. City of Westminster London Borough Council [1975] 30 P. and
C.R
22. Peart Stevenson Associates Ltd v Brian Holland [2008] EWHC 1868 (QB)
23. Rustler J, Yamamoto C, Rogo K, 'Franchising in Health' (2003)
<https://openknowledge.worldbank.org/bitstream/handle/10986/11298/265830VP0REPL
A0th0YAMAMOTO0Jun02003.pdf?sequence=1> accessed 31 July 2018
24. Sai S, 'Franchise: Meaning, Features, Merits And Limitations | Business' (Your Article
Library) <http://www.yourarticlelibrary.com/business/franchise/franchise-meaning-
features-merits-and-limitations-business/69434> accessed 2 August 2018
25. Salar M, Determining Pros And Cons Of Franchising By Using Swot Analysis (Elsevier
2014) <https://www.sciencedirect.com/science/article/pii/S1877042814014025>
accessed 2 August 2018

ii
26. Skoda Export Limited v Tamoil East Africa Limited [2007] HIGH COURT, 645 eKLR
(HIGH COURT)
27. Srachan D. Vissera A, 'Franchising In South Africa: Overview'
(Uk.practicallaw.thomsonreuters.com, 2018)
<https://uk.practicallaw.thomsonreuters.com/8-632-
7998?transitionType=Default&contextData=(sc.Default)&firstPage=true&comp=pluk&b
hcp=1> accessed 1 August 2018

28. Syekei J, Coulson P and Marzheuser B, ‘Wood: Franchising In Africa, Kenya’

29. Teixeira E (Forbes.com, 2018) <https://www.forbes.com/sites/edteixeira/2018/06/18/a-
home-based-franchise-requires-the-right-type-of-franchisee/#23235e555fec>accessed 30
July 2018
30. Teixeira E (Forbes.com, 2018) <https://www.forbes.com/sites/edteixeira/2018/06/18/a-
home-based-franchise-requires-the-right-type-of-franchisee/#23235e555fec>accessed 30
July 2018
31. The Constitution of Kenya, 2010
32. 'What Is A Franchise - Franchise Opportunities | International Franchise Association'
(Franchise.org, 2018) <https://www.franchise.org/what-is-a-franchise> accessed 2
August 2018

iii