Trademark Licence Agreement (Kenya)

A Trademark Licence Agreement in Kenya governs the relationship between the parties by fixing what each must do.

Section 39 of the Trade Marks Act Cap. 506 governs registered user arrangements in Kenya. Under Section 39, a person other than the registered proprietor may be registered as a registered user of the trademark — this is KIPI's mechanism for recording authorised use of a registered mark. The application to register the licensee as a registered user must be made jointly by the proprietor and the proposed registered user and filed with KIPI using the prescribed form, accompanied by the Trademark Licence Agreement as evidence of the permitted use arrangement. Registration as a registered user protects the licensee's rights against third parties and prevents a challenge to the trademark's validity on the grounds of uncontrolled use (which could result in revocation of the mark for absence of genuine use attributable to the proprietor).

The Industrial Property Act No. 3 of 2001, which established KIPI and the modern intellectual property administration framework in Kenya, supplements the Trade Marks Act Cap. 506 on matters of IP licensing and technology transfer. Where a Trademark Licence Agreement forms part of a broader technology transfer arrangement — including know-how, patent licences, or trade secrets — the agreement should also reflect the requirements of the Industrial Property Act.

Royalties payable under a Kenya Trademark Licence Agreement are subject to taxation under the Income Tax Act Cap. 470 administered by the Kenya Revenue Authority (KRA). Royalty payments to a non-resident licensor attract withholding tax at the rate of 20% under Section 35 of the Income Tax Act (subject to reduction under an applicable double taxation treaty — Kenya has DTTs with Germany, France, India, the United Kingdom, the United Arab Emirates, and others). Royalty income received by a resident licensor is subject to income tax as business income.

Kenya's franchise sector has grown significantly, with international and regional franchise brands expanding through Trademark Licence Agreements and franchise agreements that bundle the trademark licence with operational systems, training, and ongoing support. The Federation of Kenya Employers (FKE) and the Kenya Franchise Association (KFA) promote awareness of IP licensing standard practices among Kenyan businesses. A well-drafted Trademark Licence Agreement supports the growth of franchise networks, distribution arrangements, and brand licensing models that are increasingly important in Kenya's consumer, hospitality, and retail sectors.

The legal framework governing the Trademark Licence Agreement (Kenya) in Kenya draws on several key statutes and regulatory bodies. Under the Companies Act No. 17 of 2015, the Registrar of Companies at the Office of the Attorney General maintains the register of Kenyan companies. Section 3 of the Law of Contract Act (Cap. 23) governs contractual obligations. The Competition Authority of Kenya (CAK) enforces the Competition Act No. 12 of 2010. The Kenya Revenue Authority (KRA) administers corporate tax under the Income Tax Act (Cap. 470). The High Court of Kenya has unlimited original jurisdiction under Article 165 of the Constitution of Kenya 2010. Parties executing a Trademark Licence Agreement (Kenya) in Kenya should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Trade Marks Act Cap. 506 sets the foundational requirements.

A Trademark Licence Agreement in Kenya is required whenever the owner of a registered trademark authorises another person or company to use that trademark in commerce, confirming that the use is controlled, the quality of goods or services bearing the mark is maintained, and the licensor's intellectual property rights are preserved and capable of enforcement.

A Trademark Licence Agreement is needed when an international brand — a food and beverage company, hotel chain, retail brand, or professional services firm — grants a Kenyan company or entrepreneur the right to operate a franchise or distribution business using the international brand's trademark in Kenya. Without a formal Trademark Licence Agreement, the use of the trademark is unlicensed and potentially infringing, and the licensor's trademark registration may be vulnerable to cancellation.

The Agreement is required when a Kenyan trademark owner — a manufacturer, producer, or service provider — licenses its brand to a distributor, reseller, or manufacturer in another county or region of Kenya, allowing the licensee to market and sell products under the licensor's brand name. This is particularly common in Kenya's food processing, cosmetics, and garment manufacturing sectors.

A Trademark Licence Agreement is needed when a university, research institution, or inventor that has developed a branded product or service wishes to commercialise the brand by licensing it to a private company, while retaining ownership of the trademark and the associated intellectual property.

The Agreement is required when a business undergoes a restructuring or group reorganisation, and trademark rights previously held by a parent company are to be licensed to a subsidiary operating company in Kenya. The intra-group licence confirms that the subsidiary has the legal right to use the group's trademarks in Kenya and that the use is recorded with KIPI under Section 39 of the Trade Marks Act Cap. 506.

A Trademark Licence Agreement is also needed when an entrepreneur develops a successful brand in Kenya and wishes to expand through sub-licensing — appointing regional operators in Nairobi, Mombasa, Kisumu, and other cities — while maintaining quality control over how the brand is presented in the market. The Agreement sets quality standards, approved uses, and reporting obligations that protect the brand's value.

A Kenya Trademark Licence Agreement under the Trade Marks Act Cap. 506 and the Law of Contract Act Cap. 23 must include the following essential provisions to be legally sound, commercially workable, and suitable for recording with KIPI under Section 39 of the Trade Marks Act.

Parties and Trademark Details: Full legal name and address of the licensor (the registered trademark proprietor); the licensor's KRA PIN and BRS Registration Number; full legal name and address of the licensee; the trademark registration number(s) as recorded in KIPI's register; the description of the mark (word mark, device, combined); and the registered class(es) under the Nice Classification and the specific goods or services covered.

Grant of Licence: A precise statement of the licence granted — whether exclusive (only the licensee may use the mark, to the exclusion even of the licensor in the licensed territory), sole (only the licensor and licensee may use the mark), or non-exclusive (the licensor may grant further licences to additional parties). The territory of the licence — Kenya, a specific county, the East African Community, or worldwide — must be defined, as trademark rights are territorial under the Trade Marks Act Cap. 506.

Permitted Use and Quality Control: The specific goods or services in connection with which the licensee may use the trademark; the approved form(s) in which the mark may be used — specific font, colour, size, and positioning guidelines; and the licensor's right to inspect, audit, and approve the licensee's use of the mark. Quality control provisions are essential — an uncontrolled licence (where the licensor exercises no quality supervision) may be grounds for challenging the trademark's validity before KIPI or the High Court of Kenya on the basis that the mark has become deceptive or misleading in the hands of an unsupervised licensee.

Royalties and Payment: The royalty rate — typically expressed as a percentage of the licensee's net sales of goods or services bearing the trademark; the royalty calculation basis and accounting period; the due date for royalty payments; the currency of payment (KES or agreed foreign currency); the licensee's obligation to provide audited royalty statements; and the licensor's right to audit the licensee's books and records to verify royalty calculations. Minimum royalty guarantees may be included to confirm a baseline income for the licensor regardless of the licensee's actual sales.

Withholding Tax Obligations: Where the licensor is a non-resident, the Agreement must address the licensee's obligation to withhold tax at 20% (or treaty rate) under Section 35 of the Income Tax Act Cap. 470 on royalty payments, and to remit the withholding tax to KRA. The licensee's obligation to provide the licensor with a withholding tax certificate (P18 form from KRA iTax) must be specified.

Term and Renewal: The commencement date, the initial licence term (typically 2–5 years), the renewal procedure, the conditions for renewal (satisfactory performance, royalty compliance, no material breach), and any lock-in period during which neither party may terminate without cause.

Sub-licensing: Whether the licensee may sub-license the trademark to third parties; if so, under what conditions, and whether each sub-licence requires the licensor's prior written approval. Sub-licensing without authority is a breach of the Licence Agreement and potentially a trademark infringement.

Registration with KIPI: The parties' obligations to jointly apply to register the licensee as a registered user under Section 39 of the Trade Marks Act Cap. 506 within a specified period of execution; the allocation of KIPI filing fees between the parties; and the licensor's obligation to maintain the trademark registration in good standing (paying renewal fees and using the mark to avoid non-use cancellation under Section 36 of the Trade Marks Act).

Termination and Post-Termination: The grounds for termination — material breach, insolvency under the Insolvency Act No. 18 of 2015, change of control of the licensee, or cessation of use. Post-termination obligations: immediate cessation of all use of the trademark; return or destruction of branded materials, packaging, and signage; removal of the trademark from the licensee's website, social media, and business documents. The forms-legal.com Kenya Trademark Licence Agreement template incorporates all elements required under the Trade Marks Act Cap. 506 and KIPI's registered user recording requirements.