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Global franchises challenged by knock-off brands in Ethiopia

Global franchises challenged by knock-off brands in Ethiopia

Just in time for the opening its belated first Kentucky Fried Chicken franchise in the Addis Ababa and following the opening of two Pizza Hut franchises, Yum! Brands of South Africa, the company behind the famous fast food chain of restaurants, is facing unexpected competition from knock-off restaurants set to open in the Bole area next month, among which is the Kentaki Krunchy Fried Chekin (KKFC).

The new restaurant in Bole, next to Washington Hotel, is using an almost exact name of the brand name eatery with typos, its logo, branding and phrases – “finger lickin” good – to promote the new establishment.

“I am aware of the planned opening of the unauthorized restaurant with the clear images of KFC,” said Elias Ketema, the local partner of Yum! in Ethiopia and owner of Gusto Italian restaurants, who is set to open the first KFC inside the Berhane Adere building. “I have communicated with Yum! South Africa and we hope to solve this amicably”.   

However, the co-owner of KKFC denied knowing anything about a new KFC opening and argued the two are different eateries.

“We got our license to operate from Yemen from Sheikh Hamid Al-Ahmar, (the owner of KFC Yemen) and paid all the financial dues to open the restaurant,” she said refusing to state her name. “People should come and taste our products and judge us and not confuse us with other establishments. We are legal and licensed by the government (of Ethiopia)”.

Hamid, known as a rich mogul with some aspirations for politics, owns a slew of business interests in the war-torn nation of Yemen, including Sabafon mobile network, a satellite channel and the KFC brand in Yemen.

While he owns the right to sell fried chicken under the KFC brand in Yemen, he is not authorized to sell the franchise brand in Ethiopia, nor is he allowed to start a competing, similar brand that goes against the business interest of KFC, legal commentator explained to The Reporter.

However, the co-owner of KKFC, along with her Yemeni partner is adamant they got the license from Hamid and they are a legal entity.  

This is not the first time such experiences have occurred in Ethiopia, tarnishing the country’s hard fought reputation as business friendly and one worthy of foreign investments.

In 2013, a visiting tourist to the capital made a visit to the local IN-N-OUT near the Millennium Hall at the run down street of underage youth and fast food. Disappointed in its service, she made a complaint to the company once she made her way to New York. Unknown to her and the company, the local operation was not linked to the famous restaurant and prompted the later to make a complaint to the Ethiopian Intellectual Property Office (EIPO) and the Ministry of Trade.

Since then, the local IN-N-OUT, with a lax intellectual law has grown to open much bigger restaurants, while the case still pends before the EIPO and the ministry.  

There are now a knock-off McDonald’s restaurant in Adigrat, a Starbucks in Mekelle, Burger king in the dusty part of the Stadium area and a Subway sandwich restaurant in Bole, near the Office of the Eritrean delegation to the African Union, that closed its shop this week.

When The Reporter visited the so-called Subway last week, the restaurant was said to run out of sandwiches and instead offered local Ethiopian delicacies of stews.

There was an aborted attempt to bring Starbucks franchises to Ethiopia in 2005, but that did not stop the local aspiring business owners to mimic America’s biggest café in the capital.

While the negotiation was not successful, its owner Tseday Asrat, the partner of Eilas, now the local partner of KFC, decided to open her Kaldi’s Cafe, with the striking similar images of the Seattle based company.

Then there was, the local InterContinental Hotel, located in Kasanchis, whose attempt to emulate the real brand name failed, and the owners decided to operate as the brand name hotel locally, inside two buildings.

Registered in Atlanta, the company faced lawsuits, including at the Supreme Court, which allowed a number of complaints to move forward, but all pending while the hotel remains standing in the capital.

The local American Embassy has led a quiet protest against InterContinental Addis, refusing to do business with it and advocating a stricter intellectual property laws within Ethiopia so such experience will not be repeated.

Near the Bole International Airport, there was a motel-like hotel named Mariot, competing with name recognition with the brand name Mariott brand in Ethiopia, which by then was eyeing to open a local hotel in Addis Ababa and Hawassa. That hotel has now closed shop.

“Upon the vivid fact by reiterating that our institution is, no doubt, our country’s center of legislation enforcement as well as cooperation in the IPR field,” the new Acting Director of the Ethiopian Intellectual Property Office, Ermias Yemanebirhan boosted recently. “Evidently, we all came to rely upon the veracity that the Office works within its mandate and in close partnership with the World Intellectual Property Office (WIPO) and with other member states and multiple partners worldwide to promote the use IP for techno goy transfer, advancing the creative industry and enhancing fair-trade practices with the aim of entrenching our national development”.

Meanwhile, Tamiru Taye, Communication director of the Office, has a different take on the matter. As far as he is concerned, the EIPO does not have the mandate to enforce intellectual property right regarding trademarks and logos unless the trademark user or another party whose rights have been violated brings up the issue voluntarily to the office.

“For that matter, there is no legal requirement for every trademark to be registered by EIPO before joining the market. It is rather the companies wishing to have their intellectual properties protected that will voluntarily register their brand name and trademark with the Office,” Tamiru explained to The Reporter via a phone interview.

Underscoring that the Office’s mandate is more about protecting IPRs with the intention of benefiting the right holders, Tamiru admits that he is unaware of the recent case between KFC and KKFC.