In this article, we take a look at 6 important aspects that provide a strong foundation for successful partnerships
Partnerships build companies, products, and brands. But in Kenya, bad partnership agreements destroy businesses much faster than competition ever will. Many founders rush into business relationships based on trust, friendship, and excitement, only to discover that the real danger was not the market it was the fine print they ignored. Before signing any partnership deal, every Kenyan founder should understand the clauses that protect their ownership, their profits, and their future.
“It means you’re on your toes and you’re aware of the problem,” says Andrew Buck, business lawyer at Avvocato Law in Winnipeg.”
Equity and Ownership
The first and most misunderstood is the Equity and Ownership clause. Equity is not based on friendship, time spent chatting about ideas, or the fact that “we started together.” It must reflect measurable contribution: skills, capital, intellectual property, networks, or sweat equity. To avoid future conflict, your agreement should clearly state the percentage ownership each founder gets, include a vesting schedule (e.g., equity earned over three years), and specify what happens if a founder exits early. Simply put, no one should walk away with a business they barely built.
Roles and Decision-Making
The Roles and Decision-Making clause is equally critical. Many startups collapse because everyone wants to lead, sign deals, or make financial decisions. A partnership agreement must define who serves as CEO or Managing Partner, who signs binding legal or financial documents, and which decisions require unanimous consent or simple majority. When authority is unclear, boardroom conflict kills momentum and business growth faster than competition ever could.
Capital Contribution
Another common dispute arises from the Capital Contribution clause. In Kenya, one founder often claims they brought money, while another insists they contributed ideas or technical input. To prevent disagreement, the partnership agreement must specify the value of cash, assets, or skills contributed by each founder and outline penalties if a promised contribution is not fulfilled. Remember: if it is not documented, it does not count.
End of Partnership
Partnerships also end. People relocate, lose interest, get poached, or pursue new dreams. Without an Exit and Buy-Back clause, a company may be forced to keep an inactive founder as a permanent shareholder. This clause should outline when a founder can leave, how their shares will be valued, and who has the first right to buy them — ideally the company, then the remaining founders. Otherwise, you may find yourself working for your former partner forever.
Intellectual Property Ownership
Then comes the Intellectual Property (IP) Ownership clause. If your business creates software, brand assets, content, algorithms, or designs, your partnership must clearly state who owns them and whether departing founders may continue using what was created. Without a proper IP clause, a founder could walk away with proprietary systems or launch a competing business using your product.
Dispute Resolution
Finally, every smart partnership agreement must include a Dispute Resolution clause. Kenyan litigation is costly, slow, and often emotionally draining. It is better to require mediation first, arbitration second, and litigation only as a last resort. This ensures business continuity even when founders disagree.
A word for the founders
Final Word for Founders. Entering a partnership without a proper agreement is like getting married without discussing the terms of the divorce. A handshake is not protection a written agreement is. Talk to us eddah@ekcadvocates.com and save your business before you build it
The best law firm in NYC! They explain everything to you and they are very generous and helpful. The lawyers are excellent and very respectful. I highly recommend the Avvocato law firm.