Vodafone is embroiled in a high-profile legal battle. 61 current and former franchisees have filed a lawsuit claiming damages exceeding 120 million pounds. The claimants, many of whom had longstanding relationships with the telecom giant, allege breaches of contract and unfair treatment that have led to significant financial and personal hardships.
The franchisees argue that since July 2020, Vodafone’s arbitrary business decisions have caused severe disruptions, pushing some to the brink of financial collapse. The legal petition, now under court scrutiny, accuses Vodafone of breaching its duty of good faith, slashing commissions without warning, mismanaging financial relief, and imposing excessive penalties.
Originally marketed as a collaborative venture, Vodafone’s franchise model was presented as a “true partnership,” promising unlimited earning potential and mutual success. However, claimants say the reality fell far short of these assurances.
Andrew Kerr, a former franchisee from Bangor, Northern Ireland, detailed how his once-promising business venture became a nightmare. In 2019, he entered the franchise agreement after securing loans based on a Vodafone-approved business plan. By March 2023, his business had collapsed, leaving him saddled with debt and serious health issues.
Kerr recalled, “It began as a dream but became a nightmare. Vodafone’s decisions left me financially ruined and without my stores, plunging me into crippling debt.” He described how a sudden commission cut with just 14 days’ notice wiped out nearly a third of his revenue. The resulting financial strain led to severe stress and health complications, culminating in his hospitalization in late 2022 after collapsing at home.
Similarly, Donna Watton, another franchisee, recounted her struggles. A former Vodafone store manager from Lincolnshire, Watton transitioned to the franchise model only to experience a 40% drop in revenue overnight. She described Vodafone’s actions as “arbitrary and irrational,” transforming her profitable store into a failing business and leaving her nearly 100,000 pounds in debt.
The franchisees’ legal claims revolve around several specific accusations:
Sudden Commission Cuts
Franchisees allege that Vodafone abruptly reduced commissions, providing little notice or explanation. These cuts rendered many stores unprofitable. Internal comments from Vodafone executives reportedly acknowledged the damaging impact of such decisions.
Mismanagement of Pandemic Relief
During the Covid-19 pandemic, the UK government provided business rates relief to support struggling businesses. The claimants argue that Vodafone factored this relief into its cost calculations, effectively diminishing the financial aid available to franchisees while benefiting the company’s bottom line.
Excessive Fines for Minor Infractions
Vodafone allegedly imposed severe penalties for minor mistakes, with fines reportedly reaching up to 30% of a store’s commission. In one instance, a franchisee was fined 21,000 pounds for a minor 7 pound error.
Disputes Over Rent Relief
Franchisees claim Vodafone failed to pass on rent-free periods during challenging economic times. Instead, they were required to pay full rent, exacerbating their financial struggles.
Exclusion from Mobile Sales Commissions
In 2021, Vodafone ceased paying commissions on mobile device sales, focusing instead on airtime plans. This decision reportedly boosted Vodafone’s margins on handset sales but further strained franchisees.
Store Repossessions
Some franchisees allege their stores were repossessed without clear justification as Vodafone pursued a “different direction.”
The financial fallout from Vodafone’s alleged actions has also taken a severe emotional toll. For many franchisees, these issues extended beyond business struggles, deeply affecting their personal lives.
Watton shared how the loss of her store disrupted her family life, especially as she cared for her infant daughter. She described the experience as a “nightmare” that strained her relationship and shattered her entrepreneurial aspirations.
Vodafone has denied the allegations and is preparing a robust defence. In response to the claims, a spokesperson stated:
“We are aware of the allegations and take them very seriously. While we acknowledge challenges faced by some franchisees, we strongly refute claims that Vodafone has unjustly enriched itself at the expense of small businesses. Our franchise model is a commercial relationship, and while we provide extensive cost-free support, commercial success is not guaranteed. The majority of our franchise partners are profitable, and there remains strong demand to open new stores.”
For the claimants, the lawsuit represents a final effort to hold Vodafone accountable after years of frustration. The group sought legal advice in late 2022 before deciding to sue the telecoms company at London’s High Court today. The claimants hope the case will compel Vodafone to reflect on its actions and adhere to the principles of trust and integrity it promotes.
