Vodafone has settled a long-running legal claim filed by 62 of its former franchisees who alleged the mobile phone group “unjustly enriched” itself at their expense by up to £85m. The agreement, reached without admission of liability, concludes a 19-month high court dispute that had yet to go to trial.
Franchisees’ allegations and impact
The small-business owners – some of whom said they had suffered suicidal thoughts because of the pressure exerted by the telecoms group – launched the high court claim in 2024 after running up large personal debts they said had been caused by their deals with the company. The former shopkeepers claimed in court papers that they had suffered large losses after Vodafone unilaterally slashed the sales commissions franchisees were paid for running the mobile phone group’s high street stores. MPs subsequently compared the case with the Post Office Horizon IT scandal.
Settlement details
In a joint statement on Thursday, both sides said they had finally concluded the dispute. They said: “Vodafone Ltd UK and the group of former franchise partners are pleased to confirm that the commercial dispute concerning the interpretation of franchise agreements has been settled. The settlement is entered into as a compromise of the dispute, without any admission of liability, and should not be construed as such. The agreement ends the legal proceedings between the parties. The terms of the settlement will remain confidential, and the parties will not be commenting further.”
Background of the dispute
The plight of the 62 franchisees – who represent almost 40% of a total 167 Vodafone franchisees – was first revealed by the Guardian in December 2024. Court papers alleged that Vodafone acted in “bad faith” by unilaterally cutting fees to its franchisees; imposing swingeing fines on them totalling thousands of pounds for seemingly minor administrative errors; and then cajoling them into taking out loans and government grants to keep their businesses afloat. The filings also referenced a July 2020 voicemail message left to one franchisee, in which a Vodafone executive appeared to acknowledge the harm the commission changes had “unleashed”, before conceding franchisees had been “shanked” – or stabbed – by the company.
Vodafone’s response and investigations
Vodafone, valued at about £25bn on the London Stock Exchange, always insisted it “strongly refutes” that it had “unjustly enriched” itself and consistently categorised the claim as a “commercial dispute”. However, it did apologise to the small-business owners who once ran the group’s UK high street shops. “We are sorry to any franchisee that has had a difficult experience,” it said in December 2024. Last September, the company started offering financial settlements to a selection of former franchisees who were outside the group of legal claimants as it launched its fourth investigation into its troubled franchising division. In 2024, Vodafone told the Guardian: “We have made a number of changes to our formal processes and governance and made a series of goodwill payments to numerous franchisees. For example, we made the decision to reimburse £4.9m including VAT [£4m] across our franchise estate (this included retrospective reimbursement of fines and clawbacks).” The company has added that comparisons to the Post Office scandal are “wholly inappropriate”.
