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Vodafone faces a multi-million-pound legal claim by 62 of its former franchisees –

Members of the claim speak out about the financial, mental and physical impacts of the retail giant’s “irrational” business decisions

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A group of 62 current and former Vodafone franchisees across the UK have filed an almost £90 million legal claim against Vodafone, the telecoms giant and one of the UK’s largest retail franchise businesses.  

            

The affected Vodafone franchisees, many of whom started their careers with Vodafone and have been loyal ambassadors for the brand over the years, claim that Vodafone – which is not a member of the British Franchise Association – has breached its duty of good faith and the terms of the Franchise Agreement. They allege that Vodafone did this by imposing irrational and arbitrary business decisions on them from July 2020.

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Franchisees allege Vodafone’s actions have caused them and their families severe financial and personal distress including reaching the edge of bankruptcy, potential repossession of their homes, and serious mental health issues.

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Beyond the issues before the courts, the experience of these franchisees raises wider concerns about whether Vodafone’s governance processes, internal culture and treatment of franchise partners meet the standards expected of a major UK plc. The franchisees also believe their case exposes a serious gap in the regulation of franchising in the UK that leaves small business owners dangerously unprotected.  

 

Franchisees trusted Vodafone. They say they got broken promises, emotional distress, and businesses left in ruins.

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The claim alleges that commission payments and remuneration to the affected franchisees were cut drastically and with little or no explanation; that Vodafone benefitted from government business rate reliefs that were intended for the franchisees when they were facing financial distress during Covid; and that Vodafone often failed to pass on rent free periods in its underlease terms to affected franchisees and charged them full rent, again when many of their businesses were already being squeezed. They say this is in stark contrast to how the franchise model was originally promoted as a ‘true partnership’ and to how Vodafone portrays the franchise and the company publicly.  

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A number of the franchisees say their stores were taken away from them with little notice and no other explanation than that Vodafone was taking their stores in “a different direction”.

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All of this culminated in a number of the affected franchisees independently seeking legal advice as a last resort in October 2022, before coming together to form a group, and now launching this claim.

 

The claim, which is being served on Vodafone, and is now part of court proceedings that are likely to be contested, alleges that:

• The franchisees were sold the programme with the promise of uncapped earning potential, but in reality, were often given commission structures that meant their stores were loss making.

• A senior Vodafone figure admitted that a commission cut imposed by the company in July 2020 – with less than 14 days’ notice – had in effect ‘shanked’ a number offranchisees. When asked for documentary evidence to show the rationale for the July 2020 commission cut, Vodafone refused or failed to explain the process it underwent at the time or provide the documents requested.

• During the Covid-19 pandemic, the UK government introduced financial support for small businesses, including Business Rates Relief, to help small bricks-and-mortar shops carry on trading in financially precarious times. From around 2022, Vodafone gathered information on the relief the franchisees were receiving and then factored this into its cost modelling when calculating the commission paid to the franchisee. This had the effect of depressing or eliminating the benefit those franchisees should have received from government assistance for Vodafone’s own direct benefit.

• Vodafone excessively fined and imposed clawbacks on its franchisees. Senior staff were incentivised to fine franchisees, and the franchisees infer that the purpose for such incentives was not purely to ensure franchisee compliance with the relevant procedures, but also with the aim of allowing Vodafone to increase its revenue. A singular fine could be as high as 30% of a store’s commission and even go as far as franchisees having their stores taken away. The severity of the fines, often in the thousands, were often totally disproportionate to the perceived cost of the failure to Vodafone. For example, one franchisee in the claim was fined £21,000 for a £7 customer mischarge.

• On numerous occasions, Vodafone took decisions in bad faith that unfairly penalised the franchisees while benefiting the company. For example, Vodafone justified a commission cut through the closure of Carphone Warehouse, citing the extra footfall franchisees should have benefitted from which never materialised. Additionally, Vodafone often failed to pass on rent free periods in its underlease terms to affected franchisees when some of their businesses were already experiencing financial difficulties.

• Vodafone stopped paying commission to its franchisees for selling mobile phones despite being one of the UK’s major mobile network operators and being widely known in the UK as place to purchase phones. In 2021, Vodafone decided to only pay commission on the value of the airtime contract increasing Vodafone’s margin from the sale of the physical device.

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In May 2025, mediation between the franchisee group and Vodafone came  to an end with no resolution. The claim is now proceeding through the High Court.