Vodafone is facing a legal battle after a group of 61 current and former franchisees filed a lawsuit claiming over £120 million in damages.
The group, many of whom had long-standing relationships with the company, allege unfair treatment and breaches of the franchise agreement by Vodafone. They argue that, since July 2020, arbitrary business decisions by the telecoms firm have caused significant hardship—pushing some to the brink of financial ruin.
The legal petition – which is now part of court proceedings – accuses Vodafone of failing to uphold its duty of good faith, drastically cutting commissions, mismanaging financial relief, and systematically penalising franchisees.
From partnership to fallout
The claimants argue that Vodafone initially presented the franchise model as a “true partnership” with promises of uncapped earning potential and mutual success. However, many allege that the reality starkly contrasted with the assurances given when they joined the programme.
Former franchisees Andrew Kerr, Rikki Lear, and Donna Watton have shared accounts of their financial and personal turmoil, which they attribute to Vodafone’s actions.
Andrew Kerr, 42, from Bangor, Northern Ireland, became a franchisee in 2019 after securing loans based on a Vodafone-approved business plan. But, in March 2023, his business collapsed—leaving him to deal with debts and serious health consequences.
“It started off as a dream – and it’s ended up as a nightmare that haunts me every day. I felt I became Vodafone’s piggy bank. They pushed me to the point of financial ruin and then took away my stores, leaving me in crippling debt,” said Kerr.
Kerr claims he was given just 14 days’ notice before Vodafone implemented a commission cut that wiped out nearly a third of his revenue. After relentless strain, both financially and mentally, the stress led to severe health implications. He collapsed in his kitchen in late 2022 and was hospitalised for eight days, spending time on a heart monitor.
“I want my life back,” Kerr says, adding that his last hope of accountability lies in this legal case.
For Donna Watton, 43, from Lincolnshire, the fallout affected not just her career but her family life. A former Vodafone store manager, Watton transitioned to the franchisee model, only to see her revenue drop by 40% overnight in what she describes as an “arbitrary and irrational” decision by Vodafone.
Watton says the sudden losses transformed her only profitable store into a failing business, leaving her with nearly £100,000 in debt and an uncertain future.
“I no longer trust Vodafone. Their actions, to me, felt deliberate and systematic,” Watton commented. “Trying to find solutions in the spirit of our partnership felt like banging my head against a brick wall. The whole experience was a nightmare, and it has put tremendous strain on my relationship with my partner – I feel awful for my children whose lives this has significantly impacted too.”
Serious allegations
The legal claim sets forth a series of serious allegations against Vodafone:
- Commission cuts: Franchisees claim these were imposed with little notice or explanation, resulting in many stores becoming unprofitable. One internal comment from a senior Vodafone figure admitted a 2020 commission cut had “shanked” certain franchisees.
- Mismanagement of government relief: During the Covid-19 pandemic, the UK government introduced business rates relief to support struggling businesses. Vodafone allegedly factored this relief into its cost modelling, effectively reducing financial benefits to franchisees while the company financially benefited.
- Excessive fines: The claimants accuse Vodafone of imposing severe penalties over minor infractions, with fines reaching as high as 30% of a store’s commission. In one instance, a franchisee was fined £21,000 for a £7 customer mischarge.
- Rent relief and underlease terms: Vodafone is accused of failing to pass on rent-free periods to franchisees during a time when their businesses were already struggling. Instead, franchisees allegedly had to pay full rent while maintaining brick-and-mortar stores.
- Commission exclusion for mobile sales: Despite being a key player in the UK mobile retail market, Vodafone reportedly stopped paying franchises commissions for selling mobile devices in 2021. Commissions instead focused solely on airtime plans, increasing Vodafone’s margins on handset sales.
- Loss of stores: Some franchisees claim their stores were repossessed by Vodafone with no clear justification, other than the company wanting a “different direction.”
These alleged practices, according to the claimants, left many franchisees grappling with serious financial, emotional, and personal repercussions, including struggles with mental health and the risk of losing their homes.
The human cost
The personal toll of Vodafone’s alleged actions is a recurring thread in the claimants’ stories. For some, this extended far beyond financial struggles.
For Watton, Vodafone’s actions not only shattered her entrepreneurial ambitions but her personal aspirations as well.
“Vodafone took away my livelihood while I was caring for my five-month-old daughter,” Watton said. The decision to repossess her profitable store was delivered in a video call, with her infant daughter on her knee at the time.
Meanwhile, Rikki Lear, 44, a former franchisee from Kent, shared how his frustrations evolved into a feeling of purpose after joining the collective legal fight.
“I joined the programme with the best intentions… but the experience I had as a Vodafone franchise partner almost broke me,” Lear said. “I wouldn’t be here now if it wasn’t for the sense of purpose the group has given me to fight on behalf of people who have been collectively wronged.”
The telecoms giant has recently exited the British Franchise Association, a decision that contrasts with its public portrayal as a leading proponent of retail franchising. The claimants allege this move only heightens questions about Vodafone’s adherence to recognised franchise standards.
Vodafone’s defence
Vodafone has denied the accusations in pre-action correspondence and is expected to defend itself robustly in court.
In a comment to Telecoms, a Vodafone spokesperson explained:
“We are aware of the allegations and take them very seriously, and we are sorry to any franchisee who has had a difficult experience. While we have acknowledged challenges were 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. We offer our franchise partners a large amount of cost-free support, but, as with any business, commercial success is not guaranteed. The majority of franchise partners are profitable and there is strong demand among our current franchisees to take on new stores.
We maintain that where issues have been raised, we have sought to rectify these and believe we have treated our franchisees fairly.”
For many of the affected franchisees, this legal action represents a final attempt to hold Vodafone accountable after years of frustration. The group first sought independent legal advice in October 2022 before coming together to file this collective claim.
“There comes a time when you have to stand up and challenge what’s wrong,” said Lear. The group hopes this legal case will force Vodafone to reflect on its actions and, in their eyes, reconcile with the principles of trust, cooperation, and integrity it promotes.
(Image Credit: Vodafone)
See also: Industry reacts to CMA clearing Vodafone and Three merger
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