Vodafone settles legal claim brought by 62 former franchisees

A £25bn Company's Dark Side: The Vodafone Franchisee Scandal

Vodafone, a London-listed company valued at about £25bn, has finally settled a long-running legal claim filed by 62 of its former franchisees. The small-business owners alleged that the mobile phone group had “unjustly enriched” itself at their expense by up to £85m. The case has been ongoing for 19 months, with the parties finally agreeing to a settlement without any admission of liability.

The plight of the 62 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 went on to allege that the telecoms group was aware of how its actions affected its partners, referencing 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.

The Guardian also subsequently revealed that Vodafone had incentivised internal security staff to increase “clawbacks” levied on its own franchisees, including one alleged case of a £10,000 penalty for a franchisee whose mistake cost Vodafone £7.08.

Many of the former franchisees said they feared losing their livelihoods, homes or life savings after running up personal debts of more than £100,000. Vodafone, which is valued at about £25bn on the London Stock Exchange, always insisted it “strongly refutes” that it had “unjustly enriched” itself and has 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”.

The settlement is a significant development in the case, and it remains to be seen how it will affect the livelihoods of the 62 former franchisees. The company's actions have been widely criticised, and it will be interesting to see how Vodafone moves forward in the wake of this settlement.