Vodafone has terminated agreements with 12 franchisees who remained active within its retail network while simultaneously pursuing a £120 million legal case against the telecoms giant.
The High Court claim, initiated in December, involves 62 franchisees accusing Vodafone of unjust enrichment by significantly reducing commissions paid to independent operators of its high street outlets.
The plaintiffs allege that these abrupt changes inflicted severe financial harm, with some claiming debts exceeding £100,000 and others reporting serious emotional distress.
Despite joining the lawsuit, a dozen franchisees continued operating under Vodafone’s brand until their recent removal from the franchise programme. Vodafone, which values the claim at £85.5 million, maintains that the case is a complex commercial disagreement and firmly denies the allegations.
A spokesperson for the company stated, “We are focused on building a robust and successful franchise network. Therefore, it is essential we support franchise partners who are aligned with our shared goals. After careful consideration, we regretfully determined it is no longer sustainable to maintain relationships with partners actively involved in a campaign against our business.”
Franchise arrangements allow businesses to trade under an established brand in exchange for fees and compliance with operational standards. Vodafone franchisees traditionally earned commission based on handset sales and airtime revenue generated in-store.
Court documents accuse Vodafone of acting in bad faith by unilaterally cutting commission rates, imposing heavy penalties for minor administrative errors, and urging franchisees to rely on loans and government support to remain solvent.
Vodafone has acknowledged past issues but rejected claims of misconduct. The company said it had conducted several internal reviews, resulting in changes to the franchise model. It confirmed that approximately £5 million had been reimbursed to franchisees through the reversal of fines and clawbacks.
The telecoms group also stated that while some interactions between the company and its franchisees fell below expected standards, no evidence of wrongdoing was uncovered.
It has since been revealed that whistleblowers alerted Vodafone executives as early as two years before the legal action, warning that many franchisees faced imminent financial collapse.
Settlement discussions recently concluded without resolution, suggesting the case may now proceed to trial.
This legal battle unfolds as Vodafone finalises its £16.5 billion merger with rival Three UK, creating Britain’s largest mobile operator with over 27 million subscribers. The newly formed VodafoneThree joint venture announced plans to shutter select outlets across the UK where Vodafone and Three stores overlap.
Chief Executive Margherita Della Valle previously commented that the dispute remains between Vodafone UK and a segment of its franchisees. Although initial mediation proved unsuccessful, she reiterated the company’s willingness to continue discussions in pursuit of a resolution.
