Vodafone has terminated the contracts of 12 current franchisees who are among a group of 62 business owners pursuing a £120 million High Court claim against the telecoms giant, intensifying a bitter and long-running legal battle over alleged mistreatment within its UK retail network.
The decision comes more than two years after franchisees first accused the FTSE 100 company of “unjustly enriching” itself at their expense, claiming Vodafone slashed commissions and imposed punitive fines on store operators, many of whom say they were pushed into financial distress as a result.
The 12 franchisees had continued to operate high street Vodafone stores while also participating in the lawsuit, which alleges the company acted in bad faith, issued clawbacks and fines for minor administrative issues, and pressured partners into taking out loans and grants to stay afloat. Some claimants have reported experiencing severe mental health struggles, with several stating they feared losing their homes or life savings after racking up personal debts exceeding £100,000.
Vodafone, which disputes the scale of the claim—putting it at £85.5 million—has described the case as a “complex commercial dispute” and said it “strongly refutes” the allegations of unjust enrichment.
In a statement confirming the contract terminations, a Vodafone spokesperson said the company remained committed to building a “successful and thriving franchise programme” and could no longer work with partners actively engaged in what it described as a “negative campaign” against the brand.
“The dispute has been ongoing for over two years and a number of the claimants have remained within the franchise programme and had their contracts renewed during that time,” the company said. “However, we are increasingly concerned about the impact negative campaigning is having on our franchise programme. After careful consideration, and with disappointment, we therefore decided it was no longer viable for us to work with franchise partners who are supporting the negative campaign against the business.”
Franchisees operated stores under the Vodafone brand, earning commissions based on device and airtime sales. Court documents allege that in recent years, Vodafone unilaterally slashed those payments and levied steep fines for minor infractions, such as documentation errors, undermining the financial viability of many of the small businesses.
While Vodafone has denied wrongdoing, it acknowledged that internal investigations revealed instances where interactions with franchise partners fell short of expected standards. The company has since issued nearly £5 million in reimbursements, including for clawbacks and fines, and says it has made “a number of improvements” to its franchise partner programme.
Nevertheless, tensions have continued to escalate. It has emerged that whistleblowers raised concerns with Vodafone executives about franchisee hardship more than two years before the legal claim was filed in December 2023.
Attempts to resolve the dispute through mediation broke down last month, raising the prospect of the case heading for trial at the High Court.
The legal row also comes at a time of major structural change at Vodafone. Earlier this month, the company finalised a £16.5 billion merger with rival Three UK, forming the country’s largest mobile network with more than 27 million customers. The new VodafoneThree joint venture has said it will rationalise its store portfolio, with closures expected where existing Vodafone and Three outlets overlap.
Commenting on the broader dispute, Vodafone CEO Margherita Della Valle said: “The commercial dispute is specifically between Vodafone UK and some of our franchisees. Our first joint attempt at mediation has not resolved the dispute despite our best engagement. We remain open to further discussions as the process continues.”
With relationships between the company and a significant number of its former and current franchisees deteriorating, the fallout from the lawsuit could cast a long shadow over Vodafone’s efforts to reshape its UK retail operations and move towards a leaner, post-merger future.
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Vodafone terminates contracts of 12 franchisees who joined £120m lawsuit