Vodafone hit with £120m legal action by UK franchisees
A group of Vodafone franchisees across the UK have launched a multi-million-pound legal action against the telecoms giant over “bad faith” business practices.
The claim was filed to the Commercial Court of the High Court by law firm IBB Law, representing 61 current and former Vodafone franchisees and is worth more than £120m.
The franchisees claim that Vodafone 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.
It was stated that Vodafone recently left the British Franchise Association, which promotes ethical franchising in the UK.
Claims against Vodafone
The claim includes several allegations, one of which states the franchisees were sold the programme with the promise of uncapped earning potential but were often given commission structures that meant their stores were loss-making.
Claimants also note Vodafone benefited from government business rate reliefs intended for the franchisees when facing financial distress during the Covid pandemic.
One of the franchisees, Andrew Kerr from Northern Ireland, said: “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.”
A number of franchisees independently sought legal advice in October 2022 before coming together to form a group, which has now launched this claim via IBB Law.
Vodafone has denied the allegations. It is not yet clear who the telecoms giant has opted for its legal counsel.
Commenting on the claim, a Vodafone spokesperson said: “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,” they added.
This news comes after Vodafone and Three completed a £16.5bn merger that was given the green light by the regulator last week.