No Resolution Yet in £120m Dispute Between Vodafone UK and Former Franchisees

Last year we reported on how broadband and mobile provider Vodafone had been hit with a £120m+ legal claim from over 60 current and former UK franchisees (here). The group, which said they were challenging the “financial, mental, and physical impacts of the retail giant’s “irrational” business decisions“, today reported that their attempt to mediate a solution “has come to an end with no resolution“.

The affected franchisees, many of which say they started their careers with Vodafone and have been “loyal ambassadors for the brand over the years“, claim that Vodafone – which recently left the British Franchise Association (BFA) – 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.

Andrew Kerr, Rikki Lear and Donna Watton, three former franchisees and members of the claim, accused Vodafone of causing them and their families “severe financial and personal distress including reaching the edge of bankruptcy, potential repossession of their homes, and serious mental health issues” – impacts they allege are felt by others across the programme.

Some of the examples given allege that Vodafone’s commission payments and remuneration to the affected franchisees were “cut drastically and with little or no explanation“. The group also claims that the operator benefitted from government business rate reliefs that “were intended for the franchisees“, when they were facing financial distress during COVID-19.

In addition, Vodafone are said to have “often failed to pass on rent free periods in its underlease terms to affected franchisees and charged them full rent“, again when many of their businesses were already being squeezed. The operator itself has previously said that they were “sorry to any franchisee who has had a difficult experience” and “acknowledged challenges were faced by some franchisees,” but they also “strongly refute“ claims that Vodafone ‘unjustly enriched’ itself at the expense of small businesses.

The main development today is that mediation between the group of 62 related franchisees across the UK and Vodafone has “come to an end with no resolution“. The group is now renewing its calls for accountability and redress.

A spokesperson for the Group of franchisees said:

“We have been engaged in a mediation process with Vodafone which has now come to an end. We are deeply disappointed that our recent efforts to resolve our dispute through mediation have concluded with no agreement reached.

As a group, we entered into the mediation process with the best intentions. We are extremely frustrated that the process failed to resolve this dispute, which would have allowed both parties to move on.

Our group was formed because Vodafone’s decisions have caused significant and direct harm to the individuals’ businesses and lives. We will now continue our efforts to seek justice through the court process. We remain absolutely committed to securing redress and accountability for everyone affected.”

The £120+ million legal claim will now proceed to the High Court, which is likely to be a long and expensive process.