Dispute Between Vodafone UK and Ex-Franchisees Takes Another Twist

The ongoing £85.5m legal dispute between mobile and broadband giant Vodafone and a group of 62 current and former UK franchisees (here) recently experienced another twist. This came after the network operator confirmed that it had terminated the contracts of 12 franchisees who had continued working with them while also being party to the case.

Just to recap. The affected franchisees, many of which say they 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, previously accused the network operator 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 allegations claim that Vodafone’s commission payments and remuneration to the affected franchisees was “cut drastically and with little or no explanation“. The group also claims that the operator benefitted from government business rates reliefs that “were intended for the franchisees“, when they were facing financial distress during COVID-19. Not to mention some claims about Vodafone failing to “pass on rent free periods in its underlease terms to affected franchisees and charged them full rent“.

However, Vodafone has already said they “strongly refuted“ the claims, while at the same time saying they were “sorry to any franchisee who has had a difficult experience” and “acknowledged challenges were faced by some franchisees”. But over the weekend it also emerged (The Guardian) that the operator had now terminated the contracts of 12 current franchisees because of their involvement with the dispute.

A Vodafone spokesperson said:

“We are focused on building a successful and thriving franchise programme. As a result, we have a clear duty to do everything we can to support those franchise partners who are committed to our joint success.

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. 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.”

As reported last month, initial attempts to mediate a solution came to an end “with no resolution“ (here), which suggests that the case may now progress toward the High Court. This is likely to be a long and expensive process.