Vodafone has agreed to settle a £85m claim brought by 62 of its former franchisees, who alleged the company's actions left them facing personal debts totalling millions of pounds. The settlement, reached after nearly two years in court, follows a long-running dispute over allegations that Vodafone unjustly enriched itself at the expense of its high street partners.
The small business owners claim they incurred significant debt due to their arrangements with Vodafone, including substantial reductions to sales commissions and fines for minor errors. Court documents alleged that Vodafone's actions were tantamount to bad faith, coercing franchisees into securing loans and government grants to keep their businesses afloat.
According to court papers, evidence cited includes a 2020 voicemail from a Vodafone executive acknowledging the detrimental impact of commission changes and admitting to "shanking" franchisees. This follows previous allegations that Vodafone incentivised staff to increase clawbacks from franchisees, including a £10,000 penalty for an error totalling just £7.08.
In a joint statement, Vodafone and the group of former franchise partners confirmed the settlement as a compromise without admitting liability. The terms will remain confidential, with no further comments forthcoming. This resolution follows Vodafone's previous apologies to affected franchisees, stating in December 2024 that it was "sorry to any franchisee who had a difficult experience."
The case has garnered significant attention, with around 40% of Vodafone's total 167 franchisees involved. The company has faced comparisons to the Post Office Horizon IT scandal, although Vodafone maintains these are "wholly inappropriate." Last September, Vodafone offered financial settlements to some former franchisees outside the claim group and launched a fourth investigation into its franchising division.