Vodafone franchisees who ran 11 shops in Yorkshire part of £85m legal claim against phone giant

They are part of a wider group of 62 former franchisees taking action against the retail giant, with the case reaching the High Court this week in advance of a potential trial split into two parts.

Vodafone has said it will “robustly defend” itself in the matter and rejects the claims.

Many of the franchisees were Vodafone store managers who were encouraged to take on their shops by the company when it launched a franchise programme in 2017. The claimants collectively operated 183 of the around 400 franchised Vodafone shops in the country.

A skeleton argument for the claimants argues that Government assistance during Covid such as grants, loans and business rates relief which should have gone to franchisees was “unlawfully factored” into remuneration models with “the effect of depressing or eliminating the effective benefit those claimants should have received from government assistance for Vodafone’s own benefit”.

It is also alleged that Vodafone “unlawfully restructured the basis and/or calculation of commission in a manner adverse to its franchisees and beneficial to Vodafone” from June 2021 and that the company also unlawfully reduced franchisee remuneration from August 2020 “by reducing the commission rates on customer upgrade transactions and home broadband upgrade transactions”.

It is also alleged that Vodafone wrongly imposed fines and penalties on franchisees.

The skeleton argument said Vodafone has admitted to in principle to claims relating to a practice of recharging rent-free periods to claimants. These claims are valued at £360,000 and described by the claimants as a process where money would be taken from franchisees for building rent “in circumstances where, in the relevant period, Vodafone was not in fact paying rent to that head-lessor – resulting in a windfall to Vodafone”.

A key part of the claim hinges on the claimants’ argument that they were commercial agents of Vodafone and therefore entitled to compensation for the termination of their franchise agreements. Vodafone argues the relevant regulation did not apply to the group.

Vodafone’s skeleton argument states more widely: “Subject to one category of minor claims (worth less than 0.5 per cent of the total alleged claims value and which Vodafone disputes quantum in any event), Vodafone disputes its liability on all of the claims and contends that the claimants’ case is misconceived in law and/or based on misunderstandings or mischaracterisations of the facts.”

Andrew Kerr, a spokesperson for the claimants, said: “For years, Vodafone has failed to answer serious questions about what went wrong in its franchise programme. Now those questions will be tested in open court.

“Many of us have lost businesses, taken on life-changing debt, and suffered the consequences of Vodafone’s decisions first-hand.

“We have always tried to resolve this constructively and remain open to a fair outcome, but Vodafone continues to avoid accountability, and we are fully prepared to see this through the courts to secure justice.”

A Vodafone spokesperson said: “We continue to run a successful franchise business in the UK with over 350 stores, and the majority of our partners have expanded their business with us.

“We reject the claims and will continue to robustly defend all aspects of this commercial dispute.

“We have engaged in efforts to resolve the matter with the claimants, including making a reasonable offer to settle. We have every confidence in our case and the court process, and in the absence of reaching a settlement, we remain firmly committed to resolving this dispute through the courts.”