62 current and former franchisees allege that sudden, swingeing cuts to commission rates on selling Vodafone products in high street stores plunged many of them into huge personal debt
The campaign by 62 current and former Vodafone UK store franchisees fighting to secure £120 million compensation via the High Court appears to be gathering momentum. The court case was filed last December; last Friday, the issue was debated in Parliament, reported in The Guardian. Vodafone has about 150 franchisees in total.
The Government’s Minister for Small Business, Gareth Thomas, told Parliament that he will “track very carefully” the legal claim brought against Vodafone who allege that sudden, swingeing cuts to commission rates on selling Vodafone products in high street stores plunged many of them into huge personal debt, with some considering suicide. They claim the carrier “indiscriminately…operated to enrich Vodafone at the expense of its franchisees” in 2020 as the UK emerged from lockdown.
Read in full the allegations made by the franchisees against Vodafone here.
Thomas added, “Franchising can be used as a method to exaggerate the power of the business at the heart of the franchise and to weaken the position of franchisees. My assertion is that is common and is particular in the case of Vodafone.”
Vodafone refutes the claims
Vodafone strongly refutes the claims. In response to the court filing last December, it issued this statement:
“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.“
A spokesperson told Mobile Europe at that time: “the initial introduction of the new rate card [in 2020] had a greater impact on some locations and an…unintended consequence was that a handful of stores…felt more pain than others.”
The spokesperson added that the company had listened to complaints from franchisees and amended the rate card, made reimbursements for fines and money [franchisees] had paid out that they shouldn’t have. The spokesperson added that Vodafone had been and still is willing to go to mediation although talks to resolve the situation ended in May without agreement.
