Vodafone Faces Fourth Probe into Franchising Division Amid £120m Legal Battle

Published: 10 September 2025 | The English Chronicle Online

Vodafone has launched a fresh investigation into alleged misconduct within its franchising division as it battles a £120m high court lawsuit that accuses the telecoms giant of exploiting small business owners who once ran its branded stores. The new inquiry marks the fourth internal probe into the division in just three years, underscoring the scale of the controversy engulfing one of Britain’s most recognisable corporate names.

The latest move comes as Vodafone is understood to have approached a number of former franchisees who are not part of the ongoing litigation, offering financial settlements to address grievances that remain unresolved. In recent communications, Vodafone invited former partners to meet with senior leadership, admitting there may be “additional historic issues” beyond those raised in court.

The high court case was brought in December by 62 former franchisees, representing almost 40% of the 167 individuals who once operated Vodafone’s high street stores. They allege the company acted in “bad faith” by slashing commissions, imposing hefty fines for minor infractions, and encouraging franchisees to take on significant debt through loans and government grants to keep their shops afloat. Some claimants say they were left facing personal debts of more than £100,000, with the pressure leading to mental health crises, including suicidal thoughts.

Members of Parliament have already drawn comparisons between the Vodafone dispute and the notorious Post Office Horizon IT scandal, which saw hundreds of sub-postmasters wrongly accused of fraud. While the contexts differ, both cases highlight alleged corporate mistreatment of small business operators in franchising or partnership models.

Vodafone, valued at £21bn on the London Stock Exchange, has consistently denied accusations of unjust enrichment. A spokesperson reiterated in December that the company “strongly refutes” the claims but added: “We are sorry to any franchisee that has had a difficult experience.” The company has pointed to a series of changes to its franchise programme, which it says were introduced following “in-depth investigations.” These include goodwill payments totalling £4.9m, including VAT, distributed across the franchise network.

Despite those measures, claimants argue Vodafone has not gone far enough and accuse the company of attempting to resolve complaints quietly rather than confronting the scale of the alleged wrongdoing. A representative for the 62 claimants said they were “gravely concerned” that Vodafone was “trying to settle issues outside the current legal claim,” warning that “if Vodafone is serious about addressing the harm done, it must abandon behind-closed-doors tactics and engage openly with all affected partners.”

Court papers allege Vodafone unjustly enriched itself by systematically reducing franchisees’ income, sometimes to unsustainable levels, while punishing them with arbitrary fines that further undermined their financial position. The claimants argue that the company’s approach left many store owners financially crippled, while senior executives ignored whistleblower warnings as early as two years before the high court case was filed.

Vodafone disputes the £120m valuation of the claim, asserting the true figure is closer to £85.5m. Mediation efforts between the company and the claimants collapsed in May, suggesting a lengthy and bitter legal battle still lies ahead.

For Vodafone, the repeated inquiries into its franchising operations have cast a long shadow over its reputation. While the company seeks to portray the dispute as a “commercial disagreement,” the human cost, mounting legal scrutiny, and echoes of other high-profile corporate scandals have ensured the case remains firmly in the public eye. With the stakes rising, Vodafone’s attempt to move past the controversy will depend on whether it can convince both the courts and its former partners that lessons have been truly learned.