Lawsuit brought by former store operators missing from Vodafone results

Vodafone has not listed a potential liability in its 2026 financial results stemming from a legal claim by franchise operators who allege they were harmed by company-imposed business decisions. The Fairer Franchise campaign group represents 62 current and former Vodafone franchisees, who are bringing an 85 million ($115 million) High Court claim, alleging the telco unilaterally cut commissions and overhauled the way it compensated them for operating Vodafone-branded stores, often without consultation. The claimants, some of whom are former employees of Vodafone, say they were encouraged to invest heavily in Vodafone stores after the firm established a franchise program in mid-2017. This expanded to around 400 branches, 183 of which were operated by the claimants in the case. Vodafone is alleged to have repeatedly and unilaterally cut the commissions paid to franchisees for sales of its products and services, particularly from July 2020 onward. The group also claims Vodafone changed remuneration models without consultation or proper consideration of the impact this would have on the franchised businesses. In particular, the claimants allege Vodafone unlawfully clipped remuneration from August 1, 2020, by reducing the commission rates on customer and home broadband upgrade transactions, and that it restructured the calculation of commission to franchisees in a manner beneficial to itself, as part of the rollout of a scheme called "EVO" in June 2021. At the heart of the case is the group's claim that the franchisees were effectively "commercial agents" of Vodafone - within the meaning of the Commercial Agents Regulations - because they sold products and contracts on Vodafone's behalf. Vodafone denies this and says the regulations do not apply. If the High Court rules that they are applicable, the franchise operators may be entitled to termination indemnities that the claimants estimate could be worth up to 52 million ($70 million) alone. The group says Vodafone has already conceded aspects of the claim in court, including admitting breach of contract in relation to rent-free periods for some stores that were not passed on to the franchisees. A spokesperson for the Fairer Franchise group told The Register: "Vodafone has again failed to disclose our 85 million High Court claim as a contingent liability in today's results, while quietly paying more than 20 million to other franchisees with no explanation, and after admitting it breached our contracts over rent-free periods never passed on to us." "We are 62 people who lost our businesses, our savings, and in many cases our health. As VodafoneThree prepares to reshape two retail estates, the question for investors and analysts is whether this management team should press ahead while serious allegations about its treatment of franchisees remain unresolved." The next hearing is scheduled for July 9. The Register asked Vodafone for a statement regarding the group's claims and why it did not mention the case as a potential liability in its financial results. In its results report published Tuesday, Vodafone says: "Legal proceedings where the Group considers that the likelihood of material future outflows of cash or other resources is more than remote are disclosed below. Where the Group assesses that it is probable that the outcome of legal proceedings will result in a financial outflow, and a reliable estimate can be made of the amount of that obligation, a provision is recognized for these amounts." For the UK, Vodafone lists two lawsuits. One involves alleged overcharging of customers who signed contracts that included both a handset and airtime. The other covers alleged collusion between the major UK mobile networks to withdraw their business from Phones 4U, causing its collapse. There is no mention of the Fairer Franchise case. Vodafone Group's fiscal 2026 results showed an 8 percent year-on-year increase in revenue to 40.5 billion ($47.6 billion), attributed to strong services growth and the consolidation of Three UK. Service revenue grew 8.8 percent to 33.5 billion ($39.3 billion), although for the UK the rise was just 0.3 percent. (R)