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Vodafone has launched a fourth investigation into the historical conduct within its franchising division, which is at the centre of a £120m high court claim against the mobile phone group.
Vodafone is also understood to have offered financial settlements to a selection of former franchisees who are outside the group of 62 currently suing the business.
The group of high court claimants – who represent almost 40% of a total 167 Vodafone franchisees – launched a legal case in December alleging Vodafone “unjustly enriched” itself at the expense of scores of vulnerable small business owners by slashing commissions to franchisees running the mobile phone brand’s stores.
The new inquiry appears to be the fourth such investigation into the franchising division, after what Vodafone termed “a full assurance review” in 2022 – and then “two investigations to examine complaints raised by franchisees” in 2022 and 2023.
Several franchisees have told the Guardian that the pressure exerted on them by Vodafone executives triggered suicidal thoughts, while many said they feared losing their livelihoods, homes or life savings after running up personal debts of more than £100,000.
MPs have compared some aspects of the Vodafone dispute with the Post Office Horizon IT scandal.
Vodafone has always said it “strongly refutes” the claim that the company “unjustly enriched” itself, but has apologised to the small business owners who once ran its high street shops. “We are sorry to any franchisee that has had a difficult experience,” it said in December.
In messages sent over the past week to former franchisees outside the claim, Vodafone asked those “willing to speak to us about these issues” to book a meeting with its “leadership team”.
“We have identified that there may be additional historic [sic] issues outstanding with some franchise partners who are not related to the [high court] claim”, the communication said. “Our initial conversations with other exited franchise partners have given us the opportunity to address outstanding issues or concerns that they may have raised.”
The Guardian has spoken to numerous former Vodafone franchisees outside the group of 62 high court claimants who say they would be willing to join any future claim against the company.
The FTSE 100 business, which is valued at £21bn on the London stock market, said in December it had made a “number of improvements to our franchise partner programme” after “several in-depth investigations”.
It added last year: “We have … made a series of goodwill payments to numerous franchisees. For example, we made the decision to reimburse £4.9m including VAT across our franchise estate.”
Court papers filed by the 62 claimants allege that Vodafone acted in “bad faith” by unilaterally cutting fees to its franchisees; imposed swingeing fines on them totalling thousands of pounds for seemingly minor administrative errors; and then cajoled them into taking out loans and government grants to keep their businesses afloat.
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Vodafone has said it rejects the allegations, which it described as part of a “commercial dispute”.
The two sides had previously been in mediation talks, which collapsed in May. There have also been suggestions that whistleblowers warned a series of senior Vodafone executives – including the current chief executive, Margherita Della Valle – that scores of its franchised store owners faced financial ruin about two years before the high court claim.
Vodafone, which argues the legal claim is actually worth £85.5m, did not comment.
A spokesperson for the 62 claimants said they were “gravely concerned” by Vodafone “trying to settle issues … outside the current legal claim”.
He added: “If Vodafone is serious about addressing the harm done, it must abandon behind-closed-doors tactics and engage openly with all affected partners.”
