Vodafone pays out 85m to former partners

Vodafone Limited has settled a High Court claim brought by 62 former franchisees over the operation of its UK retail franchise agreements, ending the case before liability issues reached trial. The claim, APK Communications & Ors v Vodafone Limited [2026] EWHC 811 (Comm), concerned contractual decisions affecting remuneration and alleged breaches of contract.

The settlement was concluded without any admission of liability, and its financial and commercial terms will remain confidential. The claimants had challenged Vodafone’s decisions, alleging breaches of contract, duties of good faith, and restrictions on contractual penalties.

The claimants relied on the Commercial Agents (Council Directive) Regulations 1993, while Vodafone denied liability, maintaining that the disagreement concerned the interpretation of commercial agreements. Before the settlement, the Commercial Court had approved a split trial, with liability to be determined first.

The court also approved the use of sample claimants, as the proceedings involved 62 separate businesses with issues that did not arise identically in every claim. This structure was intended to make the case manageable while preserving the parties’ ability to address individual circumstances.

The settlement brings the proceedings to an end but does not produce a judgment on the disputed contractual provisions or the application of the Commercial Agents Regulations. The disputed contractual issues remain undecided, leaving lawyers advising franchise businesses without a ruling on whether Vodafone was entitled to exercise its contractual powers as it did.

Similar cases will turn on the wording of the agreements, the decisions taken under them, and the evidence explaining those decisions. Franchisors should keep clear records when changing commissions, making deductions, or relying on a right to alter commercial terms, which can help them review their contracts and avoid potential disputes.

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In situations like this, the outcome can be compared to other disputes in the franchise industry, where the balance of power between the franchisor and individual operators is often a point of contention. The lack of a clear ruling may lead to further cases, as franchisees seek clarity on their rights and obligations.

Law firms acting for either side should review variation procedures, internal approvals, and dispute provisions as soon as concerns arise. Where the same agreement is used across a network, one disagreement can lead to claims from several operators and substantial disclosure before liability is considered.

David Lewis KC and James Shaw of Gatehouse Chambers acted for the claimants during the proceedings. They were also associated with Fairer Franchise, which had publicly presented the claim as raising wider concerns about the balance of contractual power.

The settlement brings those particular proceedings to an end, but it does not produce a judgment on the disputed contractual provisions or the application of the Commercial Agents Regulations. Lawyers advising franchise businesses still have no ruling on whether Vodafone was entitled to exercise its contractual powers as it did, whether duties of good faith applied or whether the contested provisions amounted to penalties.

They must consider the potential consequences of their actions.