APK Communications Limited and others v Vodafone Limited: a franchise case to watch

The main allegations made by the franchisees include:

1. Commission Cuts: the franchisees claim that Vodafone acted in bad faith by altering its commission policy. The company ceased paying commissions for mobile phone sales and, in 2021, changed the commission structure to reward only the value of airtime contracts.
2. Disproportionate Fines: the franchisees claim that Vodafone imposed disproportionate fines on franchisees for minor administrative errors. One cited example is a £21,000 fine imposed for a £7 customer mischarge.
3. Government Business Rate Reliefs: the franchisees claim that Vodafone collected data on the financial relief franchisees received from the UK government during the pandemic. This information was reportedly used in calculating commission payments, effectively nullifying the intended benefits for the franchisees and favouring Vodafone.

Vodafone refutes the claims.

Should this proceed to trial, it will be a significant case within the franchising sector. The case will likely turn on issues around duties of good faith and the Braganza duty both of which have featured in recent franchise case law (for example, in the Hunter's case, where the court held that a franchisor would comply with the Braganza duty if its policy was consistent and it considered the impact of its decision on the relevant franchisees).

For more information on this topic or advice on any specific franchising queries, please contact Rachel Bowley or Gordon Drakes