The Franchise Fallacy

Let’s talk about the dealer and franchise model in telecom. Because if we don’t, we’re going to keep watching the same slow-motion car crash again and again. Case in point: Vodafone. Their dealer project - which became a movement called “Fairer Franchise” - has become a textbook case in how not to do it. It was a well-meaning idea on paper that collapsed under the weight of arrogance, poor planning, and plain old selfishness when the world turned upside down.

Vodafone’s Franchise Gamble: Too Far, Too Fast

Vodafone thought they could outmaneuver the cost pressures of running retail by flipping to a franchise-heavy model almost overnight. They threw their entire retail channel into the hands of well meaning ex-store managers who were hungry to build businesses and provide for their families. All good so far. But when they asked a bunch of ill-equipped ex-regional managers to lead a national franchise transformation, things started to unravel. These weren’t entrepreneurs who could coach and produce entrepreneurs from the franchise principals. They were former middle managers, good at KPIs and top-down control, but with zero track record in financial forecasting, P&Ls, or what it really takes to run a small business.

No sandbox. No testing ground. No phased rollout. Just full throttle and damn the consequences. It wasn’t brave. It was reckless.

And then came COVID.

While the world reeled, Vodafone doubled down - not on empathy or partnership - but on clawing back every penny they could. Commission structures were slashed without warning. Support was withdrawn. Store managers, already squeezed to the brink, were left holding the bag: debts piled up, staff were laid off, and the brand’s so-called "partners" were treated like expendable cost centres. Over 60 franchisees have now banded together in a £120 million legal claim accusing Vodafone of unjust enrichment.

Let that sink in.

These weren’t rogue operators trying to cheat the system. These were hand-picked franchisees who trusted the brand and paid dearly for it. Vodafone’s sin wasn’t just operational misjudgment—it was a moral failure. When the chips were down, they didn’t act like partners. They acted like predators.

No wonder their share price has flatlined and their market perception has tanked.

Across the Pond: The American Dealer Disaster

The U.S. telecom dealer model is no better. In fact, it’s arguably worse.

Large national dealers dominate. Their model? Think Coca-Cola distribution. It’s all about store coverage - location, location, location. Flood the zone with stores, cut deals on leases, and churn through staff like it’s fast food. It’s cheap. It’s scalable. But it’s also soulless.

Store fits? Done on the cheap. Training? Practically non-existent. Staff turnover? Through the roof. And the customer experience? Absolutely diabolical. You walk into some of these locations and you’d be forgiven for thinking you’d stumbled into a payday loan office, not a flagship retail channel for a multi-billion-dollar telecom brand.

Operators pretend these dealers are "partners," but they don’t invest in them the way real partners do. They don’t train them, support them, or hold them accountable to brand standards. Instead, they chase expansion, not excellence - and the customer pays the price.

The Dealer Model: Should It Even Exist?

Here’s the hard truth: the dealer model, in its current form, is broken.

But that doesn’t mean franchising or authorized retail should be tossed in the bin. Far from it. I believe a good franchise model can work brilliantly—when done right. When it’s balanced. When it’s built with integrity, fairness, and mutual success at the core. When the brand sees its partners not as costs, but as extensions of itself.

But that’s not what we’re seeing.

Most telecoms want the benefits of franchising—reduced costs, faster expansion, local entrepreneurship—without the responsibilities. They outsource the risk but retain the control. They under-resource training, penny-pinch on commissions, and expect gold-plated customer experiences from operators they barely equip to function.

You can’t have it both ways.

The Rules of a Successful Franchise Model

So, what does a successful dealer or franchise model actually look like?

Here’s my view—born not just from opinion, but from 25 years in telecom retail, and the school of hard knocks in Newcastle, where we call it like it is:

1. Balance is critical. No more than 50% of your stores should be outsourced. Keep your key city stores and flagship locations under direct control. These are marketing channels, not just sales outlets. If you outsource these, you outsource your brand.

2. Train and support like you mean it. Training isn’t a one-time induction video. It’s a system. A culture. A continuous learning loop. Equip your partners to succeed, then hold them accountable.

3. Pay fairly and predictably. Residual commissions. Incentives linked to NPS. Protection from sudden cuts. If you build your partner’s business, they’ll build yours. Vodafone’s commission slashing debacle is a perfect example of what happens when you forget that.

4. Test before you scale. Run pilots. Gather data. Refine the model. Don’t gamble your entire retail estate on a theory.

5. Hire the right people to run it. Being a good regional manager doesn’t mean you’re cut out to design or operate a franchise model. Get experts who understand franchising inside and out—especially when it comes to forecasting, small business economics, and partner engagement.

6. Be a real partner. When crisis hits, act with values, not just spreadsheets. How you treat franchisees in tough times will define your brand more than any marketing campaign ever could.

Final Thought: Stop Blaming the Dealers

The next time someone in a boardroom says, “Our franchisees aren’t delivering,” ask yourself this: did you set them up to succeed? Did you build a system that rewards the right behaviours? Did you invest in their success like it was your own?

Because if you didn’t, maybe it’s not the franchisees who failed.

Maybe it’s you.

Let’s rebuild this model—not just for profit, but for pride. Because telco customers deserve better. And so do the people trying to serve them.