In December 2019, after several years of litigation, the Post Office settled a major dispute with its sub-postmasters for £57.75 million. What lessons does this dispute have for franchisors and franchisees?
The Post Office has a network of over 11,000 branches throughout the UK. These are generally operated as quasi-independent businesses by sub-postmasters, who are remunerated by the Post Office for the provision of various services (under the Post Office brand).
The horizon system
Sub-postmasters were required to use a computer system known as Horizon for accounting purposes. The Post Office relied on evidence from Horizon to take action against over 500 sub-postmasters in relation to discrepancies in their accounts. Many had their contracts terminated; some were made bankrupt and some were even prosecuted for criminal offences. Over a considerable period of time, evidence emerged that Horizon itself could have been at fault. This eventually led to group litigation by affected sub-postmasters against the Post Office, brought with the assistance of a litigation funder.