Claims Direct's new chief executive has vowed to fight franchisees' attempts to gain compensation.

New CEO Ronnie Henderson said 25% of the company's 245 franchisees are threatening to sue Claims Direct. It is understood they will claim £16.5m.

They are accusing the company of misleading them over how much money they would make from the fanchises.

Henderson, who replaced the company's founder Colin Poole last week, said: “The vast majority of franchisees want to work with us.

“They realise that the situation the company is in has changed and that they cannot expect everything to be as it was three years ago. Three-quarters are on our side. The other quarter think they should be paid millions, but of course we will not pay.

“I had a meeting with legal advisers who tell me that they do not have a case. They can bring their action, but we will contest it vigorously.”

Earlier this year, the personal injury firm's shares plummeted following three profit warnings. Poole and co-founder Tony Sullman then purchased shares at 10p each.

Last month they sold some of the shares to investor Simon Ware-Lane, giving him a 29.8% stake in Claims Direct.

Now Henderson hopes to bring the company back to profitability. “One policy does not fit everyone,” he said. “We may need three policies. We want to change the product, the way we distribute it and the way we deal with claims mangers and solicitors.”

He eventually wants share prices to hit the £1 target, although he admits “it is an uphill struggle”.

Henderson's annual salary is £165,000. He has also been given five million share options.