Unacademy Pivots to Franchise Model After Acquisition Talks Collapse

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AuthorRiya Kapoor|Published at:
Unacademy Pivots to Franchise Model After Acquisition Talks Collapse
Overview

Unacademy is transitioning its offline coaching centers to a franchise model, a move signaled by CEO Gaurav Munjal. This strategic shift follows unsuccessful acquisition discussions with upGrad and others, reportedly due to valuation disagreements. The pivot aims for capital efficiency and cost containment after significant revenue decline and leadership churn, marking a recalibration towards an asset-light structure.

Unacademy, the prominent Indian edtech firm, is enacting another significant strategic shift, transitioning its offline coaching centers to a franchise model. CEO Gaurav Munjal announced the change internally, signaling a move away from direct ownership and operations. This pivot, expected to be complete by April 2026, follows a series of failed acquisition talks and a prolonged period of cost-cutting.

Franchise Pivot Aims for Capital Efficiency

The shift to a franchise model aims to create a more asset-light and capital-efficient structure. Unacademy will supply academic content, technology, and brand reach, while franchise owners manage daily operations. This approach is seen as a direct response to increasing financial pressures, including declining revenues and significant cash burn. The company previously aimed for offline centers to become profitable, a goal that has evidently been recalibrated.

Financial Strain and Past Valuations

The Bengaluru-based edtech firm was once a sector leader, commanding a peak valuation of $3.5 billion. However, since 2022, Unacademy entered a prolonged cost-correction phase. Aggressive cost-cutting measures, including layoffs and reduced incentives, helped lower its net loss to ₹435 crore in FY25 from ₹1,678 crore in FY23. This year, CEO Munjal had previously stated a goal to reduce the core business cash burn to below ₹200 crore in 2025, a significant drop from over ₹1,000 crore annually three years prior. Yet, growth suffered, with operating revenue declining from ₹907 crore in FY23 to ₹701 crore in FY25.

Acquisition Talks Unsuccessful

This strategic recalibration occurs in the shadow of Unacademy's repeated attempts to find a buyer or merger partner. Discussions with BYJU'S-owned Aakash, Allen Career Institute, PhysicsWallah, and most recently, upGrad, have all failed, reportedly over significant valuation differences. Unacademy was reportedly seeking a valuation between $300-$400 million, a steep markdown from its peak, a figure upGrad was unwilling to meet.

Leadership Flux and Online Focus

The company has also experienced considerable senior leadership churn between 2023 and 2025, with several key executives departing. Founded as an online platform, Unacademy's 2022 offline expansion aimed to diversify revenue streams. However, the inherent high costs of physical centers, coupled with aggressive competition, appear to have prompted this strategic pivot back towards its online roots. The company claims some core online offerings are now contribution-margin positive. CEO Munjal also highlighted growth in Airlearn, its language-learning platform, though it faces a challenging market.

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