Unacademy to exit offline centres, embrace franchise model by April

Edtech firm Unacademy will exit its company-operated offline centers and transition fully to a franchise-led model over the coming months, according to an internal email from founder Gaurav Munjal, as reported by Moneycontrol.

This decision comes shortly after months of acquisition talks between Unacademy and upGrad, which fell through due to disagreements on valuation and deal structure, the report added.

In his email, Munjal outlined that Unacademy will convert its offline centers into franchise partnerships. Under this model, local operators will manage day-to-day operations, while Unacademy will continue to provide academics, technology, curriculum, and brand support. The transition is expected to be completed by April, after which Unacademy will no longer directly operate these centers.

Munjal also highlighted that this shift would lead to a more sustainable cost structure, with local franchise partners taking on operational responsibilities, allowing Unacademy to focus on academics, technology, and product development.

Additionally, the email detailed Unacademy’s cost restructuring efforts over the past year. The company reduced its test-prep expenditure from around Rs 450 crore in CY2024 to approximately Rs 200 crore, attributing this reduction to the closure of underperforming initiatives and focusing on successful ones, added the report.

The deal's collapse also coincides with market speculation regarding upGrad’s potential Initial Public Offering (IPO) later this year. In November, the Mumbai-based company appointed Amitabh Kant as an independent non-executive director, a move seen as part of its global expansion strategy and preparations for a public listing in the next 18 months.

Financially, upGrad reported a significant improvement in profitability, reducing its losses to Rs 273.35 crore in FY25, compared to Rs 559.5 crore in the previous fiscal year. Revenue from operations grew 5.5% year-on-year, reaching Rs 1,569.3 crore.