Daybreak - Lenskart built its empire on franchisees. Now it’s battling them in courts

Episode Date: April 16, 2025

In a little over a decade, Lenskart has gone from being just India’s biggest online eyewear retailer to becoming one of Asia’s biggest omnichannel eyewear giants. Needless to say, business has been booming. And the company is now inching towards its next big step – an IPO. But in the midst of all its success, it appears Lenskart may have rubbed some people the wrong way. The catch is that these are the very people who helped it get to this point in the first place –  the franchise owners that operate hundreds of its stores across the country. You see, for the last few years, many of them have had observed a similar, pretty disturbing pattern. They’ll set up their stores with Lenskart’s blessings. And then things start getting weird.Tune in. Check out our new podcast Make India Competitive Again —SpotifyApple The Ken is hosting a subscriber event! Join Two by Two hosts Rohin Dharmakumar and Praveen Gopal Krishnan and three distinguished guests as they discuss broken career ladders, shortening career spans, and collapsing organisational structures. Buy tickets here. 

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Ramon Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

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as they entered the workforce has been crumbling for some time now. Today, even a 10-year career isn't a given. You can blame a bad job market, AI, economic downturns, changing dynamics. But the bottom line is, this is much bigger than that. The very nature of careers is changing. So, how do professionals across ages and industries, plan their careers in an environment like this?

Well, we are hoping to answer just that at the Ken's live event in Bangalore on the 21st of April. Two by two hosts, Rohan Dharma Kumar and Praveem Gopal-Krishnan will be in conversation with three accomplished and distinct. distinguished guests, Harshal Mathur, the co-founder and CEO of Razorpeh, Vasuta Agarwal, chief business officer of InMobi, and Professor Saurav Mokharji of IIM Bangal. Join them as they discuss how we should rethink careers for a new era of rapid change, innovation and uncertainty. Details about the event and a link to purchase tickets will be in the show notes of this episode. Little over a decade, Lenskart has gone from being just India's biggest online Iowa retailer to

becoming one of Asia's biggest omnichannel eyewear giants. Needless to say, business has been booming and the company is now inching towards its next big step, an IPO. But in the midst of all its success, it appears Lenskart may have rubbed some people

the wrong way. The catch is that these are the very people who helped it get to this point in the first place. I'm talking about the franchise owners that operate hundreds of its stores across the country. You see, for the last few years,

many of them have observed a similar, pretty disturbing pattern. They'll set up their stores with Lenskart's blessings, of course. And then things start getting weird. They found that they were being left in the dark about their own store's finances. And then somewhere down the line, Lenskart would swoop in and open a country-run outlet

very close by. This is a fight that's been simmering for quite a while, but now all that frustration is turning into legal action. Right now, a group of former franchisee owners is preparing to ask the Karnatica High Court to reopen an investigation into Lenskart. These particularly disgruntled store operators have accused the company of full-blown fraud, of playing accounting tricks to mess with their franchisees commission earnings. I don't know if you noticed, but there's a reason I said that they want the investigation to be reopened.

This isn't the first time this case has entered the courtroom. Multiple FIRs have also been filed against Lenskart in the last few years, one of which was handed over to the economic offences wing, which looks into financial crimes like fraud and misappropriation. But Lenskart stood its ground. In January, it got a stay order from the Karnatica High Court, putting the investigation on hold, for now at least. The company told the Kemp that the dispute is rooted in contractual.

issues and that the Karnatica High Court rightly recognized this and issued the state. But the store operators are not backing down either. In this episode, we dive into this particularly bitter battle. Welcome to Daybreak, a business podcast from the Ken. I'm your host Rahal Philippos and I don't chase the news cycle. Instead, every day of the week, my colleagues Nikla Sharma and I will come to you with one business story that is worth understanding and worth your time. Today is Wednesday, the 16th of April.

I want you to imagine you are the owner of a Lenskart franchise store. Things are going well, business is looking good. And then suddenly, a couple months down the line, another Lenskart store pops up right next to yours. Turns out it's run by the company directly. Now, this is the first allegation store operators are making against Lenskart. Unfair competition, cannibalization. It isn't hard to see.

why this would annoy a store operator. Unfortunately for them, this is increasingly becoming their reality now that Lenskart is actively moving away from franchise partnerships. The focus is now on running its own stores. And the sad thing is that most franchise owners saw it coming. The Ken spoke to one such operator named Shailesh Jain. He recalled how in the last three to four years, Lenskart replaced nearly eight area managers. These managers had to oversee both franchise and company-owned stores,

but their focus was mainly on Lenskart's own stores. For nearly a year, Lenskart didn't even send Shailash a stored manager. It was only after countless follow-ups that they did end up hiring someone, but they asked Shailash to cough up much more than the market rate. It gets worse. Last year, his franchise license was terminated. Another franchise owner expressed his frustration after Lenskart opened a company-owned store right next to his,

despite promising that they would not. Now, this begs the question. Is this just standard industry practice, or is Lenskart going above and beyond? Well, Jitesh Agarwal, founder of legal advisory firm Trey Life Consulting, argues that it's not all that unusual. He told us that several Indian startups and global businesses do it, especially in high-performing locations.

Think Indranagar in Bangalore or Cannot Place in Delhi. Even Domino's has a similar strategy. It calls it fortressing. So it clusters stores in tight zones to dominate local markets. Brands like Bikonair, Walla also tend to mix company-owned and franchise outlets. When we reached out to Lenskart before publishing our story, it said that this approach is completely normal. A spokesperson explained that the goal was to eventually set up a store in every single neighborhood.

In fact, they explained that proximity in kilometers isn't even a crisis. criteria and the company's store opening policy. The spokesperson said that this is even mentioned in the company's contract with franchise companies. So essentially what Lenskart is saying is that it is well within its right to set up a store wherever it wants. Naturally, this doesn't work out too well for store operators, but turns out that is just the tip of the iceberg. Every couple years, even before they are able to recover their ROI, it seems the company

demands an additional 15 to 20 lakh rupees for mandatory store renovations. And if they refuse, their license is terminated. At least three franchises told us that they lost their licenses that way. Lenskart has also acknowledged this in its High Court petition. Meanwhile, the disputes over final settlements are ongoing. Some franchisees claim that Lenskart manipulated its settlements after store closures. One franchisee in Madhya Pradesh, for instance, returned for 14 lakh rupees in assets to the company after his license was terminated. Yet, his initial settlement was only 50,000 rupees. After sending a legal notice, the franchisee was eventually reimbursed over 13 lakh

rupees. And this isn't a one-off. Other franchisees have reported similar experiences of unexplained entries and manipulated spreadsheets. Just last October, five franchise operators in Karnatica teamed up and filed a police complain in Mysore. Between the five of them, they had run 13 Lenskaat stores at the state, and they all had the same gripe.

They were accusing Lenskart's top executives of manipulating the company's accounting software to mess with their stores' finances. The company also insists that Soma Shekhar, the main complainant, voluntarily ended his license in December 2024. Lenskart claims it sent him a full settlement statement and that he actually owes $12,000 rupees. Sheikar has denied this, arguing that the reconciliation report is riddled with unexplained entries and lacks any certified audit. The case in the Mysore court remains pending and is set to be heard next on 9th April. The High Court accepted Lenska's petition on 22nd January and stayed the

police investigation against the company till the next hearing. The franchise owners, meanwhile, are in the process of filing a counter-petition requesting the High Court to let the police continue its investigation. The last time around, this did not play out the way they had hoped. Back in 2016, they formed the All India Lenska Franchises Association to negotiate better terms. But their resistance was short-lived. A former member said most people involved by the forced out, terminated or bought off. Believe it or not, it gets worse. Before we move on to the next segment, we have a very special announcement to make. Hi, I'm Sita Rahmanjee and I'm a deputy editor at the Ken. It's been tough to keep up with the news.

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This is a newsletter that we think will be relevant to everyone in India, and we'd love for you to tune it. The Ken spoke to 18 Lenskaat franchises. 13 of them said they had reported discrepancies in their financial records, which Lenskart ignored despite being repeatedly flagged. They claim that while they were assured complete transparency, the company's accounting practices were anything but clear. Lenskart was meant to provide full access to sales, purchase and stock data via its point-of-sales system. It was meant to regularly send reports and purchase ledgers to the stores.

But it didn't end up doing that. Now, for a store owner, all of this data is crucial for calculating profits and ensuring compliance with GSD regulations. The operators claim that Lenskart also controlled several aspects of daily store operations. things like hiring managers to handle sales, payments, inventories. These managers were supposed to answer to both Lenskart and the franchisees, maintaining quality standards. Yet, franchisees claim that they were often left out of the loop. That's despite the fact that these managers were actually on their payroll. Lenskart's control extended even

further. A former franchise owner we spoke to said Lenskart controlled franchisee funds through a digital wallet. It kept deducting money for arbitrary things like advertising fees and customer satisfaction surveys. And then there is the fraud investigation. A forensic audit commissioned by the franchisees and referenced in an FIR filed on 26th October 24 alleged significant discrepancies between transactions in the POS system and figures recorded in financial registers, GSTR filings and purchase logs. After reconciling commission sales ledgers, Franchisees found that for the fiscal years, 22 to 23 and 2020 to 24, over 35 lakh rupees in profits and commission revenue had never been reported.

This was an issue highlighted in the FIR. Another recurring complaint was about how, when products were directly shipped to customers, the invoices would be emailed to them. The franchisees would be left out of the process. They couldn't even download the same invoice. That ended up becoming a serious problem when tax authorities came knocking. In fact, nearly a dozen franchisees reported receiving GSD notices based on Lenskart's reported data, which didn't even match their own records.

And when they tried reaching out to area managers, they just would not be able to get a meeting. We even took a look at WhatsApp and email exchanges, and we found a similar pattern. Franchise owners would raise red flags and Lenskart officials would deflect. In response to these allegations, Lenskart insists that any discrepancy typically arise from inconsistent use of reports at the store level. Lenskart insisted that they proactively work with their franchise partners to deal with such challenges. But even if there is true to that, things are about to get even harder for store operators. They are all going to play a much smaller role in the next phase of the Lenskart story.

Because now the push is for primarily company-owned stores. As the company prepares for its IPO, a more tightly controlled retail network makes for a more attractive proposition to investors. A messy, dispute-ridden franchise model on the other hand certainly does not. Daybreak is produced from the newsroom of the Ken India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings.

A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. Head to the ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted by Rahil Filippos and edited by Rajiv Sien.