Daybreak - Lenskart's all set for its IPO but the franchisees behind its success want to drag it to court

Episode Date: July 29, 2025

Lenskart has grown into one of Asia’s biggest eyewear companies and is now gearing up for a massive IPO. It is aiming to raise ₹2,150 crore through a fresh issue as part of an ₹8,000 crore public offering. But as the company prepares to go public, a storm is brewing behind the scenes.A group of former franchise store owners is accusing Lenskart of unfair practices and even fraud. They're alleging they were kept in the dark about store finances and undercut by company-owned outlets opening next door. Now, these franchisees are pushing the Karnataka High Court to reopen an investigation into the company even as Lenskart insists it’s a contractual dispute.Tune in.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

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.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get an alert as soon as we release our first episode, please follow Intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. In just over a decade, Lenskart has gone from being India's biggest online eyewear brand to one of Asia's largest omnichannel eyewear companies.

The retailer has steadily reduced its own. losses in recent years and even reported a profit of nearly 300 crore rupees for the financial year that ended in March 2025. Business has clearly been booming. And now, the company is getting ready for its next big move. Just yesterday, Lenskart filed its draft papers with Seby for an IPO, where it plans to raise a little over 2,000 crore rupees through a fresh issue of shares. The total size of the IPO could be around 8,000 crore rupees, with some early investors. like SoftBank and Tamasek looking to sell parts of their stake. But even as Lenskart gears up for this big market debut,

there is trouble bubbling in the background. And it is coming from a group of people that were key to Lenskart's early growth. It's franchisee owners. Over the last couple of years, many franchisees have noticed the same troubling pattern. They would set up their stores with Lenskart's support and slowly things would start to feel a little. little off. They say that they were kept in the dark about their store's finances. And then,

out of nowhere, a company-owned Lenscott store would pop up right next door. Now, based on the recent IPO filings, it seems like this trend is probably going to continue because the company is planning to use 300 crore rupees from the money that it raises to open more than 600 new company-owned stores. You see, this tension has actually been brewing for a while. But it was only recently that it turned into legal action. A group of former franchises are preparing to go to the Karnataka High Court asking it to reopen an investigation into the company. They have accused Lenskart of manipulating numbers and shortchanging them on commissions

and they are calling it fraud. And here's the thing. This is not the first time that the issue has gone to court. Over the last few years, multiple FIRs have been filed against the company with at least one handed over to the economic offences wing. Lenskart, for its part, says that it is all just a contractual dispute and earlier this year it got a stay order from the Karnataka High Court to pause this investigation.

But the store owners are not backing down and now, just as Lenskart is going for its public offering, the fight is heating up again. In this episode, my co-host Rahel is going to give you a ringside view of the messy battle between Lanskart and the franchisees who say that they were left behind. 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 Shailash Jain. He recalled how in the last three to four years, Lenskart replaced nearly eight-eighths-eat. 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 store manager. It was only after countless follow-ups that they did end up hiring someone, but they asked Sherleish 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 Tree 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 Bickonair, 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. 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 management. standardry 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 $14,000 in assets to the company after his license was terminated. Yet, his initial settlement was only $50,000. After sending a legal notice,

the franchisee was eventually reimbursed over $13,000. And this isn't a one-off. Other franchises have reported similar experiences of unexpained entries and manipulated spreadsheets. Just last October, five franchise operators in Karnatica teamed up and filed a police complaint 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. 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 Lenskaat'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 Lenskart Franchises Association to negotiate better terms. But their resistance was short-lived. A former member said most people involved either forced out, terminated or bought off. Believe it or not, it gets worse. The Ken spoke to 18 Lenskart 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 2022 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 GST notices based on Lenskarts 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

app 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 discrepancies 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 Lenskaud 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 thekem.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.