Lenskart IPO is in trouble
Lenskart's founder and CEO, Piyush Bansal, seems very happy as he announced the Lenskart IPO last month on July 29. However, this happiness won't last much and can be ruined by this one lawsuit.
The Lenskart IPO is in big trouble, as it filed IPO papers back in July, which is India's most-awaited IPO. But the Lenskart focus shifted from the IPO to the lawsuit.
Lenskart's court case introduction
Some old franchise owners of Lenskart in Karnataka filed an FIR against Lenskart and sued them, stating that Asia's biggest eyewear business model had committed fraud against them.
Lenskart IPO and Business Model
As I stated above, Lenskart is Asia's biggest eyewear business model. And it has 2500+ stores across India. But in the beginning, They had the primary focus on the franchise model. That means if you have money and land, you can open a Lenskart store in your locality. So that you can earn money and share the profit with them. The software and the designs were fully provided and fulfilled by the company itself.
Lenskart's court case details
The franchise owners further stated that the company was using the data of the stores to analyze, which store is earning more profits. While the franchise owners themselves don't get enough data from their own stores. They further added that Lenskart also manipulated the data of the stores.
The big thing is that anywhere the company realized that the store is doing good in that locality. The company itself opens a company-owned store close to the franchise-owned store.
And the products were sold at cheaper rates than at the franchise-owned store. And the marketing was so good that the company-owned store attracted all the customers to itself. As a result, the franchise-owned store started depreciating. Sales began dropping, and franchise owners began making losses, but the startup remained profitable over time.
According to data, there were 30% Lenskart stores till 2023, but in two years, there has been a massive drop, and now only 12% of stores are available that are dealing with the franchise business model.
Final Words
The case is still going on in the Karnataka High Court, but the thing to see is if the franchise owners are able to prove their complaint or not and what will happen to Lenskart's IPO between all of that stuff.