Unacademy, one of India’s leading edtech firms, has announced a strategic overhaul of its offline operations after months of acquisition negotiations with rival upGrad broke down. In an internal communication to employees, co-founder and CEO Gaurav Munjal outlined a plan to exit all company-operated offline centres and transition fully to a franchise-led model, marking a major shift in the company’s business strategy and cost structure. The transformation comes as Unacademy seeks to sharpen its operational focus, enhance capital efficiency, and concentrate on strengthening its core online offerings amid a broader market slowdown in the edtech sector.
The move is part of a wider cost reset and operational realignment that follows the collapse of acquisition talks with upGrad, which failed to align on valuation and deal structure after several months of negotiations. The talks, first reported by Moneycontrol, had been expected to culminate in an acquisition that would combine Unacademy’s test-prep business with upGrad’s learning platforms, but disagreements over valuation scuttled the deal.
All company-owned offline centers that were previously operated directly by Unacademy will progressively become franchise partnerships under the new concept, with local operators handling day-to-day center management. Franchise partners will bear the operational load and related expenses, while Unacademy will still provide academic material, technology support, curriculum, and branding. This transformation is expected to be finished in the upcoming months, with the entire switch to a franchise model scheduled for April 2026.
Shift to Franchise Model Aims at Cost Efficiency and Focus on Core Strengths:
In his internal email, Munjal emphasised that the franchise model has already demonstrated its viability and will help Unacademy maintain an asset-light and capital-efficient structure. By moving away from the capital-intensive approach of running offline centres, the company expects to reduce fixed costs while preserving its ability to grow through a broader network of local partners.
Munjal’s message emphasized that this change puts Unacademy in a position to concentrate on scalable digital solutions rather than physical operations and reflects a return to the company’s strengths, which include creating scalable online learning products. In response to questions over the shift, a company representative reaffirmed, “Unacademy will be an online-first company moving forward, like it was when we started in 2015.” The reorganization is part of an ongoing effort to reduce expenses and enhance unit economics throughout the company. Due to the prioritization of core lucrative verticals and the termination of underperforming efforts, Unacademy’s test-prep division’s cash burn was reduced from approximately ₹450 crore to approximately ₹200 crore during the 2024 calendar year.
Several of Unacademy’s major test-prep verticals, including UPSC, NEET PG and CAT preparation, have now turned contribution-margin positive, while subsidiaries such as PrepLadder and Graphy delivered cash-flow positive performance for the full year. Its language-learning platform Airlearn also saw robust growth, expanding from around $200,000 in annual recurring revenue at the start of 2025 to nearly $3 million by year-end.
Leadership Changes and Broader Strategic Reorientation:
The announcement follows a period of leadership shifts within Unacademy. Earlier in 2025, Munjal and fellow co-founder Roman Saini moved away from day-to-day management roles, with co-founder Sumit Jain appointed to lead the firm’s core test-prep business. These leadership changes reflect a broader strategic recalibration aimed at streamlining decision-making and aligning the management team with the company’s evolving priorities.
Unacademy currently holds around ₹1,100 crore in cash on its balance sheet, providing it with sufficient runway to complete the offline transition and invest in growth areas. As the franchise shift advances, the company is expected to use these reserves to strengthen digital offerings and capitalise on segments where it has established unit economics and competitive advantages. Munjal’s internal communication conveyed a clear message of optimism about the future: 2026 will be focused on growth, not survival. After several years of cost correction and operational restructuring, he wrote that Unacademy is now well-positioned to concentrate on areas of strength and build momentum in its core markets.
Market Context: After the Collapse of upGrad Acquisition Talks
The failed acquisition talks with upGrad, a competing edtech and online education platform, served as the impetus for the switch to a franchise model. Due to disagreements over acquisition structuring and company valuation, the months-long negotiations broke down, allowing Unacademy to forge its own course. The difficulties facing edtech consolidation in a sector where values have been under pressure were highlighted by the lack of agreement on conditions and price points.
The breakdown of the deal with upGrad follows similar industry trends where multiple high-profile consolidation attempts have faltered amid valuation mismatches and funding headwinds. In this challenging environment, companies like Unacademy are opting to recalibrate operations to become leaner and more efficient rather than pursue large-scale acquisitions that may strain financial resources.
Analysts note that Unacademy’s shift back to an online-first focus and its embrace of a franchise-led physical presence reflect broader sector dynamics — where edtech firms are balancing the need to maintain brand presence on the ground with the imperatives of sustainability and profitability. By shedding direct operational responsibilities and leveraging local partnerships, Unacademy aims to strike that balance while maintaining its influence in the offline learning ecosystem.
Growth in 2026 and Beyond:
In order to preserve academic standards and brand credibility, Unacademy must ensure quality and uniformity throughout its franchise network as the offline transition draws to a close in April. Maintaining the company’s image as it expands its offline presence through franchise operators will need careful partner selection, clear operational rules, and constant support.
The strategic shift also aligns with Unacademy’s broader ambition to capitalise on its digital strengths while keeping financial discipline at the forefront. By consolidating its resources around areas such as test preparation, language learning and scalable online products, the company hopes to achieve sustained growth and compete effectively in a competitive educational landscape. While the collapse of the upGrad deal represents a setback in terms of potential consolidation, Unacademy’s decisive move to restructure and pursue a franchise model highlights its resilience and adaptability. With a healthier cost structure, improved unit economics and a renewed focus on core offerings, the edtech unicorn is positioning itself for a growth-oriented 2026 and beyond.
