Bengaluru: In 2016, at least two on-demand laundry startups—Flashdoor, and Doormint (backed by Kalaari and Helion Ventures)—shut shop following a funding crunch. Another on-demand laundry provider MyWash sold its business-to-home services aggregator Housejoy the same year.
Even as investor sentiment ran dry in the laundry space, it did not deter Arunabh Sinha from setting up his own startup in the laundry space with a franchise format approach to on-demand laundry business.
Sinha started a pilot in Delhi-NCR with local dry cleaners, and in just over three years, UClean has expanded to 36 cities and 175 franchisees closing an annual gross merchandise value (GMV) of ₹30 crore. The company is also gearing up to launch in international markets, including Bangladesh and Nepal by the end of October and in Malaysia and Thailand by the end of this year.
“Nepal would be 12 to 15 franchise opportunity for us, and for Bangladesh expansion, we are targeting around 150 franchisees over the next five years," said Sinha, chief executive of UClean in an interview.
UClean currently offers door-step laundry facility where the user places an order via a mobile app or by simply dropping and collecting laundry directly at stores. UClean also allows users to do their own laundry across select stores.
While most startups in the on-demand laundry space focused on aggregation and connecting them with potential users, Sinha and team focused on increasing the number of stores owned by each franchisee.
“We focused on recruiting new franchisees every year, training them, and up-skilling them, providing them software, while we kept providing them business support. As a company, one metric we track very closely is franchise repetition rates, wherein we focus on helping franchisees to open multiple stores, within a year of being in our system," said Sinha.
The effort seems to have paid off for UClean. Out of the 175 franchise partners on UClean’s platform, 25 who have been working with UClean for two years or more have already ended up signing more than one store unit.
Sinha operates on a business model where the franchise owner invests his or her own money, and manages their own stores, rather than UClean taking full control of daily operations.
“Operationally a franchisee with us should be able to break even in the first month itself…The entire money he or she invested could be returned back within just 18 months," said Sinha.
UClean takes a 7% share on total revenues that a store every month makes which the company has classified as “royalty" revenues. A franchise owner pays up to ₹5 lakh to open a new store with UClean, which also is equivalent to equity-free funding for UClean which is re-invested back into the business, according to Sinha.
Till date, UClean has raised only two rounds of funding worth ₹12 crore from Franchise India Holdings Ltd, and a couple of undisclosed angel investors. It also recently purchased an 85% stake in Delhi-based laundry and dry cleaning service provider White Tiger.
“Some years ago, there was a rash of laundry startups, and when it didn’t work out, everyone (including investors and founders) decided that laundry is a very expensive business and in spite of this market sentiment UClean had the courage to break through into this market. The founder didn’t go by the mainstream story and applied lessons from market failures as an intuitive strategy which has now worked for him (Sinha)," said Aniruddha Malpani, an investor in the hospitality space and founder of Malpani Ventures.
Prior to starting UClean in 2016, Sinha worked with budget hotel brand Treebo heading its north India business for almost 15 months. An IIT Bombay graduate, Sinha has multiple years of experience working with franchise-led businesses and even worked with a consulting firm that helped bring brands like Carl’s Jr. and Fatburger to India.