UClean Cleans Them All With Its Franchise Model
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Within three years, UClean has become the largest laundry chain in the country. While sharing his ambitious plans to have brand stores in every locality, Arunabh Sinha, Founder, UClean, highlights his strategy which has made his brand irresistible for franchises.
What is the strategy that has helped UClean become a success story?
Most of the organised players entered this space on the ‘aggregation’ model which has always been the preferred business model for startups across sectors. However, the laundry segment is not cut out for aggregation. Being highly fragmented with low ticket size business, finding professional vendors is extremely difficult. Moreover, low ticket size revenue distribution between the aggregator and the vendor makes it challenging.
In addition, lack of professional vendors implies that despite the best efforts of the aggregator, customer delight would be a challenge as the major chunk is controlled by the vendor. However, we were clear that laundry is a hyper-local business which requires small neighbourhood shops to offer doorstep services in their vicinity. Hence, we created the mini format laundry store model which entails an investment of less than Rs 20 lakhs.
What are the factors which make your brand irresistible for franchisees?
Given the challenging times the economy is going through, investors are looking at fail-safe businesses which do not involve high operating costs and can quickly become cash flow-positive. Laundry is an essential service based on daily needs. It involves daily cash flows, minimal operating expenses, and has a very high consumer purchase frequency, where each customer typically comes back every week to avail the services. Being a neighbourhood laundry concept, rentals and setup costs remain under control with space requirement as low as 150 sq. feet. The business is largely subscription-based with monthly, quarterly or annual packages. Hence, customer acquisition cost is generally low and solid returns start coming within 6-7 months of going live. Almost 20% of our franchises are multi-unit operators and we will double this percentage in the next three years.
How do you see ChemDry complementing UClean’s business?
Chem Dry is the largest surface cleaning brand in the world which has been expanding rapidly across the globe, riding on its patented Hydro Carbon Extraction (HCE) technology. It specialises in cleaning of upholstery, carpet and homes, with a demonstrated experience of 40+ years and presence across 50+ countries. We have recently bagged the pan- India master franchise and exclusive development rights to build the brand in India. This partnership will help us realise our vision to become a one-stop-shop for all cleaning requirements inside a household. As the focus customers are same for both the brands, we will leverage on the UClean franchises for business development.
Could you elaborate about your achievements and expansion plans?
Over the last 12-18 months, we have rapidly increased our reach into the Tier II and III cities, while firming our presence in Tier I cities. We have become the largest laundry chain in the country by on-boarding 180 franchises. Owing to this growth, we have seen a healthy 25% increase in year-on-year revenues. In fact, our 12-month old stores are grossing average sales of Rs 2.5-3 lakhs per month per unit. Given India’s size and the neighbourhood-based format, there is potential for setting up UClean store in every locality. On an immediate basis, we are looking at a 50% annual growth and are targeting to have 400+ franchises by 2021.
Franchising since: 2017
Total outlets: 180+
Investment: Rs 15-20 lakh
Area: 150-250 sq ft
Break-even: 12-18 months
Expansion: Pan-India, Global