Tyler & Zach Gordon bought Basecamp Franchising: ~200 thrift stores, $12M revenue, $4-5M EBITDA

The Setup Tyler and Zach Gordon are brothers with roughly 20 combined years in private equity, including time at Restaurant Brands International under 3G Capital. That exposure shaped their operating thesis: long holds beat short ones, because a five-year PE clock eats itself on diligence, repositioning, and exit prep, leaving maybe a single year of real operating work. They wanted an asset they could compound for 10-20 years. They spent two years searching. First they did the classic top-down exercise, screening 150 industries down to 10 gold and silver medalists. Every one was uninvestable. Elevator repair, medical waste, fire suppression, all already blanketed by PE platforms able to drop cost basis 50% on day two. The lesson: the obvious good industries are priced that way. They pivoted to looking for structurally strong verticals that were disorganized, unsexy, or sat as barnacles on bigger industries. Franchising became the lens. A few thousand franchisors exist in the U.S.; strip out restaurants, home services, gyms, and you eliminate ~75% of attention. In the remaining tail they found thrift, a $50B industry no one in ETA was looking at, fragmented enough that Goodwill itself is federated. The Deal The target was Basecamp Franchising, parent of Uptown Cheapskate (young adult apparel resale) and Kid to Kid (children's apparel and gear resale). Founded by the Sloan family in 1992 (Kid to Kid) and 2009 (Uptown), the system had ~200 stores at close, $200M in system-wide sales (~$1M per unit average), $12M of franchisor revenue, and $4-5M of EBITDA. Royalty is 5% of franchisee sales. The Gordons started as prospective franchisees. For six months they mapped DMAs (Houston, Denver, Long Island) planning 5-10 store builds. A conversation with Chelsea Sloan Carroll, a daughter running a 15-20 store franchisee platform, pulled them upstream. Within a few conversations the question shifted: what if we partnered at the franchisor level? Structure: Gordons acquired 60%, Sloan family rolled 40% and kept their ~35 franchised stores. The family rollover was the point, not a concession. It signaled permanent capital, aligned the family's largest franchisees with the new owners, and told the system this was not a PE flip on a five-year clock. Capital came primarily from Gordon family money plus a small friends-and-family raise. Operating Moves The Gordons inverted the standard post-acquisition playbook. Most PE-backed franchisors acquire at a high multiple and accelerate unit growth to justify it. The Gordons did the opposite: almost no franchise development spend in year one. Instead they poured investment into downstream infrastructure, new-store onboarding, field operations, and technology. They spend several million a year on tech alone, including a proprietary pricing engine called Baseline Lens that turns millions of item-level data points into suggested prices for buy-counter employees. The operating thesis is simple: franchisee profitability drives royalty growth more reliably than unit growth. Top-quartile stores generate $350K+ SDE. A top Uptown does $3M in sales and $1M EBITDA, moving ~1,000 items sold per day (2,000 transactions counting buys). Average ticket is $12-13 at Uptown, $6 at...