Acquiring Minds: Buying a $200M Franchisor (Not Units, the Whole System)
Hosted by Will Smith | Release Date: July 31, 2025

Introduction

In the July 31, 2025 episode of Acquiring Minds, host Will Smith delves into the intricate journey of Tyler and Zach Gordon, brothers with substantial private equity experience, who transitioned from aspiring franchisees to acquiring a $200 million franchisor system of thrift stores. This episode provides invaluable insights into acquisition entrepreneurship, specifically focusing on buying an entire franchise system rather than individual units.

Guest Backgrounds

Will Smith [00:00]:
"Today's guests... developed a thesis."

Zach Gordon [00:07]:
"Both with private equity backgrounds, brothers Tyler."

Tyler Gordon [04:21]:
"Zach and I both grew up in New York City... Harvard undergrad, then HBS."

Chelsea Sloan [04:47]:
"Spent a couple of years working at Restaurant Brands International... parent company of Burger King and Popeyes."

Tyler and Zach Gordon bring a combined two decades of private equity experience, while Chelsea Sloan adds her expertise from a multinational franchisor background.

Developing the Acquisition Thesis

Tyler Gordon [05:50]:
"If it was one word that we kept coming back to, it was fulfillment... build value over a long term period of time and value, not just in a financial sense, but hopefully also in terms of impact."

Chelsea Sloan [06:29]:
"Private equity's approach to holding assets indefinitely if there were enough growth opportunities made a lot of sense."

The Gordons emphasized the importance of a long-term horizon in acquisitions, diverging from the typical 5-7 year private equity model to aim for decades of value creation.

Challenges in Traditional Acquisition Approaches

Zach Gordon [10:47]:
"The more you can have conviction in a given industry... helps you not just uncover opportunities and build credibility with potential sellers."

Tyler Gordon [10:59]:
"Franchising as a general matter can add a lot of value... alignment that long-term horizon was really important."

The Gordons critiqued the traditional top-down industry evaluation, finding it crowded and unfruitful due to intense competition from established private equity firms.

Discovering the Thrift Franchisor Opportunity

Chelsea Sloan [19:06]:
"Thrift at this point is something like a $50 billion industry... very fragmented."

Tyler Gordon [19:17]:
"An overlooked industry... dynamics have fundamentally shifted."

The brothers identified the thrift industry as a large yet fragmented market ripe for consolidation, particularly focusing on franchising opportunities that were previously under the radar.

Evaluating Unit Economics

Tyler Gordon [23:39]:
"How much does it cost... return on investment for a franchisee."

Chelsea Sloan [23:45]:
"Unlevered payback of five years or better... 20% unlevered yield or higher."

Central to their acquisition thesis was the evaluation of unit economics. They sought franchisors offering strong cash-on-cash returns, identifying average EBITDA yields well above industry standards.

Tyler Gordon [25:36]:
"What you can realistically expect to earn as a franchisee... House your own store's EBITDA."

By scrutinizing franchisor disclosures, they ensured that the business model was financially robust for franchisees, which in turn, supported the scalability of the entire system.

Transitioning from Franchisees to Franchisors

Chelsea Sloan [32:45]:
"Basecamp is a family-founded company... sold 60% of the company."

Zach Gordon [43:37]:
"The family retained 40%... dynamic with significant family involvement."

Initially considering becoming franchisees, the Gordons discovered a unique opportunity to acquire a controlling stake in the franchisor itself, fostering a symbiotic relationship with the founding family and aligning long-term interests.

Operational Improvements and Growth Strategy

Tyler Gordon [35:36]:
"Focus on quality... unit count will follow."

Chelsea Sloan [36:17]:
"Invest in technology, operations, marketing... setting us up to grow rapidly."

Emphasizing operational excellence, the Gordons invested in backend systems and franchisee support before aggressively expanding unit count, ensuring sustainable growth.

Tyler Gordon [49:14]:
"Have a long-term vision... scale successfully without overextending."

Their strategy prioritized the profitability of existing franchisees, believing that successful units would naturally drive further expansion.

Macro Trends in the Thrift Industry

Chelsea Sloan [94:23]:
"Supply side has always been there... sustainability and secondhand becoming cool."

Tyler Gordon [95:26]:
"Systematize complexity... create a moat through data-driven operations."

The episode highlights macro trends such as increasing consumer acceptance of secondhand goods driven by sustainability concerns, positioning thrift franchising as both environmentally and economically viable.

Conclusion

The Gordons' acquisition of a $200 million franchisor in the thrift industry underscores the potential of system-wide acquisitions in fragmented markets. By focusing on strong unit economics, long-term value creation, and operational excellence, they transformed an underappreciated industry into a scalable and profitable business model. Their journey offers a blueprint for acquisition entrepreneurs seeking opportunities beyond traditional unit acquisitions, emphasizing strategic depth and holistic system growth.

Notable Quotes:

• Tyler Gordon [05:50]:
  "If it was one word that we kept coming back to, it was fulfillment."

• Chelsea Sloan [23:45]:
  "You would want to see an unlevered payback of five years or better. So this means you would want to have a 20% unlevered yield or higher."

• Zach Gordon [43:37]:
  "...the family retained 40%. That's, that's quite a bit, that's not too far from 50."

• Tyler Gordon [35:36]:
  "It's much more about quality than quantity."

• Chelsea Sloan [76:50]:
  "We offer cash and I'm walking out with the stuff that I perceived as no longer having value for me."

For those interested in acquisition entrepreneurship and franchising insights, subscribing to the Acquiring Minds newsletter at acquiringminds.co is highly recommended. Additionally, accompanying resources and webinar recordings are available to further explore the nuances of buying and scaling business systems.