Buying a $200m Franchisor (Not Units, the Whole System)

And so I would say for the really the first 30 plus years of our company's history, there really wasn't much of an investment in terms of trying to get in front of those individuals. But we have started doing that here again in the last six months. And we've had a few different brokers who have then come back to us and said,

Where have you been hiding? Like, how has this been the case that I've never heard of you or I've never really focused on kind of either thrift more broadly or your concepts more specifically? These are phenomenal unit economics.

i don't know 15x uh in the span of of six months and so yeah you should see as i would say concepts get into that spotlight as there's more notoriety around the potential that there ends up being that pull from various industry participants to help fuel growth

Well, and existing franchisees. I would say that fully 50 plus percent of our development historically has been internal. So it's franchisees who are raising their hand and saying, all right, I'm ready for my second, my third, my fourth, my fifth store.

So actually we view our job is to make sure that every franchisee is set up for success. So that's at the individual unit level. But then also we want to facilitate people, you know, whatever their goals are.

If they want to get the five units, how do they get there with as little brain damage back to that concept as possible?

Great, guys. And so, okay. Pull on the thread, another turn of phrase that we keep returning to. You pull on the thread, franchisees talk to one of the big franchisees who happens to be in the family. Then you end up at the matriarch and patriarch who are the owners of the system and get to talking about why it actually makes sense to buy the entire system with them rolling a significant chunk,…

Can you share what base camp, the parent entity, look like as a business at that time in terms of revenue and EBITDA and also what you paid.

Yeah, so as we talked about earlier, at the time we bought the business, it was about 200 stores open across the U.S. At that point, it was about $200 million of system-wide sales, so roughly around $1 million per unit. How that then translated into the financial performance of Basecamp, it was about $12 million of revenue and then $4 to $5 million of EBITDA.

And so obviously as a franchise or business, as you or some of our listeners may know, it's actually very similar in a lot of respects to a SaaS business in that there's a lot of investment upfront to build your processes, your team, your infrastructure. But then when you've reached a certain requisite level of scale, the margin profile ends up being really attractive. from there.

And so at the time we bought the business, it was really past that inflection point where each incremental dollar of royalties or overarching revenue ended up translating really attractively down to the bottom line.