I liked their image. Aaron's is halfway between retail and rental, and they attract a broader range of customer than a traditional rent-to-own company.
Robert Briley, Aaron's Franchisee

Photo RTO Online

Aaron’s President Ken Butler (right) and wife Julia Butler (left) with Franchisees Robert and Lou Briley at the recent Aaron’s National Managers Meeting in Orlando, Florida.

Aaron's (NYSE:RNT) continues to break new ground with innovative systems, product selection and merchandising, and service quality.

But if you ask Greg Tanner, Aaron's national director-franchising, "What's also exciting is that we're sprouting new growth with our conversion program, and planting more stores in smaller markets."

"We've been converting independents to Aaron's stores for more than 15 years, but it wasn't until Robert Briley converted his Rent City locations that we really began to cultivate other chains and independents," said Tanner.

Briley, a well known and highly respected RTO operator, said he converted to Aaron's "to take out the competition."

It's a textbook business-school, case study in how to dominate a market. Briley, an APRO board member, said converting to Aaron's was a "simple business decision."

Briley began moving away from rental purchase and focusing more on leasing in 2005 to compete with Aaron's growing presence in Texas. "I liked their image," he said and added, "Aaron's is halfway between retail and rental, and they attract a broader range of customer than a traditional rent-to-own company. And, I like their marketing campaigns and national brand recognition."

"For Aaron's, the conversion market is fertile ground," said Tanner. "Why compete when we can collaborate and expand together?"

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Greg Tanner, Aaron's national director-franchising.

Going Smaller to Get Bigger
In a strategic move to extend its presence in underserved markets across the country, Aaron's is aggressively franchising throughout "small-town America."

Aaron's has more than 1,560 company-owned and franchise showrooms in 47 states and Canada that are located in or near major markets and large cities. However, in recent years newer stores are springing up in smaller population towns and in rural areas, 60 or more miles away from the nearest major market.

"Some of our best performing stores are the newer ones that we've opened in small towns where there's an ideal match between the incomes, population, lifestyles, behavior patterns and buying habits of typical Aaron's customers," said Tanner.

Nowhere is that more evident than in New Mexico, where multi-unit franchisee Dave Holland, operating as DNH Enterprises, LLC, owns four Aaron's and one RIMCO store. In fact, the highest volume Aaron's Sales & Lease Ownership store system wide is located in Farmington, New Mexico, a city of 44,000 people located in the San Juan Basin that's a hub for much of northwestern New Mexico and the Four Corners region.

"Our Farmington store is about 12,000 total square feet: 7,000 showroom, and 5,000 backroom and warehouse," said Holland. "We have a great manager and staff who have caused the growth. They're good on the sales effort, and work the non-renewals well."

But the road to Farmington took a fortunate fork in the road. "I was raised in the Panhandle of Texas, and I was living in Midland with my family working for Parker Drilling Company," said Holland. "I was in their manufacturing division for 23 years when in 1998 they decided to move the operation to Louisiana.

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left to right - Jeff Hafer DNH Ebterprises District Manager; DNH owner Dave Holland, Aaron’s Franchisee; Ken Butler, Aaron’s President - on stage at the 2008 Aaron’s National Managers Meeting in Orland, Florida.

"I figured it was time to look for something else rather than move, so I explored everything including franchising; bought the franchising books; and talked to a lot of people. A friend was a pizza franchisee, and he did everything he could to talk me out of the food franchise business.

"I happened to see a classified ad in the Midland Reporter-Telegram newspaper about the Aaron's franchise opportunity. I was familiar with Aaron's, because I regularly passed an Aaron's store on my way to work.

"Out of curiosity I called. The franchise sales rep said, ‘There must be some mistake. We have stores in the Midland-Odessa area.' (Their adman was supposed to run the ad in Midland, Michigan, not Midland, Texas.) But we got to talking, and the more I learned; the more interested I became.

"I liked the concept, and we began to talk about stores in New Mexico. So I opened my first store in September 1998, in Roswell, New Mexico. Then two months later in Las Cruces, and then a third store in July of 1999, in Santa Fe.

"I'd opened three stores in ten months; it was time to take a breath. I didn't open number four until April 2002, in Farmington. In June of 2003, we opened in Espanola, and finally we opened our sixth store December of 2006, in Las Vegas, New Mexico.

"We've since sold our Las Cruces and Roswell stores back to Aaron's, and opened a RIMCO store in Farmington. Aaron's likes to buy, and I liked to sell."

"This has been a very positive experience. Charlie (i.e., R. Charles Loudermilk, Sr., founder and company chairman) and his team have shown a lot of courage. They're not afraid to try things and to do things differently."

"Aaron's has a proud past. It all started when Charlie began renting chairs at an auction in 1955," said Greg Tanner. "And, we have an exciting future. We're a $1.5 billion company with a leading franchise opportunity that reaches a growing and underserved market."