Rent to Own Franchise Week 2007

Some of our best performing stores are the newer ones that have opened in small towns with populations of less than 30,000 people.
Greg Tanner, National Director of Franchising Development for Aaron’s Sales & Lease Ownership

Listen to a podcast interview with Todd Evans. Todd Evans, Vice President, Franchise Operations, Aaron's Sales and Lease Ownership. Download PDF E-book version of RTO Magazine Franchise Issue.

In a strategic move to extend its presence in underserved markets across the country, Aaron’s Sales & Lease Ownership is aggressively franchising throughout “small town America.”

Aaron’s, a division of Aaron Rents, Inc., is the nation’s leader in the leasing and sale of residential and office furniture, consumer electronics, home appliances and accessories. Aaron’s currently has more than 1,350 Company-operated and franchised stores in 47 states and Canada. Aaron’s locations are typically located in or near major markets and large cities. However, 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 have opened in small towns with populations of less than 30,000 people,” said Greg Tanner, National Director of Franchising Development for Aaron’s Sales & Lease Ownership. “Aaron’s will continue to open new franchise locations in traditional urban markets, but by expanding into smaller towns and in rural areas, we increase our penetration in growing and underserved markets.”

Aaron’s will continue to attract franchisees to open multiple franchise locations in urban markets, while simultaneously concentrating new efforts in smaller communities. Aaron’s franchise strategy also focuses on larger, freestanding buildings of between 8,000-10,000 square feet with high recognition in the community, versus blending into strip malls.

With revenues of nearly $5 billion, the consumer durable goods leasing market is one of the most consistent growth markets in the nation today. Having only penetrated 20 percent to 25 percent of the potential market, there are still significant opportunities.

“In addition to the excellent unit-level economics of Aaron’s stores in these smaller towns, our strategy to target these areas is based on demographic research that shows an ideal match between the incomes, population, lifestyles, behavior patterns and buying habits of typical Aaron’s customers,” said Tanner.

Listen to a podcast interview with Ken Butler. Ken Butler, President of Aaron's Sales and Lease Ownership, addresses attendees at the 2007 Aaron's National Managers Meeting In Dallas, Texas.

United States Census Data shows that more than 50 percent of the nation’s 96 million households fit the profile of a typical Aaron’s leasing customer. By carrying a larger selection of new products and big brand names, including Philips, Sony, General Electric and Maytag, at low prices and offering flexible financing options, Tanner says Aaron’s is well poised to grab a significant share of the $125 billion household and electronics industry.

“We are a unique retail category that offers the same products sold in big box stores, but we are more flexible when it comes to payment options,” he said. “Our customers can pay by credit card or cash like most other stores, but they can also pay 90-days same as cash or take on a one to two year lease if they want to. Whatever their situation, we work with them.”

Celebrating more than 50 years of success, Aaron’s is most known in communities around the national for its culture, service, program, and people." Those are our real secrets,” Tanner said.

Shifts in the nation’s economy have also set the stage for tremendous future growth of the Aaron’s concept. The continued tightening of consumer credit and the growing number of American households with real annual earnings under $50,000 has created an unprecedented demand for the leasing of big-ticket consumer goods.

“That’s one of the truly rewarding aspects of operating a neighborhood business like Aaron's," Tanner said. “Customers can come in our stores and lease or purchase high-end products at prices they can afford, on a payment schedule that works for them.”

Listen to a podcast interview with Robert Briley. It’s a textbook business-school, case study in how to dominate a market. Briley, chairman of the Texas Association of Rental Agencies and an APRO board member, said converting to Aaron’s was a “simple business decision.”

Robert Briley Converts Rent Citys To Aaron's
Robert Briley, one of the most well known and highly respected RTO operators in the country, converted Rent City locations to Aaron’s Sales & Lease Ownership “to take out the competition,” he said. “I’ve made many acquisitions over the years principally to remove competitors from the market. Converting to Aaron’s allowed me to do that.”

It’s a textbook business-school, case study in how to dominate a market. Briley, chairman of the Texas Association of Rental Agencies and 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 Texas presence. “I like their image,” he said and added," Aaron's is half way 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.”

“We’re finding that there are many strong independent operators out there who don’t have an appetite to sell out, but are increasingly competing with public money,” said Todd Evans, vice president of franchise operations for Aaron’s. “We felt this was a good time to resurrect our conversion program.”

Robin Loudermilk, Chief Operating Officer of Aaron Rents, parent company of Aaron's Sales and Lease Ownership, addresses attendees at the 2007 Aaron's National Managers Meeting In Dallas, Texas.

When Aaron’s originally rolled out an independent conversion program 15 years ago, the company met with limited success. Evans says the program was refined and the Rent City deal is the prototype for future conversions. Evans queries, "Why compete when we can collaborate and expand together?”

Aaron’s Sale & Lease Ownership is in the midst of an aggressive growth plan aimed directly at markets currently occupied by independent dealers in towns with a population of 30,000 or less.

Aaron’s lower-margin, higher volume business model differs from traditional rent-to-own operations in several ways. The primary difference is profit margin. Can the volume really outrun the lower margins? “Yes,” says Briley. “Your typical rent-to-own store averages 10-12% returns per month. Aaron’s returns average 4% and their goal is 2%.”

“There’s no doubt that you can put a higher percentage to the bottom line, if you follow the accepted rent-to-own model,” said Evans. “And, there’s nothing wrong with that method of doing business. But, you don’t deposit percentages. We put more money to the bottom line.”