Aaron's Rental Purchase Franchise Division opened its 125th retail outlet in Bethlehem, PA, giving the Atlanta-based Rental Purchase giant (1997 annual revenues $310 million) a high profile presence in every region of the country. Fifteen additional franchise units are scheduled to open by the end of the month -- numbers generated from both multi-unit openings by satisfied franchisees, as well as new openings by experienced entrepreneurs from other industries, including video rental, fast food and auto dealerships.
"Entrepreneurs are always on the lookout for the next growth market. Furniture, electronic and appliance Rental Purchase offers almost unlimited potential for profitable expansion," explains Todd Evans, director of franchise development, Aaron's Rental Purchase. "By re-engineering the Rental Purchase retail environment and sales transaction to appeal to a higher end of the consumer market, we've created a very attractive opportunity that appeals to experienced, aggressive entrepreneurs looking to expand their business portfolios."
Unlike its competitors, Aaron's takes rental purchase beyond its stereotyped urban market. Aaron's builds super stores for its extensive selection of furniture, brand name electronics and appliances. Averaging 8,500-square-feet, these stores are built in high trafficked, suburban neighborhoods. In addition, the company has also done away with long-term agreements typical of the Rental Purchase industry. Customers can own their merchandise 'in 12 monthly payments and the agreement can be canceled at any time.
"Aaron's is re-inventing the rental purchase business much as Blockbuster® did for video rentals," says Mike Kelly, Aaron's 13-store franchisee and former Blockbuster® franchisee. "We're creating a whole new way of providing basic necessities to a major segment of the population."
Begun in 1992, and building upon Aaron Rents, Inc.'s 43-year history as the nation's premier name in furniture rental and rental purchase, Aaron's Rental Purchase franchises are opening at the rate of one per week, a trend that will accelerate into the next century even as fast food and video rental franchise growth slows due to maturing markets and
Aaron's is using its innovative approach to expand 'into the virtually untapped $4.1 billion Rental Purchase market. Recognizing that fewer than 20 percent of the 19.6 million households comprising the market are being targeted, the company is working with its franchisees to capture this under-served, burgeoning market. "The key is to team up with a company that's successful," says Charles Smithgall 111, a former Atlanta broadcaster and partner in two radio stations, who now owns six franchise stores in Kentucky and plans to add six more in Rhode Island. "With Aaron's you're hitching your wagon to a star."
Financial performance, growth opportunity, stable corporate management, strong franchise support programs and the same tough standards that propelled parent company Aaron's Rental Purchase to its solid number three ranking in the industry, are the issues fueling franchise growth and attracting increasing numbers of experienced entrepreneurs.
Minimum financial qualifications for Aaron's franchisees are a $300,000 net worth and $175,000 in liquid assets. In turn, Aaron's Rental Purchase Franchise store revenues average more than $1 million per store, with pre-tax profits in excess of $136,000.
Here's why: Aaron's has been able to create a bridge between the Rental Purchase market and the broad retail market. Blending top quality products-electronics, furniture, appliances-with its innovative, appealing rental purchase pricing format, Aaron's is attracting customers with higher disposable incomes who are buying more and paying monthly. In addition, 82 percent of Aaron's customers return to rent additional items. Further enhancing the bottom line, these products are typically rented three or four times before being acquired, so rental purchase is simply more profitable than traditional retail.
"This business is wide-open," adds franchisee Mike Kelly. With yet another outlet in the planning stage, Kelly insists success is guaranteed: "Aaron's has cleaned up the image, built bigger stores in better neighborhoods, provided the best customer service," he says. 'Nobody can touch us."
Founded in 1992, Aaron's Rental Purchase Franchise is a division of Atlanta-based, publicly-traded Aaron Rents, Inc. (RNT NYSE) Formedmi 1955, Aaron Rents, Inc. has since emerged as a U.S. leader in furniture rental and rental purchase with a total of 426 stores in 32 states. One of the first companies to enter the rental business, Aaron Rents, Inc. has grown to encompasses four divisions with revenues topping $3 10 million: Aaron Rents, Aaron's Rental Purchase, Aaron's Rental Purchase Franchises and MacTavish Furniture Industries.
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