 APRO: The Official Voice of the Rent to Own Industry
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Progressive Rentals April - May 2008
Make the Connection! APRO’s 2008 Rent-to-Own Convention and Buying Show: August 11–14 , St. Louis
Make the Connection!
Meet us in St. Louis and make your rent-to-own connection at APRO’s 2008 Rent-to-Own Convention and Buying Show. It’s the industry’s must-see event of the year—and this one will be spectacular. We’ve streamlined the convention schedule to accommodate both dealers and vendors. And for the first time, we’re meeting in St. Louis, the gateway to expanding your business and enjoying leisure time with family, friends and colleagues. Last year’s successful All-Industry Roundtable is back, along with informative seminars designed to help you improve your rent-to-own business. APRO’s 2008 Buying Show will offer specials available exclusively to attendees. So don’t miss this year’s best opportunity to connect with everything rent-to-own!
New Schedule - APRO has revamped its convention and buying show schedule for 2008 in order to make the meeting more convenient for rental dealers and exhibitors. This year’s exhibit hall will feature extended hours in a two-day schedule, with new “Info-To-Go” educational sessions on the exhibit hall stage, as well as complimentary lunches and a cocktail party. The annual Awards Banquet will be held a day earlier than usual in the convention schedule.
APRO Show Specials - More than 100 vendors exhibiting products specifically for the rent-to-own industry will offer APRO Show Specials that won’t be available anywhere else. The Buying Show will conclude with a cash giveaway of up to $10,000. New for 2008: Exhibitors will be taking pre-show orders. If your entry is drawn and is a pre-show order, your winnings will be doubled!
All-Industry Roundtable - APRO’s All-Industry Roundtable session is back by popular demand! The hottest topics in the industry will be discussed among rental dealers with companies both large and small. Roundtable participants will be able to give and get immediate insight into current issues via an interactive keypad-response system. And later that day, APRO will feature a top slate of educational seminars to help your business grow.
RTO Networking - APRO’s social gatherings can’t be beat! This year, we’ll take you to St. Louis’ unique City Museum for a Gala Cocktail Party, present our version of the ESPYs at our Awards Banquet and—new for 2008—host a cocktail reception right in the exhibit hall.
Golf Tournament - This year’s Joe Eason/Tom Kitchens Golf Tournament will be held on the rolling hills of the Quail Creek Golf Club in St. Louis. New for 2008: The tournament will start later in the day this year to allow for more participation from those driving in from surrounding areas.
Meet us in St. Louis! - There’s something for everyone in St. Louis, including the Anheuser-Busch Brewery, a ride to the top of the Gateway Arch, a paddle-wheel cruise on the Mississippi, the new Lumiere Place Casino, St. Louis’ fabulous historic districts and more. Use this opportunity to nurture your business and have a great vacation with family and friends. The St. Louis Renaissance Grand Hotel offers an elegant and relaxing atmosphere near the banks of the Mississippi River and America’s Center exhibit space is directly across the street.
It’s Affordable - One aspect of the 2008 show that is not new is registration costs—we’re keeping them low so that you can bring your most valuable employees to the most important annual event in the industry. We’re offering a $75 “limited registration” that includes all seminars and exhibit hall admission (with three lunches and exhibit hall cocktail party); tickets to social events are available for an additional charge.
Social events
Joe Eason/ Tom Kitchens Golf Tournament
New for 2008! APRO has scheduled the golf tournament to begin at 11 a.m. to allow for more participation from those driving to the event from surrounding areas. Quail Creek’s Championship Golf Course provides natural streams, rolling hills and Bermuda fairways. The par-72 course has four sets of tees, playing from 5,500 to 7,000 yards. Designed by Hale Irwin, the club has hosted two USGA tournaments and a U.S. Open qualifier. When you’re there, you’ll understand why Quail Creek (www.quailcreekgolfclub.com) is considered one of the most popular courses in St. Louis. Golf tournament space is limited and assigned on a first-come, firstserved basis, so register early.
APRO President’s Reception— honoring state presidents, APRO PAC, Team APRO and Congressional Leadership 6–7 p.m., Monday, August 11 Sponsored by dPi Teleconnect and Speed Queen This annual event recognizes those who have gone the extra mile to help the rent-to-own industry thrive by nurturing the legislative process at both the state and federal levels. Join APRO President Larry Carrico in honoring those who work so hard to protect our industry. Missouri Congressman William Lacy Clay will address the group and offer insights into the latest developments regarding the Consumer Rental-Purchase Agreement Act on Capitol Hill. Business attire; complimentary hors d’oeuvres and cocktails.
Gala Cocktail Party at the St. Louis City Museum 7–10 p.m., Tuesday, August 12 Sponsored by Coaster, D&H Distributing, Florida State Games, LG Electronics and Moneris Solutions St. Louis’ City Museum is no ordinary museum. Housed in the 600,000-square-foot former International Shoe Co., it’s an eclectic mixture of playground, funhouse, surrealistic pavilion and architectural marvel made out of unique, “found” objects. Internationally acclaimed sculptor Bob Cassilly and his crew of 20 artisans constructed the museum from the very stuff of the city. Reaching no farther than municipal borders for its reclaimed building materials, the City Museum’s features include old chimneys, salvaged bridges, construction cranes, miles of tile and even two abandoned airplanes!
Dress casually and wear comfortable, closed-toed shoes so that you can explore the recesses of this unique creation. Free food, complimentary drink tickets, music and dancing will be available at the cocktail party.
Spouse/Guest Tour:
Tour some of St. Louis’ most historic homes and neighborhoods at this year’s annual Spouse/ Guest event, including the 42-room Cupples House, which was built in 1889 on the grounds of St. Louis University. Then move on to explore the unique character of St. Louis through three of its most historic neighborhoods: Compton Heights, Soulard and Lafayette Square. This tour is included in the Spouse/ Guest registration. Tickets can also be purchased á la carte. Preregistration is required as space is limited.
Exhibit Hall Reception
New for 2008!: Enjoy light hors d’oeuvres and complimentary drinks while perusing the America’s Center exhibit hall and visiting with friends, old and new. This reception will be held prior to the APRO Annual Awards Banquet.
APRO 2008 Awards Banquet: The ESPYs
In honor of St. Louis’ rich sports history—which includes the Cardinals, Rams and Blues—APRO’s Awards Banquet has a sports theme for 2008 patterned after the prestigious ESPN awards program. As the ESPYs honor sports heroes, APRO will honor the heroes of the rentto- own industry during this elegant evening. New for 2008!: APRO has responded to your requests and scheduled the awards banquet for Wednesday night—one night earlier than usual in the convention schedule—so that those who wish to leave on Thursday afternoon after the close of the exhibit hall can do so. Semi-formal evening attire.
In Search of the Industry's Finest
Help APRO and the rent-to-own industry honor the two most important people in the rent-to-own business: the customer and the employee. How, you ask? By finding and nominating the 2008 Rent-to-Own Customer of the Year and Employee of the Year. APRO’s RTO Customer of the Year and Employee of the Year contest marks its ninth anniversary this year—almost a decade of recognizing those who best serve not only our industry, but their communities and the betterment of society in general. If you know a customer or an employee in the rent-to-own industry who excels in charity and kindness, then please help us honor them. APRO’s Rent-to-Own Customer of the Year and Employee of the Year competition helps increase store morale and motivate RTO employees. It also helps bolster the image of the industry and has proven to be one of the best means of attaining positive local news coverage for rent-to-own businesses. Many companies have created their own internal contest then nominated their winners for APRO’s national competition.
What’s in it for me?
The 2008 Employee of the Year will win a trip for two—with accommodations, travel and convention registration included—to APRO’s Convention and Buying Show in St. Louis, August 11–14. The winning employee will be honored during APRO’s general session as well as in APRO’s publications and on its Web site. APRO’s 2008 Customer of the Year will likewise win a trip for two to APRO’s 2008 Convention and Buying Show—or the cash equivalent. And for helping APRO find that distinguished Customer of the Year, the store that nominates this year’s winner will receive $500.
The competition not only benefits rent-to-own employees, customers, the industry and its image, but gives you a chance to win a free vacation or money. So what have you got to lose? Read the profiles of past winners (see sidebar) to get a better idea of the caliber of people APRO is striving to honor. Then visit APRO’s Web site (www.rtohq.org) and complete the nomination form or use the form included in this article and send it to APRO.
Here are brief profiles of APRO’s previous Rent-to-Own Customer of the Year and Employee of the Year recipients since the program was initiated in 2000. If, while reading about these winners, you realize that you know an employee and/ or customer who has likewise gone “above and beyond” the call of duty, please make the effort to nominate them for the 2008 competition. Note: these profiles were written at the time the honors were bestowed and may not accurately depict current circumstances or employment.
RTO Customer of the Year:
2005: Johnnie Bradford : Johnnie Bradford is pastor of Open Door Full Gospel in Columbus, Mississippi, which she founded in 1990 to provide not only a place to worship, but also to give children a sense of belonging. Bradford’s church serves 300 members and includes a youth center for children with no place to go and nobody to love and care for them. Not only does she have a special place in her heart for children, she’s also opened a personalcare home for the elderly. Bradford is a certified nurse assistant and certified in caring for the hard-of-hearing.
2004: Patrick and Marianna Head Patrick Head has served as pastor of the Friendship C.M.E. Church in Dorsey, Mississippi, for the past 10 years where he and his wife, Marianna, help the community fight poverty, homelessness and hunger. Longtime Baber’s Leasing customers, the Heads assist in tutorial and mentoring programs for children and Patrick is the co-founder of the Save Our Youth organization.
2003: Donna Brown Minister and evangelist Donna Brown was raised by an alcoholic mother who was unable to hold down a job and, eventually, a home. “I had to overcome a lot of anger from my childhood,” she says. “Just because you’re a minister doesn’t mean you have it all together. We all have to overcome things.” Brown is a regular visitor to nursing homes to cheer up the elderly. She has spent a great deal of time counseling a young mother struggling with drug addiction and has taken on the responsibility of helping to raise the woman’s child.
2002: Norma Burgenger Norma Burgenger of Vinita, Oklahoma, has turned to Stanley’s Rent To Own to assist her in opening her home to strangers in need. “Even though she lives on a fixed income, she takes in people who need a temporary place to stay regardless of their background or current situation,” says Stanley’s Rent To Own store manager Bobby Pierce. “Norma is a very caring person who does whatever it takes to help someone out. Without us, however, she might not be able to assist these folks in the manner she would like to.”
2001: James and Brenda Atchison James and Brenda Atchison have been loyal customers of the Rent One store in Mt. Vernon, Illinois, since its opening in 1985. The Atchisons have helped raise eight foster children as well as four children of their own. “They never know when the local child protective services office might call to ask them to rescue another child,” says Rent One’s Keith Carrico. “However, when the call comes, they know Rent One will be there to deliver whatever is needed to make their house a home for a child in need.”
2000: Maria Magdalena Estrada El Paso’s Fiesta Rent To Own customer Maria Estrada is a single mother of four boys who has relied on the service and convenience of her local store for many years. “I have acquired home furnishings, appliances and electronics to create a warm and stable environment for all of my boys,” says Estrada.
RTO Employee of the Year
2007: Jonathan Brown Jonathan Brown’s participation in the Upward Bound program and his role in supporting his grandparents as they raised him and his siblings distinguishes him as an individual who goes above and beyond his job to help his community and family. Brown mentors other students and contributes to such causes as Adopt-AHighway, the Red Cross, blood and food donation campaigns and local nursing homes. He has continued his leadership and mentoring through his employment at Best-Way/Rent To Own in Tappahannock, Virginia. In his first year of employment, Brown was named the company’s Employee of the Year before going on to become APRO’s Rent-to-Own Employee of the Year.
2006: Murray Beck Murray Beck, vice president of Rent One operations in Mt. Vernon, Illinois, is a champion at raising money and awareness for muscular dystrophy and multiple sclerosis. His efforts not only raise awareness and funds for these important causes, they also serve to showcase Rent One’s commitment to community involvement. In addition to being named APRO’s 2006 Rent-to- Own Employee of the Year, Beck was also honored as Rent One’s Regional Manager of the Year in 2006.
2005: Paul Russell During the 2004 flooding in the Ohio Valley, Paul Russell of Blue Ribbon Rentals led a team to solicit and deliver food and clothes for victims of the disaster. A pastor for his church, Russell started a youth ministry from scratch and now ministers to at least 60 teenagers— mostly from broken homes and/or abusive backgrounds. Russell doesn’t believe in the word, “can’t.” He has taken care of employees in need and fed hungry customers who’ve lost their jobs.
2004: Jody Katz Jody Katz of Buddy’s Home Furnishings in Tampa, Florida, strives to raise awareness of the problem of missing children. His efforts and Buddy’s role in supporting Child Protection Education of America raised $10,000 for the organization by acting as a corporate sponsor for CPEA’s annual “Leather & Denim Biker Ball” and sponsoring the annual “Missing Children’s Walk” in Florida. In addition, Katz and Buddy’s have sponsored at least 15 “ID Me Now” events where parents can have their children’s fingerprints registered in each of Buddy’s stores throughout Florida.
2003: Anthony Robinson Rent-A-Center employee Anthony Robinson of Lakewood, Colorado, is a single parent who not only has two children of his own, but also adopted his sister’s three daughters after their mother died in 2001. Robinson participates in Street Beat, a program for at-risk and troubled youth in Denver, Colorado. “I went there after high school and became a member and then an instructor,” says Robinson. “My focus is the kids, because they need somebody. That’s my drive to keep going. I don’t have that ‘quit’ in my system.”
2002: Ronnie D. Williams In addition to his duties as account manager for RentWay in Harrisburg, Illinois, Ronnie D. Williams manages the Harvest Deliverance Center, a homeless shelter that also provides food and clothing for the needy. A father of six, Williams spends the holidays preparing and serving meals to those unfortunate enough to find themselves without a home or family with whom to spend the holidays.
2001: Josef Warren Josef Warren is manager of the New Image Rent To Own store in Security, Colorado, and “really knows how to make our customers feel right at home,” says New Image Assistant Manager Mike Payne. “He’s great with people—both customers and employees—and treats everyone with equal respect.” Beyond his outstanding efforts at New Image, Warren also gives of himself outside of work. He makes frequent visits to cancer patients, holds prayer groups for the depressed and also visits with prison inmates.
2000: Eric Ison Eric Ison, store manager for Showplace in Marion, Ohio, was nominated for APRO’s Rent-to-Own Employee of the Year award by his district manager for being a “valued high-performance manager.” Ison not only has become one of the company’s leading trainers—including developing a computer training class for employees—but also is involved in his community. He started a food drive, helped build a school playground and participates in United Way fund-raisers as well as the Adopt-A-Family program, the Salvation Army and the American Red Cross.
Contest rules and criteria
RTO Customer of the Year:
RTO Employee of the Year:
Rent-to-own and Islam
If you are wondering what rent-to-own, a 20th century American commercial notion, could possibly have in common with Islam, a Middle Eastern religion that arose in the middle ages, wonder no more. The answer: quite a lot, actually. There are even Arabic words for rent-to-own—ijara (leasing) and ijara wa aliqtina (lease ending into ownership).
Rent-to-own arises in the context of the Islamic religion because of interpretations of the Koran and the Hadith (official interpretations of the Koran) known as Sharia law. Sharia is among the most conservative of Islamic interpretations of the Koran and holds sway in several countries where Islam is the predominant religion—Saudi Arabia, Iran and Nigeria, for example. It is an influential doctrine in many other parts of the Islamic world, as well. Sharia law controls many aspects of public and private life for believers and non-believers alike: political, economic, sexual, social, dietary, dress, as well as the more traditional areas of law—civil and criminal.
To Western sensibilities, many aspects of Sharia law seem medieval, often barbaric. Without investigating Sharia punishments such as stoning to death for adultery or amputations for theft, there are aspects of this body of law that control one’s economic life. Sharia law prohibits believers from taking riba, which is a term akin to interest on a loan or a finance charge on a purchase. The idea is that it is unholy to gain without any effort and beyond the profit that may result from an exchange in the marketplace. Islam teaches that money has no intrinsic value and Sharia law forbids anyone from profiting just by loaning out money. There is some dispute among Islamic scholars whether riba means any interest or only interest at usurious rates, although the strict interpretation favors the former.
The same kind of prohibition exists in the Bible. Exodus 22:25, Leviticus 25: 35–37, Psalms 15:5 and Ezekiel 18:13 all condemn charging interest for the loan of money. However, by the time the New Testament was written, the rules of money lending had been relaxed and Jesus’ parable of the talents seemingly approves the charging of interest—Matthew 25:14–19. In any case, Christianity and Judaism both were able to rationalize their ways around the Old Testament prohibition against charging interest during the Enlightenment and as the world commercialized in the interests, perhaps, of greater and quicker earthly treasures. This easy rationalization has been harder to come by in Islam. If loaning money without charging interest is an ecoeconomically senseless endeavor—and charging interest can send you to hell—what to do? The answer, in a word, for the most devout Muslims, is ijara—rent-to-own. While the motivation of Islamic rent-to-own dealers and customers is entirely different from the motivations underlying the RTO industry in the U.S., the business result and the transactions are the same. It is a riba-free transaction that may cost a little more, but one that does so very much more. In U.S. terms, it provides customers with access, flexibility, convenience and terminability. To Muslim believers, it provides goods and services today and nothing less than the keys to the Koranic equivalent of the Pearly Gates. Islamic populations governed under Sharia law are being told that they cannot enter into transactions where interest is charged. The marketplace response has been rent-to-own and it is an increasingly popular option for housing and vehicles in England, several other European countries with heavy Muslim populations and Canada. There are Muslim financial institutions in these countries that are structuring riba-free RTO transactions for the devout. The bank buys the property the believer wants and collects rent on the property, whether real or personal, holding title until the purchase price, plus a little extra, has been paid. By some estimates, Sharia-compliant finance is growing at a rate of 15 percent per year in the Middle East.
Here is how a Sharia-compliant financial institution explains ijara financing: the customer identifies the desired property—either real estate or personal property. The bank purchases the property and puts title either in the bank’s name or in a trust. The customer enters into an agreement to purchase the property at the bank’s cost with payments over time. Title remains with the bank/trustee/ lessor until the price has been paid in full. In addition, because the customer is using the property, the customer must also pay rent for its use. Depending upon the deal, the rental rate may be stable or it may be adjusted as often as daily or less often—annually, or every three to five years. In its purest form, an ijara transaction cannot charge a late fee if the rental payment is not made on time, because such a fee would be deemed riba and forbidden. However, the agreement can provide for the lessee to pay a certain amount to charity if the ijara payment is not made on time.
The bank/lessor may control the charitable funds, but must ultimately give those funds away and cannot make them part of the lessor’s income. If the customer breaches any term of the agreement, the bank/lessor can terminate the agreement and claim the property as its own. Once the agreement is terminated, for any reason, the customer is no longer obligated to make rental payments. When the agreement runs its course, the bank/lessor transfers title to the property to the customer for no additional consideration, just like a rent-to-own transaction in the U.S. The practice of structuring financial transactions to comply with Sharia law is not without criticism, even among Muslims. In Canada, the country’s Mortgage and Housing Corp. has commissioned a study of Islamic banking and ijara there and that proposed study has come under attack. The Muslim Canadian Congress (MCC), a progressive Muslim group, has released a letter stating, “Religion has no place in the banking or mortgage industry.” According to the founder of MCC, “You are taking advantage of the most disadvantaged people. [Sound familiar?] You are telling them that we will charge you more for your total mortgage and when you die you will go to heaven. They are using the holy books to prey on a vulnerable market.”
No one expects to see prayer rugs in U.S rental stores any time soon, but stores in areas with heavy Muslim populations may want to investigate the prevalence of Sharia law principles in their communities. If there are a lot of adherents, some careful and respectful marketing and an explanation of rent-to-own, U.S. style, might bring some more business into the store. Of course, if the Islamofascists, who insist on strict compliance with Sharia law worldwide, finally win the war on terror and Americans either bow their heads to Mecca every day or have them cut off, the rent-to-own business in the U.S. stands to get very, very big, indeed. In the meantime, a better understanding of Sharia law in markets with lots of Muslims might spur deliveries.
Ed Winn III is APRO’s general counsel. His e-mail address is edwinn@mwvmlaw.com.
APROfile: Scott Brown
Scott Brown spent the bulk of his Wichita, Kansas, childhood in two places: the grill and the pool. Both locales were manifestations of family legacies. Brown’s Grill was opened by Scott’s grandfather, Richard Brown, in 1946 and, by the time Scott came along, there were three locations run by Scott’s dad, Charlie (yes, Charlie Brown), and uncle, R.J. Prior to joining the family restaurant business, Charlie had lettered nine times in three different sports and been an All-American as a high school football player, then went on to a full football scholarship at Kansas State University. Meanwhile, Scott’s mother, Priscilla, had held a dozen or so national swimming records as a youth. So it’s no mystery how Scott not only inherited extraordinary athletic ability, but also absorbed a die-hard work ethic, entrepreneurial spirit and exceptional discipline and drive during his formative years—qualities that have served him well beyond his days of hosting duties at the grill or record-breaking competition at the pool.
They’ve served him, in fact, all the way to owning a ColorTyme franchise that generated enough revenue to rank his four-store operation fifth nationwide in the system. To call Scott Brown “hard working” is an understatement. Brown was a tender 10 when he began helping his grandfather at the restaurant, working three hours every Sunday for $10. A competitive swimmer since the age of 8, Brown was driving himself to 5:15 a.m. practices by the time he was 14 and completing every weekday with another two-anda- half-hour swim session.
He kept up both “jobs” through his high school graduation, when his championship swimming—twotime Kansas state champ, All-American as a senior and still the holder of several statewide records—earned Brown an athletic scholarship to the University of Arkansas, where he became a four-year letterman. “When you’re on an athletic scholarship, it’s like having a job,” Brown says. “If you don’t perform, then they cut you and you lose your college funding; you’re done.” Despite the performance pressure—or maybe in addition to it—Brown learned many lessons about the real world while looking at life through swim goggles for up to 50 miles a week. “Swimming absolutely taught me a lot,” confirms Brown.
“We had only a few big swim meets a year, so I learned how to work hard every day toward an end goal. My AAU swim coach taught me how to use visualization, so I got to where I could visualize very, very clearly what the next meet would be like and what winning would feel like, and I was able to prepare myself mentally as well as physically. I had to develop solid time-management skills in order to juggle my swimming and my academics—just like I juggle my responsibilities as a business owner today.” When Brown was ready to graduate as a Razorback with a real estate finance degree, his idea was to go into commercial real estate— but it was late-1980s bust-time, so opportunities weren’t exactly knocking down Brown’s door.
The family business was still going strong, but Brown wasn’t hot to go back into the kitchen. “I didn’t go into the family business because, well, I wanted to try something different,” Brown says. “I love the restaurant business, but the hours are brutal. My dad used to get up at 4:30 a.m. and work until one o’clock, come home and sleep, then go back to work at 5:00 for the supper rush and work until after I was asleep. He was super-supportive and always there for me, for swim meets and other activities, but the job was so time-consuming. I just wanted to do something else.”
Brown’s father, Charlie, did happen to know two rent-toown trailblazers—Rent-A-Center’s co-founder Tom Devlin and then-CEO Bud Gates—and suggested Scott interview with the company. Scott had no idea what rent-to-own was all about, but agreed to interview with Gates in June 1987. “I wanted to get into the real estate department,” remembers Brown. “But Bud insisted that operations was a better career path, so I started as an account manager at Wichita 5 on Waco Street.
The first three months I spent questioning what I was really doing there. Here I had a finance degree from a four-year college and I’m out on the truck in a tie delivering and picking up furniture, running a route, learning the basics of the business. It just wasn’t what I had envisioned for my career path. But I got some good advice from my dad; he said ‘Give it two years of your life and if you’re not where you want to be in two years, then go out and find something different.’ A year later, I was the assistant manager of the biggest store in town. Six months after that, I was the store manager back at Wichita 5 and man, I was in charge and in tall cotton.” During this period, Rent-A-Center was bought by the British company Thorn EMI.
The new owners decided to launch a new concept division within their retail/rentals area, as a competing brand to Rent-ACenter. They wanted to open up the first Thorn International Rentals (TIR) store in Baltimore and the first manager they chose for the job was Scott Brown. “I moved to Baltimore to run the first TIR store,” Brown recounts. “And that’s when my career really began to take off. I doubled the size of the store within six months and was promoted to district manager. We opened up seven stores in seven months and secured 5,700 agreements within the division’s first year-and-a-half. I got promoted again to market manager and I transferred to San Antonio, where I took the south Texas region from four to seven stores.
In 1992, I was named TIR’s market manager of the year. The whole thing was a huge learning experience for me.” The tremendous wave Brown had been riding gradually turned into a series of smaller swells to ride out, as Thorn EMI purchased Remco, converted all of its stores to the TIR brand, acquired Choice TV and transitioned those stores into Remco, then chose to fold all Remco stores back into the Rent-A-Center brand. Brown stayed in south Texas until late 1995, when he returned to Baltimore with his wife and their firstborn to oversee the Choice TV acquisition. Managing 16 stores at 30, he was among the youngest multi-unit managers within the TIR system.
But when all stores were reverted to Rent-A-Center in 1997, Brown decided it was time for a change. “I really enjoyed working in the Remco environment,” Brown says. “We had a much different operating philosophy, a solid value structure, empowered supervisors and the whole system gave you a lot more latitude to run your business. Rent-A-Center was so big, it had to be really structured and that just wasn’t a good fit for me. And if I wanted to get promoted, then I’d probably have to relocate. I was ready—with my family—to settle down for a while.” But for Brown, settling down meant first shaking things up. After a highly successful decade in the industry, Brown left rent-to-own and joined Merrill Lynch in Annapolis, Maryland, as a financial advisor managing high-networth individuals’ investment portfolios. It’s an almost-eight-year era Brown summarizes succinctly. “It meant a big pay cut and building from the ground up again,” he says.
“I was quite successful at it, but after about seven years, I got the itch to do something different and I realized the clients I had with true wealth were the ones who owned their own businesses.” At the beginning of 2004, Brown rang up a former Rent-A-Center associate, Steve Arendt, who was at that time the CEO of ColorTyme, to see whether an opportunity existed for Brown to re-enter rent-to-own in the Washington, D.C., area through ColorTyme. “[Arendt] said, ‘Let’s roll,’ and by spring I was fairly committed to becoming a franchisee,” Brown says. “The ColorTyme model seemed like the right fit for me and the people felt like family.” Still serving clients at Merrill Lynch, Brown began to consider candidates for a business partner—someone who could launch the franchise while Brown eased out of his investment-house responsibilities. Louis Garcia, a colleague from Brown’s TIR days, came to mind immediately. “Louis was a regional director for RentWay in Texas at the time,” Brown says.
“I called him up and asked him whether he wanted to be in business with me. He was ready to go.” The pair lined up their first lease by autumn and opened up the doors of Epic Venture’s first ColorTyme store in November 2004. “The plan was for me to continue working at Merrill Lynch while we got going,” explains Brown. Their strategy was: “Let’s start with one store and once it’s cash-flow-positive and can support itself— under our model, about six or seven months—we’ll go search for our next site. Louis will have a team in place to run the first store and he’ll go open up the next one. And so on, up to five stores in the northeast part of the D.C. metro area—which is our development agreement with ColorTyme. Once the third store was cashflow- positive, I was going to leave Merrill Lynch and get more involved in management.” The first three months went like clockwork, securing more than 300 agreements.
But then opportunity knocked—loudly— and Brown and Garcia’s best-laid plans turned topsy-turvy. “We had an opportunity to buy three more stores from another ColorTyme franchisee who was, unfortunately, going out of business,” Brown says. “It was a huge financial commitment, but the real estate was great, the leases were favorable and all the stores needed was some inventory and some leadership. So we went from one store to four stores overnight—and we had been in business only three months. It was a lot to bite off. I stayed with Merrill Lynch another three months, but Louis was doing everything and he was about to snap. He did an amazing job for us, but it was just too much work, so I left Merrill Lynch and came on full-time with Epic Ventures.”
Three years later, Brown and Garcia are still running the same four stores, but the size of the stores has tripled. Along the way, they’ve garnered several ColorTyme awards, including 2005 New Franchisee of the Year and the Top New Store Growth, 2006 Top Ten Franchisee of the Year and 2007 Big Five Award for being among the top five revenue-producing franchisees. The next step? More stores, of course. “We’re planning to open up our second store in the D.C. market— our fifth overall—in May, another by next spring,” forecasts Brown. “Then, we expect to revert to our original pattern, so that by the end of 2010, we should have eight stores—five in D.C. and three in Baltimore. “Right now, I can visualize as clear as day what this company is going to look like and feel like when we get the eight stores built,” Brown says.
“We’ve already got the right sites selected; we’re just on the waiting list with the landlords. I know how much revenue we’re going to be doing. I have the vision, I know where we’re going. Every quarter, we talk about whether our vision is aligned. Are we working toward the same thing down the road? It keeps us focused on it and working hard. Goals are good to have, but they don’t mean a thing until you put them on paper and tell somebody about them.” At the core of Epic Ventures’ success is the complementary partnership between Brown and Garcia. Brown, the company’s CEO, handles all things financial, as well as site selection and marketing.
Garcia, the firm’s president, takes care of everything else—with the help of recently added minority partner and vice president of operations Dave McNichol. “Dave is one of the best—maybe the best—operators in rent-toown,” Brown says. “He and I are sort of cut from the same cloth— we’re hard-charging overachievers; we want to be number one at everything we do. Louis is the best balance for that—has more than 25 years of experience and more business maturity. I get all amped up and he calms me down. He’s much more passive with his management approach; he’s got the patience of a saint. I’m a lot more direct; I’ll hit you between the eyes. He’s like an older brother to me, the perfect partner for me. I’m the face of our company, I’ve got the vision going, I’m the passion—Louis is the heart and soul.”
But it’s not all about the perfect pairing. Brown and company also have an arsenal of not-so-secret—yet rather unique— ‘weaponry’ that they are convinced make their continued success just about foolproof. First: a generator program—a giant database Epic Ventures’ stores use as a client contact system. According to Brown, the program is his company’s biggest competitive advantage. “No one else in the industry has this, that I’m aware of,” he notes. “Others might have sales lead programs, but most of what I’ve seen consists of a three-ring binder with a bunch of names scribbled inside and the only time they get worked is whenever the boss starts poking around, ‘What are you doing to generate new business?’ They dust it off and leaf through it, begin calling numbers only to find half are disconnected, don’t work or whatever. “With our client contact system, we can track all of our future customers,” Brown says.
“Someone who comes into our store, but doesn’t open up an account with us right off, we capture the person’s name, address, telephone, all the details and we put it into the system through a computer at the store. That communicates with a master hub at my office and we can track and work those people until they become active customers.” Of Epic Ventures’ current customers, about three-quarters of them are active because of the client contact system, with 1,800 “future customers” and about 1,600 inactive customers also plugged into the system. “We market to these three groups—futures, currents and inactives— constantly,” Brown says. “We can even track ‘futures’ by product desired, so if we’re about to hold a big sale on, say, living room sets, then I can simply pull up all the customers interested in living room furniture, gather their information, parcel it by location and send it off to our stores, with directions for our co-workers to contact these folks and let them know about the upcoming sales event.
Tap the pipeline and eventually, once you’ve marketed to them enough, they will be your customers.” Second: targeted marketing, every month without exception. “Consumer research indicates you’ve got to touch somebody 18 times before they buy,” Brown says. “So we’ve got five direct-mail avenues we use every single month—ADVO [now called Valassis, a direct-mail marketing company], marriage mail [flier-type pieces grouped together with other, often couponoriented mail], solo mail, postcards and paidin- full mailers. We also run 15-second radio spots twice a day, six days a week, just for pure branding purposes.” Third: Superior personnel. “We hire great people and we pay them well,” quips Brown— and he means it. The company typically pays about 20 percent to 30 percent more than the competition, across the board. “You get what you pay for and we want quality people,” Brown says. “We want to make sure our people are compensated well at all levels.
It helps us attract good candidates, it keeps them from looking for greener grass and it holds them accountable. We pay for performance and performance only. We pay a lot and we expect a lot.” Such expectations comprise the fourth and final leg of Epic Ventures’ solid seat of success. Brown and Garcia have dubbed them “Top Gun activities”—22 well-defined processes that they believe are vital to a store’s success. They expect all co-workers to embrace and execute these processes with dogged consistency and just to make sure, McNichol performs monthly audits of all 22 activities. “We inspect what we expect on a monthly basis,” says Brown. “You’ve got to do 80 percent of the Top Gun activities month in, month out, or you won’t be working with us for too long.”
There are five categories of Top Gun activities, including a group of six activities related to the generator program. For example, followup actions—such as sending a coupon, giving a call or making an appointment—must be scheduled for all future customers. Daily, the general managers review all the ‘futures’ for their stores and flag ones without scheduled activities. As a co-worker, if one of the future customers you entered into the system during the past month doesn’t have a follow-up action scheduled at the time of your audit, then you receive a zero for the month for that Top Gun activity. No excuses, no exceptions. “This is purely about process; we’re a process- driven company,” Brown explains. “We know if we do these things, then the numbers will follow.
We expect 20 appointments with future customers to be scheduled in every store every week by Thursday. Why? Because of that 20, half won’t come in; 10 will, and about half of them will get something from you. So just that one activity is worth about three to five deliveries every week for every store—brand-new customers. We’re not hoping for success; we’ve planned for it.” Scott Brown claims that despite his own workaholic heritage, he’s not all that interested in how much time people clock at work. What he wants is quality time. “When the day is done, I’m not about the quantity of hours at all,” he says. “But if you’re going to work, then make sure you’re putting in really high-quality hours. Make your time impactful and create momentum whenever possible.” Brown also claims he himself is not a workaholic.
Committed, energetic and passionate about his work, absolutely—but for Brown, balance is also part of the mix. “Too much work can make you dull, miserable and stale,” he reasons. “I’ve got a wonderful wife of 16 years, Supereena, and two fantastic kids—Nathan is 13 and Pryia, 9—so I spend as much time with them as I can. And I’m an avid mountain biker; I go to Moab, Utah, a couple of times a year to indulge in that pastime. Extreme fun.” One can’t help but wonder of the first Kansan ever to break a minute in the 100-yard breaststroke more than 25 years ago: does he still swim? “Hell, no,” laughs Brown. “My last college swim meet was in April of 1987; I graduated in May and haven’t done a lap since.
My burnout on swimming was complete. I get into the water recreationally and splash around with my kids now and then, but no, I really don’t swim anymore and don’t want to.” And yet, Brown continues to do so much more than just keep his head above water. His natural ambition—coupled with a genuine affection for the industry he sort of stumbled into and can’t seem to stay away from—keep Brown challenged, which is exactly where he likes to be. “Rent-to-own is a really dynamic business,” he says. “It changes all the time and there are a lot of balls you’ve got to juggle to succeed.
My favorite thing about it is that I get to build things—teams, organizations, relationships. That really excites me. But you’ve got to know what it is you’re building. People will often say to me, ‘Gosh, you’re so lucky—you’ve got these successful stores and everything just seems to be going your way.’ And I say, ‘Lucky? Luck is where preparation meets opportunity and we don’t just happen to be at that intersection by accident. We had a plan—and we’re making it work.’”
Kristen Card is an independent business writer in Austin, Texas.
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APRO's 2009 Convention!
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RTOHQ: The Magazine
RTOHQ: The Magazine is the Association of Progressive Rental Organizations' award-winning rent-to-own industry magazine, and it's available here. | ||
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Click the links below to download each article as a PDF
Complete issue of RTOHQ: The Magazine | April-May 2009 | ||
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Association of Progressive Rental Organizations 1504 Robin Hood Trail Austin, Texas 78703 800/204-2776, ext. 103 Fax 512/794-0097 |