By Geoff Williams
They can focus on their business and not have to worry about vendor or business relationships. We’ve already established those on their behalf,” says Larry Sutton, owner of Rent-n-Roll Custom Wheels and Tires. “We also have a media buying service. We can take care of planning and promoting their business, so they can focus on renting and selling. We can take care of the rest.”
More about rent to own franchise companies and rent to own stores here.
Sutton is answering a question that every CEO running a franchise operation is asked at one point or another: Why is it better to be part of a franchise operation, instead of running your own independent store?
Buying into a franchise can be a lot like deciding whether or not to get married to a particular person. Much of it is based on chemistry and the expectations of each partner. Choose your mate wisely and you’re in for the time of your life. Choose badly and you may feel like you’re simply doing time. To help you get a better picture of what franchisors are looking for in a prospective suitor, APRO talked to most of the key rent-to-own franchise companies to help clear the air a bit on some of the requirements. If you’re experienced in rent-to-own and franchising, have some experience in one or the other or even if you’re just a beginning entrepreneur with some ambition and a dream, there are options out there.
When you consider that the rent-to-own industry generates $6.6 billion every year, serving 3.2 million households through 8,500 stores in 50 states—it should be more than clear that this is a big business and that no corporate entity is just going to hand anyone the keys to their own store. In fact, these rent-to-own companies have their own guidelines about what they’re looking for in a franchise owner and some have extremely rigid standards.
That, of course, is how it should be. Franchisees want to buy into an already established brand in order to make the business world a little less complicated. Franchisors depend on partnering with other ambitious and competent entrepreneurs to grow their empire. And if it does grow, everyone wins.
While there are no hard and fast rules when granting a buyer a franchise—even the companies in this group will bend their guidelines for the right entrepreneur—only those with extensive experience and net worth should really give these folks a call. Arguably, the most difficult franchises to buy into are Aaron’s, Premier-Rental Purchase, easyhome Ltd. and ColorTyme, although that’s a subjective opinion. It’s not like there’s a scientific method to quantifying this type of information.
Still, those four are large companies. Premier-Rental Purchase has 71 franchised stores – a healthy if not phenomenal amount—but the RTO conglomerate is part of the bigger organization based in Lightfoot, Virginia, called Premier Companies, which is also the parent of Premier Home Furnishings and Premier Wheel Rentals. Aaron’s is a massive enterprise with 865 company-owned stores and 576 franchises; within three years, the franchise side will be almost as massive as the corporate. And easyhome may be not as well known, at least in the United States, but the Canadian rent-to-own furniture company has made a nice reputation and robust organization for itself, with 192 company-owned stores and now 24 franchise stores.
But even the biggest businesses have a wider, open-door policy than one might think. For instance, while ColorTyme would ideally like to find those with RTO experience, it is not a necessity. Two of ColorTyme’s top franchisees, who have collectively owned more than 50 ColorTyme stores, came in with no background in the rent-to-own industry. Colortyme has 195 franchise stores.
“You can never tell,” says Aaron’s CEO Ken Butler, when asked to describe the typical franchise owner. “I hate stereotyping people. Many of our franchise owners have different backgrounds.” That said, Butler concedes that if you have deep pockets, it’s a plus: “It demonstrates that you may have the financial wherewithal to run a business.”
“There are no hard and fast requirements of who we won’t talk to,” says CEO Trooper Earle, who bought Premier Rent-to-Own in 1994, two years after it had been founded by Carlos Sardina. “We’re entrepreneurs. If someone wants to join us, we’ll find what it takes to make it work.”
Earle is rather emphatic about that. “We help people get in business. Our competitors help you get into business, but there is one difference: They have already pre-negotiated with a bank and have funding and they do other pre-opening steps. With us, we have to go get the money. We’ve never failed, but that means you have to be very, very good to do that time and time again without failing.” Maybe more to the point, says Earle: “Any bank that is going to lend you half a million dollars is going to have to see that you have it together. We do market research, real estate research, business plan, everything is unique. I have to explain that to every bank individually. While that may be a disadvantage to us, when it comes to opening up a company, it’s an advantage for our people because of the level of preparation we go through.”
Aaron’s Butler isn’t afraid to admit that he has a formula and wants his franchise owners to follow it. It’s important, he says, for franchise owners to “fit into our culture. If you can play team ball, that’s a good way to put it. Some people have such an entrepreneurial spirit that they can’t come in and work inside the system.”
That’s because, of course, Aaron’s is already a proven success. Conversely, David Ingram, CEO of easyhome Ltd., fully admits that he would rather find “captains” of football teams, rather than merely players. He says he’s actually looking for people with “entrepreneurial spirits,” perhaps because his franchise operation isn’t anywhere as vast as Aaron’s.
Ingram says that he is looking for franchise owners who are looking to cover a lot of territory with their mini-empires of easyhomes “as opposed to building it one location at a time.” And Ingram sees the fact that they’re new to franchising as a big plus for that owner who always wants to be something of an entrepreneur.
“When you’re younger and not the biggest company, you can have the sense of urgency and speed to try to be as big as the biggest. I think you can be more nimble and adapt and change without it being a huge expense,” says Ingram. But while the franchising part is new, Ingram stresses, “We are going to be bringing the marketing expertise and creativity, retail background, a rent-to-own background and have a management team with a history of bringing in double digital revenue growth.”
Of course, for those looking at franchise operations with companies smaller than Aaron’s, Premier, ColorTyme and easyhome, one shouldn’t make the mistake of thinking the companies in this group have lower standards than the other. You still need to be extremely capable to enter this club of smaller, but still formidable RTO franchises, which arguably would include Discover Rims to Rent Inc., based in Salt Lake City, Premier Home Furnishings, based in Williamsburg, Virginia, Rimco in Atlanta and Rent-n-Roll Custom Wheels and Tires, headquartered in Tampa, Florida.
These are leaner operations, but no less serious about their ambitions or how they look at potential buyers. “It’s no different than the Aaron’s side,” says Todd Evans, vice president of franchising for Rimco, who also oversees development for its parent company, Aaron’s. “We’re looking for a self-starter, someone who has prior success in their business career and for the vast majority of people that will mean they’ve owned their business and earned every dollar they have.”
He cites an interesting example of people he has rejected in the past. Several years ago, when the dot-com bubble burst, he was approached by young entrepreneurs who somehow had managed to hang on to their millions and wanted to buy into the Aaron’s franchise. “We said no to the vast majority of those folks,” says Evans. “They made their money, if you will, sitting in a cubicle cranking out code and now wanted to invest in our business.” Evans, you see, is looking for someone who has “street smarts” more than “cubicle smarts.” He says, “We need someone who has some scars on them from real life experiences, dealing in the real world, because in this business, you will get got, if you don’t have that.”
Tyner Reeves, national operations director of Discover Rims to Rent Inc., says that his company’s philosophy is, “to grow the program as quickly as we can and not lose focus and sight of the most important thing, which is ensuring the profitability of the franchisee.” Discover Rims is a tire and wheel enterprise with two company-owned stores and six franchised stores, with two more scheduled to open soon.
But because his is a new company, Reeves, like the others in not-so-new-and-not-yet-completely-established category, is willing to make more allowances for a prospective buyer than the biggest companies of the bunch. He says that his ideal buyer would either be “the stereotypical guy who has the financial savvy wherewithal, but not the franchisee experience or the person who has the experience and background, but not the financial net worth, in which case we’ll help them go to the bank or set them up with an SBA loan. There are some pretty creative things that we’ve been doing.”
Jim Schebler, president of Premier Home Furnishings, echoes that sentiment. “One advantage is that we’re a new franchise operation. I’m going to be extremely hands on as we grow. I see that as an extreme advantage for franchise owners,” he says. “I’ll be as hands-on or hands-off as the prospective franchisees want me to be.” In other words, and Schebler agrees with this assessment, new franchisees will be able to help set the tone and establish the culture of the company.
But whether you go with a newer franchise or a more established one, they all provide advantages over going it alone. The best advantage being, you’re not alone. “Vendor relationships provide franchise owners the buying power of a much larger organization than they could garner by themselves,” asserts Sutton, whose Rent-n-Roll Custom Wheels and Tires has seven company-owned stores, 79 franchise locations and deposits for an additional 150 locations. “Obviously, in a startup situation, we’re teaching and training them a whole new industry. We stay on top of the marketplace and market trends and offer personal help. We’ll send some of our operators out if they need help. We give them a lot of marketing help, promotions, flyers, that whole concept. We have the vendor relationships in both wheels and tires and with the equipment.”
Sutton doesn’t say it, but the subtext is there. Start a business alone, and while you may be a big success, it’s a long road with no guarantee that you won’t end up in a financial dead end, broke, bruised and battered. When you’re in a franchise, it’s still tough, it’s still a dog-eat-dog world and all of those other business cliches, but at least you’re among friends.
But what if you’re interested in an RTO franchise, but you have absolutely no RTO experience or even franchise experience? Well, if you have the financial background to start a franchise and a lot of enthusiasm, you might want to start with the newest kids on the block like Premier Wheel Rentals or Wheel Workz, both tire-and-wheel operations.
When asked what type of franchise owner he’s looking for, Wheel Workz co-owner Dale Ingram doesn’t hesitate. “One who has money,” he says. “Give us your money, we’ll do the rest,” he chuckles.
Co-owner Tommy Crenshaw adds, “We’re not necessarily looking for someone with experience. It’s more important that they’re an entrepreneur at heart, someone who wants to own their own business and someone who is something of an automobile enthusiast. They don’t necessarily have to be an expert in wheels, but if they enjoy cars, then they’re perfect for this business. We have a very well laid out business plan and basically ask our franchisees to stick to that.”
The fact that these companies are looking more at your enthusiasm level and intelligence instead of your resume doesn’t mean that they offer any less of an opportunity. As Scott Savell of Premier Wheel Rentals says, “There’s a lot less bureaucracy here. Dealers can go right to the top and talk to me and visit with a guy who’s been there and done that.” And Premier, being part of a larger organization, is oozing credibility. And Savell knows it.
“What we’ve got over the other guys is that I’m one of the original founders of the concept of rent to own tires and rims,” says Savell. “I began this back in 1995. I’ve made a lot of mistakes, particularly in the beginning years and because of that I can keep my franchises from making some of those mistakes.”
Savell also touts his partnership with Trooper Earle, CEO of Premier Companies. “A lot of franchises can be packaged up to look really pretty, but you have to ask yourself, ‘can these guys teach me the concept, especially when it’s a brand new concept? Can this guy teach me to be profitable?’ I think that’s where we have a leg up on our competition.”
Maybe, but Ingram of Wheel Workz sounds no less enthusiastic about leading his team. “We will support our franchise owners in any way. As long as it’s legal. And if there’s a problem there, we’ll support them legally as well.”
Whatever choice a potential franchise ultimately makes, there really does need to be a personality match. For instance, if you feel that you’re a risk taker, but more of a calculated risk taker, it may be an Aaron’s that best fits your mindset. They have a buy-back program, so that if you realize down the road that the RTO franchising business isn’t for you, Butler says, “Life’s too short for you not to be happy. If it’s not working, you shouldn’t be embarrassed. Not everybody’s cut out to do this.” Aaron’s will buy back the store and usually pays top dollar for it, too. “It’s a great security blanket,” says Butler.
On the other hand, if you’re a free spirit and want fewer rules and more freedom, maybe a Premier franchise is the way to go. Whatever you do, it’s probably wise to heed Evans advice, whatever your franchise interests are. As the Rimco vice president says, “There are a lot of franchisors in the rim-and-tire business and I’m sure they’re all probably good, viable business models as we’re all basically doing the same thing—we’re leasing rims and tires. I would just tell people really to research every one of those potential franchisors extensively. Really dig in and try to get a bead on how the existing units they have are performing financially. If a franchisor can’t share that information with you, then that would raise some questions for me. But above all, do your due diligence.”
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Geoff Williams is a freelance writer based in Ohio.
The rent-to-own transaction is the most flexible transaction in the marketplace today. The fact that customers can return a product at any time for any reason distinguishes itself as a unique and valuable transaction filling many niches. Consumers have choices.