Rent-to-Own

RTOHQ: The Magazine March-April 2010

Your Invitation to Attend: APRO’s 2010 Convention and Trade Show

APRO’s 2010 Convention and Trade Show is the premier event for everyone involved in the rent-to-own industry— and this year, we have something to celebrate!

APRO’s Trade Show: More than 100 vendors exhibiting products specifically for the rent-to-own industry will offer APRO Show Specials not available anywhere else. All valid purchase orders written at the show will be entered in a drawing for cash prizes. Complimentary lunches will be served in the exhibit hall and there will be an Exhibit Hall Cocktail party on opening day.

Seminars: Top speakers and rent-to-own experts from across the country will provide the information you need to help your business succeed. APRO’s Convention is the only annual education program geared specifically to rental dealers. The 2010 program provides tracks designed specifically for different groups within the industry: store-level employees/one-store managers, midlevel/ multiple-store managers and owners/top-level managers.

Rental Roundtables: The Rental Roundtable session has become one of the most popular events at the APRO Convention. This year, the roundtables will echo the seminar tracks by starting with three groups of discussions: storelevel employees/one-store managers, mid-level/multiple-store managers and owners/top-level managers. Then all groups will come together for the Rental Roundtable Wrap-Up, facilitated by rent-to-own pioneer Chuck Sims. The hottest topics in the industry will be discussed, so don’t miss this opportunity to exchange ideas with your peers.

State of the Rent-to-Own Industry: In addition to the educational sessions, the APRO General Session and Business Meeting will provide annual industry updates, board elections and a rousing keynote presentation.

Networking: Social events with great food and entertainment are always a highlight of the APRO Convention and this year we’ll return to tradition with the APRO President’s Welcome Reception, a Gala Cocktail Party at Churchill Downs and APRO’s 30th Anniversary Awards Banquet and Reception.

Golf Tournament: Always a popular event, don’t miss this year’s Joe Eason/ Tom Kitchens Golf Tournament at one of the Louisville area’s most beautiful greens, the Covered Bridge Golf Club.

RAE Awards: APRO’s annual Rental Advertising Excellence Awards competition recognizes the creative advertising efforts of the rent-to-own industry. Winning entries will be on display in the exhibit hall.

RTO Customer of the Year and RTO Employee of the Year: Nominate your best customer and best employee in this annual contest recognizing the lifeblood of our industry. Winners will be announced during the General Session. Get details at www.rtohq.org.

APRO’s Educational Scholarship Foundation awards $2,000 to deserving college students who are rent-to-own employees or their children. Meet this year’s recipient at the General Session.

Event Calendar

Monday, July 19
9 a.m.-1 p.m.	Joe Eason/Tom Kitchens Golf Tournament at the Covered Bridge Golf Club (sponsored by Whirlpool)
2-5 p.m.	Early registration
6-7:30 p.m.	APRO President’s Welcome Reception (sponsored by Serta)
Tuesday, July 20
8 a.m.-5 p.m.	Registration
8 a.m.-8 p.m.	Exhibitor set-up
8-8:30 a.m.	Rental Roundtables continental breakfast (sponsored by Florida State Games)
8:30-11 a.m.	Rental Roundtables (sponsored by LG Electronics)
10 a.m.-4 p.m.	Spouse/Guest Tour: Southern Charm— Hospitality, Horses and Home Cookin’
11 a.m.-12 p.m.	Exhibitor lunch and Vendor Advisory Committee election
11 a.m.-12:30 p.m.	Lunch (on own)
12:30-5:30 p.m.	Educational seminars (seminar breaks sponsored by RES Accessories)
7-9 p.m.	Gala Cocktail Reception at Churchill Downs (sponsored by RentDirect Nationwide)
Wednesday, July 21
7-11 a.m.	Exhibitor set-up
8 a.m.-5 p.m.	Registration
8:15 a.m.	Pick up ballots for Board of Directors election
8:15 a.m.	General Session continental breakfast (sponsored by Bryce Co., Central File, Crosley, Imagery Marketing Group and SED International)
9-11 a.m.	General Session and Keynote Address (sponsored by GE Consumer & Industrial and Simmons)
11 a.m.-1 p.m.	Complimentary lunch in exhibit hall (sponsored by TRIB Group)
11 a.m.-6 p.m.	Exhibit hall open (ice cream break sponsored by Ashley Furniture)
5-6 p.m.	Cocktail Party in exhibit hall (sponsored by Affiliated Construction Specialists)
7-7:30 p.m.	Awards Banquet Cocktail Reception (sponsored by Protect-A-Bed)
7:30-9:30 p.m.	APRO’s 30th Anniversary Awards Banquet (sponsored by High Touch)
Thursday, July 22
9 a.m.-2 p.m.	Registration
8-9 a.m.	APRO Vendor Advisory Committee meeting
9-10 a.m.	APRO Board of Directors meeting and election of officers
9 a.m.-3 p.m.	Exhibit hall open (ice cream break sponsored by D&H)
11 a.m.-1 p.m.	Complimentary lunch in exhibit hall (sponsored by TRIB Group)
2 p.m.	Deadline for submitting APRO purchase orders for cash drawings
2-3 p.m.	Cash drawings in exhibit hall
3-9 p.m.	Exhibitor tear-down
Additional sponsors:
Badges: ArchBrook Laguna; Relaxation Station: Benefit Marketing Solutions; registration computers: CybertronPC; registration electronics: O’Rourke Sales Co.; registration bags: TRIB Group; Pocket Show Guides: RSSS; hotel key cards: BriteLite

Special Events

Joe Eason/Tom Kitchens Golf Tournament

9 a.m.-1 p.m., Monday, July 19, Fuzzy Zoeller’s Covered Bridge Golf Club

Sponsored by RentDirect Nationwide

At Churchill Downs, home of the world-famous Kentucky Derby, you’ll enjoy an evening on Millionaire’s Row, overlooking the track. "Place bets" on your favorite horse in a simulated race, enjoy down-home Kentucky music and food in the Bourbon Lounge, socialize with colleagues and have a great time! Kentucky Derby attire is encouraged—fabulous hats are recommended for the women. Please note: a business casual dress code is strictly enforced at Churchill Downs. No jeans, shorts, T-shirts, gym shoes or midriffs are allowed. Complimentary bar and heavy hors d’oeuvres.

Exhibit Hall Cocktail Party

5-6 p.m., Wednesday, July 21

Sponsored by Affiliated Construction Specialists

Wind down and relax with your favorite exhibitors—a good way to close out your first day of business on APRO’s 2010 exhibit floor. Complimentary beer, wine and snacks.

APRO’s 30th Anniversary Awards Banquet and Reception

7-7:30 p.m. (Reception) and 7:30-9:30 p.m. (Banquet), Wednesday, July 21

Reception sponsored by Protect-A-Bed Banquet sponsored by High Touch

For APRO’s 30th anniversary, we’ll revel in the past and look to the future as we celebrate all that the rentto- own industry has brought to our lives. Join fellow dealers in an elegant evening honoring the industry’s finest. Semi-formal evening attire. Open bar during the reception, cash bar during dinner.

Spouse/Guest Tour: Southern Charm— Hospitality, Horses and Home Cookin’

10 a.m.-4 p.m., Tuesday, July 20

We’ll start with a tour of Undulata, an historic Civil-War-era Saddle Horse breeding and training farm. Shelby County is "The Saddlebred Capital of the World," home to many of the country’s most outstanding American Saddlebred facilities. Then it’s on to the Claudia Sanders Dinner House—a 125-year-old dwelling that once was home to Colonel Sander’s Kentucky Fried Chicken. We’ll savor the flavors of Southern hospitality and cooking and offer recipes to take with you and try at home. If time allows, on our way back to the Marriott, we’ll enjoy a brief tour of Louisville, as well as some shopping time. The tour is included in Spouse/Guest registration fee. However, you must be registered in advance to attend, so please check the appropriate box on your registration form.

APRO 2010 Keynote Address:

The Passion to Succeed, The Power to Break Barriers

Jeremiah Wilson, ContactPoint

9-11 a.m., Wednesday, July 21

Sponsored by GE Consumer & Industrial and Simmons

Continental breakfast sponsored by Bryce Co., Central File, Crosley, Imagery Marketing Group and SED International

This keynote address won’t put audience members on the edge of their seats—it will stand them on the tips of their toes. "The Passion to Succeed, The Power to Break Barriers" will emphasize that we are responsible for our own success. Too often, excuses and complaints block companies from being their best. APRO’s keynote address will offer plenty of practical insights to help you do more and avoid making excuses. Keynote speaker Jeremiah Wilson introduced his patented remote monitoring device, the Maculon, and the Sales Mentor System in 2001; it revolutionized sales and service training. Prior to founding ContactPoint, he served as a national sales and customer service training specialist and was assistant to the counselor of economics at the embassy of the Czech Republic. He holds a BA in International Relations from Brigham Young University.

New for 2010: APRO’s Convention Youth Initiative Award

APRO strives to encourage our youth— they’re the future of the industry! Students currently enrolled in high school or college who are employed in the rent-to-own industry are invited to apply for a complimentary full registration to APRO’s 2010 Convention and Trade Show. Contestants must submit a one-page essay on the topic of rent-to-own. It can include what you’ve learned about the transaction and the industry and/or how you feel the industry might fit into your plans for the future.

APRO’s Youth Initiative Award will include a full registration to the convention; travel and hotel expenses will not be included. To apply, send your onepage essay by mail or e-mail and include the following additional information: name, address, telephone number, birth date, rent-to-own store where the student is employed; supervisor’s name, address and telephone number; high school or college where student is enrolled. Entries must be received by June 15. Send to Shelley Martinek, APRO, 1504 Robin Hood Trail, Austin, TX 78703; or e-mail to smartinek@rtohq.org.

Register Today

Hotel Accommodations

APRO’s host hotel is the beautiful Marriott Louisville Downtown, which is connected by a skywalk to the Kentucky International Convention Center, the site of APRO’s 2010 Trade Show. Located in the heart of downtown Louisville, the Marriott is within walking distance to several of the city’s major attractions, including the Fourth Street Live entertainment complex, Museum Row—which includes the Louisville Slugger Museum, Muhammad Ali Center, Frazier International History Museum, Glassworks and the Kentucky Center for the Performing Arts—and the banks of the Ohio River.

Who says that business and pleasure don’t mix?

Take advantage of APRO’s 2010 Convention and Trade Show to enhance your business while enjoying some personal time with your friends and family. There are many great sights to see in the Louisville area, so plan to enjoy some leisure time while you’re here. The Internal Revenue Service’s rules on business travel deductions are available at www.irs.gov/taxtopics/tc511.html. For more information on Louisville, visit www.gotolouisville.com.

Registration in three easy steps

Step 1: Travel. Louisville is one of the most accessible cities in the nation—many of you are within driving distance of this great city. If you are driving, parking fees at the Louisville Marriott range from $21 to $25 per day. If you’re flying to Louisville, book your flight early to get the best rates.

Step 2: Hotel Reservations at the Louisville Marriott Downtown. The discounted APRO rate of $119 is available July 14-25. Call 800/533- 0127—or reserve your room via the APRO Web site at www.rtohq.org. For suite information and reservations, contact Shelley Martinek at APRO, 800/204-2776, ext. 109. Important! You must book your room in the APRO block at the Louisville Marriott Downtown in order to get discounted convention registration rates. Your hotel confirmation number will be required, so book your room first. Hotel deadline is June 21.

Step 3: APRO Convention registration. The APRO member rate for a full registration is $345 for those who book in the APRO room block at the Louisville Marriott Downtown. Other registration rates are listed on the registration form at right. The Convention registration deadline is July 1. You may also register online at www.rtohq.org.

For more information

For general inquiries regarding the convention:

Shelley Martinek

800/204-2776, ext. 109

smartinek@rtohq.org

www.rtohq.org

Exhibitor inquiries:

Cindy Ferguson

800/204-2776, ext. 107

cferguson@rtohq.org

Hotel inquiries:

Marriott Louisville Downtown

280 West Jefferson Street

Louisville, Kentucky 40202

502/671-4266

Fax 502/671-4469

Reservations: 800/533-0127

or at www.rtohq.org

Exhibits:

Kentucky International Convention Center

221 Fourth St.

Louisville, Kentucky 40202

800/702-5831 or 502/595-4381

Fax 502/584-9711

The Age of Enlightenment by Kristen Card

Three of the association’s founders— Chuck Sims, Bud Holladay and Ed Winn— reflect on APRO’s beginnings

With APRO’s formation, rent-to-own went from under-the-radar operations to open-book policy— but the transition wasn’t necessarily a sunny one. "Think of it like a team," says Remco founder, rent-to-own legend and anything-but-retiring retiree Chuck Sims. "If someone is a team member, he realizes he gets bigger when the team gets bigger. When the team wins, he wins. It’s not an individual thing. When you want to create a safe regulatory environment, you can’t do it as an individual. You have to do it as a team.

I believe the misunderstanding of our industry by regulators and consumer protection advocates has done one thing: it has caused the industry to behave like a team. It’s caused us to come together with a common mission, a common purpose—and when you have a common commitment by a diverse group of people, magical things happen." That common commitment was cemented 30 years ago under the name the Association of Progressive Rental Organizations, or APRO. And while some might argue the validity of the term "magical," it’s clear that APRO has achieved some essential accomplishments for the rent-to-own industry’s survival and success.

Chuck Sims was there from the beginning—before rent-to-own was rent-to-own. He had begun working for Ernie Talley at Mr. T’s Appliances in Wichita, Kansas, in the late 1950s and the store had a rent-to-own department— although they didn’t call it that. As Sims recalls, the term "rent-to-own" was coined by the owner of Wichita’s Hillside Appliance— but it was Sims who opened up America’s first stand-alone rent-to-own store, completely separate from an appliance sales business, for Mr. T’s in the early 1960s.

"I used the wheels out of that phrase because it was a perfect description of the transaction," Sims says. "Many people shy away from the phrase because the industry put such a terrible stigma on the idea of rentto- own with the weekly bad-creditpick-’ em-up business operators. But it should be a banner of pride and direction in this industry."

Sims remembers the rent-to-own industry at its first formative stages, with a number of small operators craving more information about a business they were basically just making up as they went along. "We were sharing information, but really informally," Sims recalls. "Some of us were talking to one another, but we weren’t all talking to each other. There just wasn’t a vehicle to get us to a bigger picture."

At the same time, the necessity for further information sharing was becoming more pressing, as attacks against the business began to develop. Bud Holladay—bigpicture man, first APRO president and still not retired (he’s currently the senior vice president and chief operating officer of Gallery Homestore)—was the lynchpin. "A trade association was Bud’s idea," Sims says. "He called me and proposed we get together to talk about it. I thought it was a great idea and hitched my cart to his horse."

"We sent a letter and invited everybody to come to Dallas for an organizational meeting," Holladay recalls. "About 50 people showed up—some dealers, some manufacturers. And two things happened in that one room: the manufacturer reps realized ‘These people buy a lot of stuff and will buy lots more’; and the rent-to-own dealers realized that we were probably a bigger, stronger force than we had believed we were.

"We were learning from each other," Holladay continues. "And we discovered two big issues we all shared were educating customers about what we were and having some kind of control over our future. We needed to be better defined, gain buying leverage and find out more about our market."

The meeting featured guest speaker Ed Winn III, a University of Texas professor whom Holladay had seen present a seminar a few months earlier about government regulation and its crippling effect on entrepreneurship. Winn recently had quit his teaching gig to hang out his shingle as an attorney. Holladay’s invitation to Winn to address this assembly of rent-to-own dealers provided Winn with his first lawyerly paycheck—and an enduring career connection he never expected.

"I had completed my presentation and was still there, politely listening to their conversation, when the topic of a trade association came up," Winn remembers. "A couple of the vendors immediately got up and said, ‘We have to leave; we can’t belong to trade associations.’ And the dealers looked around at each other and said, ‘Gee, maybe we need a lawyer.’ I raised my hand and they hired me to explore the possibility of launching a trade association. A few months later, we all met again and concluded that the 30,000 existing trade associations nationwide were too different from us, that we really needed our own group. They voted to do it and that was the official beginning of the Association of Progressive Rental Organizations."

It was also the beginning of Winn’s 30-years-andcounting involvement with the group. It was Winn who drafted APRO’s bylaws, put together its first budget, rented the organization office space within his law offices and hired its first secretary. It was Winn who served as APRO’s de facto executive director for the group’s first five years (and continues to act as its general counsel).

And it was Winn who had to go to a small rent-to-own chain in Austin—the organization’s chosen headquarters city—to rent a refrigerator for the APRO office. "We had to rent by the week and if we didn’t make our payment by five o’clock in the afternoon, they’d call us every time," Winn chuckles. "We were just another account."

Visit for a little while with almost any of the rent-to-own industry’s most successful dealers and they’re bound to mention the exceptional culture of openness and sharing within the industry. It’s a given all seem to be grateful for—rent-to-own guys help each other, mentor each other, teach and learn from each other. What comes through is a sense of extraordinary community, with little room for cut-throat competitiveness. But for this prominently open industry, openness was a particularly difficult and hotly debated topic in APRO’s early years.

"The first huge hurdle we had to overcome was just convincing everyone that a trade association was the right thing to do," Holladay recalls. "Some argued, ‘Why open up the industry to more and more competitors? If we just keep our mouths shut and keep renting TVs, then no one will open a store across the street from me.’

The guys who were most strongly against telling the world about rent-to-own were the guys who were doing very well. They were stubbornly resistant to change, because they had stumbled into something that was working very well for them. ‘If it ain’t broke, then don’t fix it’ was their attitude. It almost killed the association early on."

The next challenge was deciding who could be a member of APRO. Again, the conflict centered around revealing too much and creating a competitive arena that was too easily reached. "Originally, you had to have been in business a minimum of 90 days and have rented a minimum of 150 TVs to qualify for membership," Winn says. "Some people didn’t want the trade association teaching newbies how to run a rent-to-own business from scratch, because it created competition. At some point, they agreed that this isn’t rocket science and if people want to do it, then we want to teach them how to do it the right way."

But should APRO be teaching at all? Discussion carried on about the association’s main function: was it to be a lobbying organization or training/development/fellowship group? "Did we want to do covered-dish supper in the church basement or did we want to go out and convert?" Holladay neatly characterizes the debate. "Clearly, we wanted to do a little bit of both."

"Even Chuck [Sims], who was a strong pro-APRO voice, held back a little at first," Winn notes. "He did step up and volunteer to lead some training seminars early on, but the first few times he presented them, he didn’t want to use his rent-to-own companies as examples. He had another business—selling bull semen from stud bulls—so he used examples from his bull-semen business. Eventually, he caved on it and began using Remco proper in his training examples."

Other controversies faced during APRO’s formative years included how much cost information to provide to customers, how to determine dues and how to make sure everyone was paying his fair share. In the end, the dues structure may still be a point of contention for some members, but enlightenment won the day on issues of openness and sharing.

"There were preachers, doubters and learners," Holladay says. "The preachers preached the gospel that this industry is going to hell in a handbasket if we let one single retailer in, if we give up one secret. Their line was, ‘You’re going to ruin this business if you go tell people all about it.’ The doubters doubted that the trade association concept would work at all, because nobody outside the industry gave a hoot about it and customers were just customers. They simply didn’t see the lasting value of it.

"And the learners listened to each other because they heard things they didn’t know. They thought, ‘Two of the vendors knew more about our business than we did, so what else can we learn if we get together and talk and share ideas and information?’"

"The learners lasted, the doubters converted and the preachers sold their three stores and retired to go fishing," Holladay concludes.

That was then, this is now. Three decades later, APRO has accomplished some fairly fantastic achievements for its membership—from some serious elbow-grease image-polishing for the industry to the development and support of an impressive network of state associations; from securing positive rental-purchase laws in 47 states to never surrendering the good fight for federal legislation in Congress.

"I believe every single rent-to-own dealer in this nation owes a huge debt of gratitude to APRO and its leadership— guys like Ed Winn and [executive director] Bill Keese," Sims effuses. "They have legitimized this industry, given it a face that the investment community smiles at and they’ve been absolutely unwavering in their dedication to do the right thing. There’s such a high level of commitment from the people who serve on the board—those guys really care. They’ve got a great trade association with a great philosophy and great spirit."

Though some things at APRO have remained essentially the same, the face of rent-to-own continues to change—some for the good, some for the not so much. "There has always been a big-guy-versus-little-guy issue, from the very beginning," Winn confirms. "But the big keep getting bigger. It used to be the biggest guys had 50 stores and the littlest guy had one. Today, the biggest guy’s got 3,000 stores and the littlest guy’s still got one. So some of those divisive tensions are intensified.

"At the same time, rent-to-own is becoming much more familial and inter-generational, with fathers passing down the family business to sons and even grandsons now," Winn continues. "That’s totally different from the first rent-to-own entrants. They were all about cut-and-run—they’d get four or five stores up and running, sell them and go do something else. The guys coming into the business now seem to be more about the long run. They seem willing to create careers— many franchisees are signing into 15-year deals today."

With the association and the industry witnessing a flood of younger blood into rentto- own, Sims, Holladay and Winn all feel the best legacy APRO’s founders have provided for the next generation of dealers is APRO itself. Asked for advice they might offer these fresh, green shoots, the trio concentrates it masterfully down to three Cs—two to avoid, one to embrace: cockiness, complacency and the customer as the top priority.

"Their biggest barrier would be getting too full of themselves, believing this business is easy," Holladay warns. "It appears easy only because a bunch of people sweated in the hot sun to break the rocks and make that pavement smooth. Just don’t forget beneath all that, your basic business is serving a customer base with an iffy financial history, yet with the same wants and needs as mainstream consumers. Without mindful management, it can be a dangerous combination."

"The new guys must understand that the threat to this industry is not over," Winn counsels. "There is still a taint to the business, there are still people who consider rent-to-own an attractive nuisance the world would be better off without. That hasn’t gone away and that’s not going to go away. The new guys will disband and go their own ways at their own peril." "We worked a long time to get the message across that your customer is the most important thing you’ve got," Sims says. "When someone walks into your store and hands you that first week’s payment, you want to do all you can to keep that customer on the books. If you want to be in business five years or 25 years from now and you’re not measuring your business by gauging your customer satisfaction and keep rate, then God help you."

Despite APRO’s winning culture of openness and multifaceted effectiveness for the benefit of its members, despite its 30-year ability and agility at not just surviving but thriving, at the core its members still consider themselves "marketplace pariahs" (Ed Winn’s expression) and "the red-headed stepchildren of retail" (Bud Holladay’s turn of phrase). But truth be told—and remember, we’re all about the honesty here—being beleaguered is a large part of the industry’s identity. Circling the wagons to fend off common enemies has played a vital role in tightening the ties between APRO members and moving rent-to-own forward.

"Our collegiality as an industry reminds me of kids in an orphanage who grow up together," Holladay relates. "We didn’t fit in anywhere else, so the other kids become our family. We talked about what we’d do if this, and what we’d do if that…and APRO gave us all a chance for the ‘if ‘ to become real."

"The one constant from the beginnings of the industry to today is that there are people who would like to put us out of business," Sims adds. "It was one of the founding reasons we got together and formed the association. Our mission was to create a safe place for us to operate and enjoy our businesses, and the industry has done it in spades. Not the individual stores, not the individual companies—the trade association, as a resolute team of members, did it. And they’re still doing it. What greater gift can you give to your membership?"

Some Clarity on Collections by Ed Winn III

Some clarity for collections are the second half of the famous Ernie Talley rent-to-own formula: Rent and Collect. It would be easy enough to install televisions in customers’ homes if that were all there were to it. But one must also get the customer to pay in order to have that lovely big screen in the living room—or else, what is the point? And there, of course, is the rub in rent-to-own. No rental dealer, no matter how enlightened or evolved, takes delight in having a customer watch the dealer’s television for free—and so, perforce, the dealer must collect, or try to collect, the rent.

Every dealer out there has either heard of or lived through some eye-popping, cringe-inducing, stomachcurdling tale of collection efforts gone awry. Given the nature of the business, it is no surprise that customers and dealers alike occasionally get emotionally involved with the television and the situation. All those emotions, running amok, can cause harsh words and even harsher actions. That there have been relatively few lawsuits over rent-to-own collections over the years is a tribute to the training that dealers practice and preach with their employees and the persistent patience at play in successful rental companies.

If there once was a day when dealers could hire "muscle" to collect on accounts, or failing that, recover the televisions by intimidating customers into doing what they were told, those days are long gone. Dealers today have to play by the rules and when, in the heat of the moment, they do not, they get sued and most often end up giving away the television and writing a check, to boot.

Even though the federal Fair Debt and Collection Practices Act does not apply to rental dealers, there are state debt-collection statutes, collection-practices provisions in several state rent-to-own statutes and common-law rules concerning breach of the peace, trespass, privacy and other tort-enducing conduct that do apply.

Most allegations of collection abuse occur one customer at a time, as opposed to the occasional class-action suit challenging the legality of the rent-to-own transaction itself. The nature of the collections process is that it occurs customer by customer and the strategy adopted by the dealer to get the money or the television will vary, within reason, according to who is not paying and why.

Only occasionally does the government get involved in reviewing a dealer’s collection practices, but over the past couple of years, two state attorneys generals’ offices have exacted settlements from two different rental companies resulting in the payment of money for multiple alleged abuses in the one case and payment for attorneys’ fees and an investigation fund in the other. In both cases, there were agreements by the companies to tweak collection practices in ways demanded by the attorneys general. In one case, it was an Assurance of Voluntary Compliance and, in the other, it was a Consent Decree. In both cases, it was an agreement reached by the rental company involved and the state attorney general and approved by a state court judge.

Most of the debt collection regulations that apply to rent-to-own dealers offer only vague guidance as to what one can and cannot do when trying to collect money or recover a television. "Do not call the customer at unreasonable times." "Do not contact the customer at unreasonable places." These kinds of rules leave a lot of gray area and it is in the gray area that lawyers make their money and rental dealers can lose theirs.

The two settlements are conceptually different in that one company agreed to maintain training and enforcement programs to achieve compliance with its internal policies against certain practices and the other company agreed to outright prohibitions of the practices themselves. A seemingly subtle distinction, but one that could have significance in a subsequent enforcement action, at least to the thinking of the lawyers who negotiated and drafted it. Both of the settlements with the attorneys general do, however, have to contemplate the same kinds of vague prohibitions, usually a repeated recitation of the state debt-collection laws, but they also contain some very specific limits on behavior for the companies involved. Some aspects of these settlements will surely impede collections; some will have little impact on how the company does business. The extent to which these agreements will actually cost either of the companies involved any money at the store level remains to be seen. In any case, the prohibitions in the settlements only apply to the companies who agreed to them.

Calling all customers

The most recent settlement with the attorney general may have answered one of the age-old rent-to-own collection questions: "How many times can you call a customer about his account before you have made ‘too many’ calls and are guilty of harassment?" This settlement allows the rental company to "actually speak with a customer, by telephone or in person, six times per week for the purpose of discussing a past-due account." That might be once per day for a week, or six times on Friday. Either way, the customer has no beef until the seventh contact. Also, note that the agreement does not address unsuccessful efforts to contact the customer. There has to be actual contact—the customer has to answer the phone or come to the door—before it counts as one of the six. Voice messages and door hangers do not count as contacts. The attorney general would like to have set some limits on attempts to contact customers, but the rent-to-own company was adamant that it had the right and business necessity to contact past-due customers about their accounts and was entitled to keep trying until the company could actually make contact.

The settlement also requires the company to train its employees to refrain from discussing a customer’s account with anyone who has not signed the agreement, except for a spouse. Nor can the company’s employees ask anyone who has not signed the agreement to make a payment on the account. The company also is required to maintain its prohibition against leaving phone messages with any communication other than the caller’s name, name of the company, date and time of the call and "a courteous request that the customer return the call." In other words, no editorial comments about the customer’s character or mother.

The other attorney general settlement, from a couple of years ago and in a different state, offers more challenges to the dealer’s collection practices. This settlement prohibits the company from making more than two telephone calls to any one person per day, unless that person makes and then breaks a promise to pay on that day. (Note that this prohibition is different from the six-times-per-week rule in the other settlement, because this rule refers to calls regardless of whether anyone actually makes contact with the customer.)

Another rule in this second settlement is that the company can only make one additional call to a customer who has told the company that he is not willing to pay any more on the account or after he tells the company not to call again.

This rule will require the company to make the choice of either writing the account off or "going legal" on the customer sooner than the company might prefer. This write-off-orsue decision is not a choice that dealers are typically eager to make because either one will cost the dealer time and money. It is a decision that dealers ultimately must make on hard accounts, of course, but most dealers will want to work the account for weeks or even months before coming to that decision. Under this rule, the dealer has lost the power to decide when to make the call and, instead, must make it as soon as the customer tells the store not to call again.

Both settlements are full of additional provisions. The companies admit to no wrongdoing, for example. In addition, the companies agree not to break any existing laws concerning collections, which are repeated in the settlement agreements. Both affected companies agreed to implement training programs to ensure that all current and future employees are aware of the prohibitions in the respective settlements.

Importantly, the prohibitions in the settlement agreements only apply to the companies involved in those settlements and only in the states where those settlements were reached. All other dealers will have to decide for themselves whether the strictures agreed to by the affected companies would work for them. If they do not, it does not necessarily mean that the attorney general will launch an investigation. Most attorney general actions in the consumer arena arise from consumer complaints. If you keep your customers happy and solve their problems promptly as they arise, they will have no reason to file a complaint and you can continue to work collections like you want—within the bounds, of course, of whatever laws that may apply to your particular business.

Calling attorneys general

One of the attorney general investigations arose because the rental company allowed unresolved consumer complaints to accumulate in the attorney general’s office. Every state attorney general has a department of consumer protection where consumers can complain when they feel aggrieved. An attorney general, after all, is the people’s lawyer. It is easier than ever for consumers to file complaints against a company, and often they can do it online. When a complaint is filed, a copy is sent to the store location where the customer acquired the merchandise and where the dispute arose. Ordinarily, the attorney general’s office will not send a copy of that complaint to the home office. Rental companies have procedures in place for funneling all such complaints—if they cannot quickly be resolved—to the home office, but sometimes that does not happen. Instead, the complaint stays in the store; store personnel fret over it for a while and then, finally, toss it in a drawer and forget about it. One unresolved complaint will not likely unleash the wrath of the attorney general consumer protection attorneys, but several might, and in one instance, anyway, did.

There is an easy solution to avoiding this dilemma. Periodically, call the attorney general’s office and politely inquire whether there are any complaints on file against the company. Usually, you can get the answer over the phone, although a few states require a written request for this information. If you own one store, maybe you call once a year. If you operate more stores, call more often. If you have knowledge of rogue employees in your stores that you have had to fire, call more often still. Today, as government offices become more automated, it may be possible to contact an attorney general’s offices and get a person in the home office on file to whom all consumer complaints are to be sent. Some offices will be set up for this procedure; others not.

We have not had any real collection horror stories in a long time. Let’s keep it that way.

The Resurrection of Mac Hennigan by Kristen Card

Former APRO President, Tulsa, Oklahoma

It’s the definition of a dilemma—which phone call would you rather receive? Scenario 1: You’re a retired rent-to-own leader—a former APRO president, in fact—who has been out of the industry loop for a while. One morning, you receive a call from an RTO pal with whom you’re still in contact. "So, you’re still around, huh?" he asks with a chuckle.

"Sure, I’m still around—I talked with you last week," you answer, puzzled.

"Well, APRO thinks you’re dead," he responds.

Scenario 2: You’re the editor of APRO’s magazine and have just published an issue featuring memories and insights from APRO’s past presidents. One morning, you receive a call from a past president you—with confirmations from several reliable sources—listed as deceased. Only he’s not; he’s on the phone and—thankfully—alive, well and laughing. To paraphrase Mark Twain, the report of Mac Hennigan’s death was greatly exaggerated.

"The only thing I’m upset about," Hennigan claims, "is that I didn’t receive any flowers at all. Not one bouquet from all of my old cronies. Extremely disappointing." Hennigan’s faux outrage and follow-up belly laugh are the mirthful mark of a man who has faced the very real prospect of death several times during his seven-plus decades and lived to tell the tale.

Born and raised in rural Louisiana, Hennigan knew at the age of six he was going to be a soldier. He left home after high school graduation to join the Army and, a decade later, was commanding a field artillery unit in Vietnam.

After an exciting military career, Mac was assigned to the Pentagon, his leastfavorite assignment. He retired from the Army in 1979 and was hired by Willie Talley to work for ColorTyme in Dallas. Hennigan managed ColorTyme’s Fort Worth market, added the Dallas market, then, when ColorTyme was sold, took over a Tulsa Curtis Mathes franchise.

"I was pretty good at rent-to-own," Hennigan says. "But I didn’t like retail. By the mid-’80s, I returned to Dallas as director of rental-lease operations for Curtis Mathes. I traveled all over the country and really enjoyed it. That’s when I got involved in APRO, as the Curtis Mathes representative."

Hennigan served on APRO’s executive board for five years and as the association’s president in 1986 and 1987. "I loved my time in rent-to-own," Hennigan says. "The camaraderie was my favorite part. I associated with the industry’s giants and loved working with those guys. I came through the military system, where entrepreneurship is never one of your goals—and it never was one of mine. I prefer managing an operation larger than I could afford to own."

Hennigan suffered a heart attack in 1989 and had to undergo bypass surgery. It slowed him down considerably. He resigned from the APRO board. The following year, he went to work for Transamerica Commercial Finance, helping repossess failing rental businesses in Canada. In 1995, a former owner repurchasing his stores, Gord Reykdal, hired Hennigan as his chief operating officer based in Edmonton, Alberta. Hennigan and his wife, Jan, had fallen in love with the Land of the Maple Leaf, so it was a great deal. "It was the best civilian job I ever had," Hennigan gushes. "We built the company from 50 stores to 150 stores all across Canada. It was fantastic."

But in 1997, Hennigan was diagnosed with a brain tumor. Again, he returned to Dallas for successful surgery. Despite Hennigan’s protests, Reykdal persuaded him to employ his long-term disability insurance and retire. The insurance company required half-time Canadian residency, so Mac and Jan delightedly spent a couple of half-years in a cottage by the ocean in Nova Scotia.

The Canadian cottage couldn’t hold a candle to Oklahoma-based grandchildren, though. Reykdal convinced the insurance company to waive its residency requirement so that Mac and Jan could move closer to family.

"That helped me adjust to retirement, which I dearly hated," Hennigan grumbles. "I still don’t like retirement much, but with six grandkids between 3 and 13, we manage to stay busy. And every summer, Jan and I get out of the hot weather in our 36-foot fifth-wheel [RV] and go somewhere cool for a few months."

A second open-heart surgery was necessary in 2005, yet today, Hennigan says he gets up every morning feeling good. "Not even a headache," he reiterates.

So, with two heart surgeries, a brain tumor, a Canadian sojourn and an early retirement, it begins to become more understandable how folks might figure Hennigan for a goner. He also mentions possible confusion with his brother, Murl, a central Texas ColorTyme dealer who died of leukemia a few years ago.

No doubt about it, this Hennigan is still alive and kicking; so if you didn’t send an appropriate gift of grieving and memoriam, then you might want to watch your back. "I didn’t get a single rose!" Hennigan chortles. "Well, you can tell them to save their money—they’ll probably get another chance one of these days. But not soon!"

Vendor Spotlight: Al Zagorniak by Neil Ferguson

Retired, Sears Contract Sales, Kansas City, Missouri

If someone had thought to anoint Al Zagorniak with a nickname during his years in the rent-to-own industry, an apt one would have been "The Bridge." As a Sears rep for almost his entire professional career, he nurtured many relationships with rental dealers, as well as his fellow vendors in the industry. He was awarded APRO’s Vendor of the Year honor in 1996 and in 1999 became the first vendor to serve on the APRO board of directors. His great sense of humor and charm made him an ideal liaison who strived to build bridges between APRO’s buyers and sellers.

"I belonged to 23 associations during my career and, in most cases, the only time they wanted you was when it was time to set up a booth," Zagorniak recalls. "But APRO was different. It’s a very progressive association, as its name suggests. It services everyone in the industry—dealers and vendors."

Although he retired from Sears in 2001 after 35 years of service, Zagorniak holds a great deal of enthusiasm for—and fond memories of—rent-to-own. One dealer with whom he had a special rapport was one-time Sears Retail Distribution/Central Service Manager Gary McDougal, who went on to operate American Rentals in Tennessee and served as APRO president from 1999 to 2002.

"When I was APRO president, I convinced the board of directors that we should have a vendor on our board—and Al was the guy," McDougal recalls. "He was very active in helping us do a lot of things for the vendors. He was like the vendor ‘whip.’ He had a real talent for pulling them together and they were lucky to have him as their man."

Zagorniak, though, is humble about his talents, confessing that one of his key assets was knowing how to listen and take orders. "Years ago, I was being interviewed for a position within Sears," he remembers, "and was asked, ‘Do you like being told what to do?’ I thought about it and figured that, when I go to church, the priest tells me what to do; when I go home, my wife tells me what to do; when I go to work, my boss tells me what to do. So I’m sure I wouldn’t know what to do if someone wasn’t telling me!"

While building bridges between APRO’s dealers and vendors, Zagorniak also sought to maintain a jovial atmosphere among his fellow associate members. Still, he never completely let down his competitive guard. "I attended an APRO conference in Puerto Vallarta one year," Zagorniak recalls. "Also at the conference was [former APRO President] Bill White, one of Sears’ good customers in the Dallas area. I arrived at the airport for the trip back to the states only to find Tom Kitchens [a fellow vendor who worked for Whirlpool] and Bill sitting together at a table. I thought to myself, ‘Tom, you rascal! You’re after my customer!’ As the baggage handlers were loading our luggage, I approached Bill and Tom, gave a quick wink to Bill and told Tom that I hoped the dogs wouldn’t find the ‘Mary Jane’ that I’d put in his golf bag. Kitchens’ face turned red and we all had a great laugh on the way back to the states. I had to stay on my toes! It was a competitive environment, but, as vendors, we had fun together, too."

Since retiring at age 57, Zagorniak has enjoyed good health with his wife of 44 years, Carol, a former Spanish and psychology teacher from Guatemala. They’re intensely proud of their two grown daughters, Cindy and Julie. "Both took advantage of their education and carved out great careers for themselves," Zagorniak says. The younger of the two, Julie, graduated from the University of Missouri and now lives in California. Cindy graduated from Kansas State University and lives near Kansas City, Missouri, which is where the Al and Carol reside.

It was in Kansas City, while stationed at Richards- Gabaur Air Force Base, that Zagorniak started working for Sears in 1966. "[U.S. Army] General Robert Woods was president of Sears at the time and he favored hiring prior military personnel," Zagorniak says, "because we were disciplined, knew how to take orders and had a strong work ethic." Since his Air Force days, Zagorniak has called Kansas City home—and also deems it one of America’s "best-kept secrets. I love it here."

Zagorniak stays busy with many post-career passions, including golf, travel, baking and driving his vintage 1969 Volkswagen Bug. Perhaps he’s most proud to be a member of Elks Lodge 26; he was instrumental in fostering that group’s involvement with reStart, a charity organization that aids the homeless. "reStart works to find housing for the homeless, run-aways and throwaways— those children who have been abandoned by their parents," Zagorniak says. "Throw-aways are the ones that really grip me."

If he’s not at the 125-year-old Elks Club (one of the oldest in the country) or on the golf course, Zagorniak might be found in the kitchen. "I’ve always had an interest in cooking," Zagorniak says. "When we were first married, Carol gifted me with enrollment in gourmet cooking classes. Soon after, I started baking yeast breads. I have my grandmother’s original recipe for holiday stollen and I bake more than 40 loaves every Christmas to give to my neighbors and friends. I have a collection of cookbooks that you wouldn’t believe!"

To know Zagorniak is to like him. His generosity, enthusiasm and sense of humor are infectious— traits that served him well during his years in rent-to-own. When APRO moved into its current Austin location in 2000, Zagorniak provided Sears’ top-of-the-line appliances for the building, charging $1 for the whole lot of them. Around that same time, he traveled to Austin to work alongside rental dealers and APRO staffers building a Habitat for Humanity home, and he donated the appliances for that house, as well. He was a handy craftsman during the Habitat project—a natural for someone so good at building bridges.

RTOHQ: The Magazine March-April 2010

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