Q&A with Cathy Skula, Rent-A-Center's Executive Vice President

1851 Franchise: What makes Rent-A-Center unique within its industry?

Cathy Skula, Executive Vice President for Rent-A-Center Franchising International, Inc.: My entire career has been spent with Rent-A-Center. What has kept me in the company for so long, and what attracts franchisees beyond good unit-level economics, is that our customer base needs us.  Our customers wouldn’t otherwise be served if the rent-to-own industry didn’t exist. Some people don’t understand our transaction process, and the fact of the matter is that some want to criticize this entire industry. But at the end of the day, if not for us, some people would have to do without things that they need, like a computer for their kids to do homework and a refrigerator to keep their food cold. The way I’ve always looked at the Rent-A-Center business model is that it feels good to deliver something to consumers who really need our service.

The rent-to-own industry is an exciting one to be in. For consumers, a lot of folks don’t have the option to get credit for a major purchase, or they only need something in the short term. That’s what makes Rent-A-Center a one-of-a-kind concept. We’re able to provide these consumers with the items that they need without dinging their credit and without any long-term payment obligation. Our whole process is pretty seamless—while our customers are leasing products, we’re servicing those items and delivering or picking them up with no extra cost. Our consumers can walk into a Rent-A-Center today without a couch and have a couch delivered to their home that same evening after paying as little as $25.

1851: What have been some of the brand’s most important milestones over the last five years?

Skula: From a brand perspective, over the past five or six years we’ve gotten into the kiosk business, which we call AcceptanceNOW. We have kiosks in national retailers, and they’re available for people who may not qualify for traditional credit approval. By utilizing our transaction, customers can still get the products they want. We’ve also gotten into the cell phone business over the few years. That’s a new product that we hadn’t carried before, and it’s introduced new customers to our transaction that may not have been aware of it previously.

From a franchising perspective, our new re-franchising strategy is a huge milestone for us. This marks a shift and pivot for us. We always thought that we needed to own and operate all of our stores and maintain that level of control. However, through successful franchisees brought into our system, we’ve realized that locally owned and operated businesses lead to positive results. Rent-A-Center lends itself so much better to franchising than the average restaurant or other concepts because of the ongoing relationship we have with our customers, and we’re eager to continue developing those franchisee relationships.

1851: What plans does Rent-A-Center have in the coming years?

Skula: We’re making a ton of investments in the brand and bringing new customers to our transaction that may not have been aware of it previously. One example of this is the investment we are making in a new franchisee product purchasing platform to replace our current manual ordering system. This new system will give franchisees an Amazon-like digital experience when they log in to order products. We’re also investing in new training for the franchise owners who enter our system. We’re putting together new operations manuals and best practices together through our intranet, and we’re going to continue making more investments to evolve into a world-class franchise system in every way possible.

1851: What does an ideal franchisee look like?

Skula: The ideal multi-unit franchisee is someone who wants to control a market. We feel like that’s the most ideal situation for us, so we’re looking for franchisees who want to own an entire DMA and operate about 30 to 50 locations so that they can get those economies of scale. Controlling a market allows franchisees to easily move both coworkers and inventory around between their stores. The ideal multi-unit franchisee is also probably someone who wants to diversify their business ownership portfolios. This is very different from the food industry, and it’s even different from traditional retail. We aren’t just looking for folks with money; they need to take an active interest in our business. This isn’t just an investment; Rent-A-Center should be something they want to be actively involved in.

1851: Why is Rent-A-Center a good investment?

Skula: Rent-A-Center is a good investment because it’s a strong diversification play. We’re in an industry that tends to be recession-resistant, and our sales don’t fluctuate wildly as the economy changes like other concepts do. Our industry is also less competitive than most other concepts out there. We’re one of the only big players in the rent-to-own space. Our unit-level economics are also strong, especially at a scale of 30 to 50 locations. That’s very attractive to large multi-unit franchisees who want to see a return on their investment. Plus, our re-franchising program gives franchisees the opportunity to buy an existing revenue stream. They’re getting a portfolio of businesses with an ongoing cash flow when they invest, which is unique.