In the rent-to-own segment of the retail industry, there’s one brand that consistently stands out as the one to beat: Rent-A-Center. From its strong national presence to its ability to eliminate the need for credit, consumers across the country continue to return to their local Rent-A-Center store whenever they’re in need of furniture, major appliances, electronics and computers but are unable to make a large down payment. It’s because of that unique positioning in the marketplace that Rent-A-Center has been able to help people across the country realize their own American dream. And now, that ability to realize a dream is being extended to entrepreneurs and business owners through the brand’s newly announced refranchising initiative.
In an effort to move a significant number of its stores from corporate ownership to local ownership, Rent-A-Center is actively looking for multi-unit operators to join its system who want to diversify their portfolios by making a major investment. This isn’t the first time that the brand has tackled the franchise business model—there are 180 + Rent-A-Center locations that are currently owned and operated by local franchisees—but this initiative marks the first time the brand has tapped into the potential of multi-unit owners who are looking to purchase the rights to an entire market and take over between 30 and 50 stores.
According to Michael Landry, Rent-A-Center’s vice president of franchise development, this new initiative is poised to create a one-of-a-kind opportunity for major investors and business owners across the country.
“I believe that the franchising space in America is ripe with opportunities. I’m consistently in awe of the vast array of quality opportunities that are out there. Ours, however, is in a fairly unique sector. The rent-to-own sector is a specialty sub-segment of the retail industry, and it’s those niche segments that often create the best opportunities,” said Landry. “Even though there are a ton of opportunities for aspiring business owners out there, there simply aren’t a ton of diversification options in the U.S. for the largest, multi-unit players in the industry. That’s where our refranchising initiative comes in. We see Rent-A-Center as a diversification play especially for those heavily invested in food or hotels. Multi-unit owners now have the opportunity to buy existing turnkey operations in key markets in one deal.”
The decision to pursue franchising isn’t one that Rent-A-Center came to lightly. Over the past six years, the brand’s team has conducted research and tested the potential behind the business model, ultimately concluding that this path will lead to the most success for both the corporation and its new franchise partners.
“We spent a lot of time with our franchise consulting group in order to determine whether or not we wanted to make this business model a part of our DNA. We wanted to be armed with all of the facts before we dove in head first, including what the financial benefits were, how big we could get and what we would need to do in terms of support. We didn’t want to be a traditional franchisor—our goal has always been to create a world class franchise system,” said Cathy Skula, Rent-A-Center’s executive vice president. “As we continued to do more research, it became clear that the pros of franchising far outweighed the cons. So, we spent years perfecting our system and ensuring that we had all the tools and resources that our franchisees would need in place in order to set them up for success.”
Landry agrees with Skula, adding that Rent-A-Center’s refranchising initiative is rooted in the brand’s ongoing efforts to become an example of what the industry should look like for large corporations and multi-unit operators across the entire industry. He also notes that the decision to refranchise is a collaborative effort that will continue to evolve over time with the help of those who come on board as franchise partners.
“As a large organization, the leadership team behind our franchising division has worked for a number of years in order to determine what it means to be a world-class franchising organization. Not only have we considered what it takes to be the best of the best in the industry as a whole, but we’ve also researched what it will take for us internally to be the best franchisor that we can be. That’s why we see ourselves as a blend of both our corporate team and franchise team,” said Landry. “As more multi-unit operators come into our system, we’re going to continue that learning process in order to continue evolving. We want this refranchising initiative to be an open conversation with our local owners—we’re absolutely interested in hearing their feedback and opinions as they dive in and get started.”
That conversation and flow of feedback started with Shirin Kanji, the first multi-unit operator to participate in Rent-A-Center’s refranchising initiative. Back in 2015, Skula and her team lobbied the brand’s larger corporation and CEO to test its newly crafted franchise business strategy. They wanted to do that test to scale, so they took a grouping of 40 stores and brought in Kanji as the operator. After waiting, supporting and watching Kanji’s team at work, it became clear that with the help of the right partners, franchising had the potential to improve the Rent-A-Center brand and open the door to new opportunities that didn’t previously exist.
Part of what made Rent-A-Center’s initial test so successful—in addition to Kanji’s ambitious work ethic—is the fact that the brand meticulously prepared for its franchising system. Between mapping out operations manuals, outlining best practices and engaging in strategic partnerships with outside vendors to help smooth the transition process, Rent-A-Center thought of every possible outcome before diving into franchising head first. For example, the brand realized that handing a group of employees over to a new owner would be a major transition for store employees. Because Rent-A-Center values its employees and wants to eliminate turnover to maintain customer relationships, the brand partnered with payroll services company Paychex to streamline the process.
Another way that Rent-A-Center’s refranchising initiative is designed for success comes down to its concept and simple business model. The rent-to-own space is one that is both recession resistant and in-demand, meaning that multi-unit operators have the opportunity to join a system that’s geared toward its customers and already proven to lead to financial success given that it’s a nearly $3 billion corporation.
“The rent-to-own space is a very unique one to be in. Ultimately our goal is to replace credit with trust because we want to help our customers obtain the American dream. Whether our customers are looking for household items, electronics or furniture, the teams assembled in our stores across the country understand exactly what they’re looking for,” Landry said. “That’s why we’re looking for franchisees who respect our customers as we officially launch our refranchising initiative. Our dynamic franchise partners need to be in alignment with our philosophies and be able to connect with where our customers are coming from. The best franchise companies today have a strong value proposition and strong relationships, and we plan to continue building those relationships with customers both on a corporate and franchisee level.”
Right now, Rent-A-Center’s parent company has approximately 2,500 brick-and-mortar stores open for business across the country. 180 of those units are franchised, meaning that as a corporation, it’s about 93 percent company owned. However, this refranchising initiative aims to move the needle toward more locally owned and operated stores. And that shift is already beginning to take place.
Kanji’s success—he recently inked a deal to take over ownership of another 31 stores, adding to his existing portfolio of 45— is continuing to replicate with other franchisees. With the launch of this new refranchising initiative, Rent-A-Center can now build on that momentum to solidify its position as a world class franchisor.
Said Landry, “The attention we’ve paid and the steps we’ve taken to make sure our transition into becoming a world-class franchisor is smooth are incredibly important. If you’re going to make a plan to bring people into your system from other industries like food, automotive or hotels, it’s vital that every member of your team is prepared for the change. So, for every day we spent trying to figure out how to sell Rent-A-Center to franchisees, we spent four trying to figure out how to properly transition from corporate ownership to local ownership. We’re eager to make our mark on the franchising industry in a big way, and we’re excited to officially move forward with this refranchising initiative and turn our goals into our reality.”