Today we are better than we were yesterday and tomorrow even better

Rumbo a la implementacin del Programa de los Aos Intermedios

AARONS FRANCHISES
ANALYSIS
REASEARCH ASSIGNMENT 2

Liam Jorge Torres Gutirrez

Teacher: Ronny Zapata

Grade: IV D

Subject: Business Management SL

LIMA- PERU
2017
 1. Information of the franchise
Aaron's offers furnishings such as big screen televisions, couches and
refrigerators for rental or purchase at its stores across North America.
In 1955, R. Charles "Charlie" Loudermilk, Sr. and a business partner borrowed
$500 to purchase 300 folding chairs and rent each of them for 10 cents a day to
auction houses. They made $90 from their first estate sale. The business
evolved to meet the needs of customers
By 1984, Aaron's was the largest furniture rental company in America. To
satisfy growing consumer demand, they accelerated their store expansion by
introducing our Aaron's franchise program in 1992 which grew their investment
opportunities. Today, they are North America's leader in the sales and lease
ownership of name-brand furniture, appliances, electronics and computers.
They are recognized as a Fortune 1000 company serving 1.4 million customers
annually through 12 Woodhaven furniture plants, 17 distribution centers, and
2,000 showrooms.

2. Franchise units
 3. Startup costs, ongoing fees and financing
Financial Requirements
Initial Investment: $283,270 -
$852,820
Net-worth Requirement: $550,000
Liquid Cash Requirement: $450,000

Ongoing Fees
Initial Franchise Fee: $15,000 -
$50,000
Ongoing Royalty Fee: 6%
Ad Royalty Fee: 2.5%

4. Franchise support
Training Onsite: ongoing

Training at headquarters: 10 days

Additional Training: At regional locations

Ongoing Support
Purchasing Co-ops
Newsletter
Meetings
Toll-Free Line
Grand Opening
Internet
Security
Field Operations
Marketing Support
Ad Slicks
National Media
Regional Media
Absentee Ownership Allowed

Number of employees required to run: 6 10

5. How has franchising influenced in Aarons
Positive aspects

Franchising is a good way to obtain expansion capital. Because your

franchisees pay to buy outlets in your chain, you can grow the number of
locations without tapping much of your own capital or needing to request
financing from banks or investors.
What is more, franchising can generate high financial returns for relatively little
risk. Unlike adding company-owned outlets, when you franchise, you put
relatively little money into adding each location. If you have a good business
model, you can earn high royalties from sales at those outlets. The percentage
returns you earn can be many times what you would have earned if you
opened and ran the outlets yourself.
Aarons has grown significantly since
1992. Total revenues have increased
from $155.7 million for calendar year
1992 to $310.8 million for calendar year
1997, and earnings before income taxes
increased from $9.7 million in 1992 to
$30.2 million in 1997, representing a
14.8% and 25.5% compound annual
growth rate in the Company's revenues
and earnings before income taxes, respectively. The increase in revenues
was driven by a significant increase in rental purchase revenues, which
increased from $22.5 million for 1992 to $139.3 million for 1997, representing
a 44.0% compound annual growth rate.
The Company has grown this business primarily through the opening of new
Company-operated stores and the development of a franchise program. Since
December 31, 1992, the Company has added 139 Company-operated rental
purchase stores and 102 franchised rental purchase stores, bringing the total
stores open at March 31, 1998, to 183 Company-operated stores and 105
franchised stores open, a total of 288 Aaron's Rental Purchase stores system
wide. In addition, the Company was operating 107 rent-to-rent stores at March
31, 1998, a net decrease of two stores since December 31, 1992.
 Negative aspects
On the other hand, you can't tell franchisees what to do the way you can with
employees. Franchisees are independent businesses. Moreover, they have
different goals from yours, which can easily conflict and even lead to legal
trouble.
In February 2013, customers sued Aaron's for allegedly using spyware on
rented computers to send over 185,000 emails to the rental company,
including customers' Social Security numbers, passwords and captured
keystrokes, as well as explicit images. Aaron's, Inc. officials had previously
said that the company had not installed the spyware, and individual
franchisees were responsible.
In October 2013, Aaron's agreed to a settlement with the Federal Trade
Commission that limited how it used monitoring technology and ordered it to
delete customer information that had been improperly collected.

Sources:

Entrepreneur.com. (2016). Entrepreneur. Obtained from

https://www.entrepreneur.com/franchises/aarons/282061

Franchise.Aarons.com. (s.f.). Aaron's. Obtained from http://franchise.aarons.com/about-

us.aspx

IFA. (s.f.). AARON'S SALES & LEASING. Obtained from http://www.franchise.org/aarons-sales-

leasing-franchise

Mandak, J. (2013). 185,000 spyware emails were sent to Aaron's computers. Obtained from
https://web.archive.org/web/20130301144333/http://www.nbcnews.com/technology
/technolog/185-000-spyware-emails-were-sent-aarons-computers-1C8595813

Shane, S. (2013). The Pros and Cons of Franchising Your Business. Obtained from
https://www.entrepreneur.com/article/226489