Progressive Rentals January-February 2004

Academics, Wall Street and the RTO Transaction by Stephen Schenck

Do Not Call: Once and For All by Ed Winn III

Overcoming Organizational Indifference by Linda Keefe

There’s No Place Like Home: An APROfile of Jim Brown by Kristen Card

Academics, Wall Street and the RTO Transaction

by Stephen Schenck

Most recently, a small group of Wall Street analysts and Michael Anderson, an assistant professor of finance at the University of Massachusetts-Dartmouth, met in New York to discuss the rent-to-own industry on December 12, 2003. The meeting centered on academic research Anderson and Sanjiv Jaggia, a professor of economics at Boston’s Suffolk University, have been conducting on the RTO transaction, including the results of two papers that have been published in The Journal of Consumer Affairs and The Journal of Applied Business Research.

“Periodically, analysts for research firms that follow the RTO industry for various institutional clients invite industry executives to talk about their company ad their prospects,” Anderson says. “They thought it would be interesting to hear a presentation from someone outside the industry this time.” The professors’ research is particularly interesting because it largely contradicts previous studies, which have tended to view RTO contracts as “disguised installment agreements.”

Central to this debate is the question of whether RTO is used by customers as a means to purchase or rent household items. Past studies, most notably the Federal Trade Commission report of 2000, relied on customer interviews and found that 60 percent to 70 percent of rental purchase agreements resulted in the item being purchased. However, by examining transactional records over a two-year time period, Anderson and Jaggia found purchases comprise less than 40 percent.

“I was told my audience was mutual fund managers and analysts interested in getting additional insight into what is kind of an under-analyzed sector,” Anderson says. The Association of Progressive Rental Organizations believes the new research is not only valuable information, but also provides a powerful tool in the industry’s public relations and lobbying efforts.

“For the past 20 years, our opponents have cited many studies citing the high costs of RTO and the victimization of our customers,” says APRO Public Affairs Director Richard May. “Now we have an independent economic analysis that reflects a different view of the industry and is available to anybody, whether it’s an investor, judge or legislator.”

“Michael’s work,” says Robert Strauss, a consumer and retail senior analyst with Independent Research Group, “brings additional visibility to a segment of retail that continues to be underserved.” Strauss and Independent Research Group organized and hosted the meeting with Anderson in New York City. WHY RTO? Although much of the attention paid to these two studies has been recent, Anderson’s plunge into rent-to-own data actually began several years ago when another professor suggested he look into the industry for future research.

“It was actually very serendipitous,” Anderson says about the beginning of his research. “Raymond Jackson, a colleague in the department, had this idea to look at the rent-to-own industry. He had read some literature and noticed that no prior researcher had put it into an economic framework.” Once the professors decided to focus their economic research on RTO, what they needed next was to acquire reliable data on which to base their study. Anderson and Jackson contacted APRO, hoping the Association would be interested in providing some research funding.

However, in order to avoid any impression of the research being industry-funded and keeping it independent, APRO put the professors in touch with High Touch, a company that provides RTO stores software to track transactions. “We were able to get a bunch of data, so what really started as a modest, little project, turned into a really major one,” says Anderson. Based in Wichita, KS, High Touch’s Director of Sales John Rogers says that he was interested in the possibilities of Anderson’s research when he first learned about the project four years ago.

“Regardless of how the results turned out, I was excited to see that a university was looking at RTO. At that time, there had been no formal academic research into the industry.” After poring over data from 100 rental-purchase stores across the country covering a 10-year time period between 1991 and 2001, the professors decided to base their research on 352,646 transactional records, 95 percent of which originated between 1998 and 2001. “There is so much information there that is so fascinating not just in terms of RTO, but economics in general,” says Anderson.

“There aren’t many data sets that are this detailed about consumer behaviors, so there are many questions into which we can hopefully gain some insight.”

OLD QUESTIONS, NEW ANSWERS

The result of Anderson’s initial analysis of the data turned out to be quite surprising and would later form the basis for his paper, “A Reconsideration of Rent-to-Own,” which was published in the winter 2001 issue of The Journal of Consumer Affairs.

Although the paper confirmed some of the previous research by other entities, which had found the majority of RTO customers to be low income and female, it contradicted the negative view that RTO took advantage of its customers. “One thing that was interesting was seeing how little work had been done on an important industry that offers what is really a unique arrangement,” says Anderson. “What existing research that was out there was all particularly one-sided. It seemed that the only viewpoint that had been expressed was one that consumers were being exploited by these agreements.

As far as we know, we published one of the first articles out there that said, wait a minute, there are other economic reasons why consumers would be interested in RTO.” The paper seemed to support what RTO owners had been saying for years, that RTO offered customers various options outside the traditional methods of credit cards and layaway to obtain goods for their homes. The article suggests that a straightforward casting of the rent-to-own agreement into a mold of an installment sales contract obscures the actual benefits and costs to the consumer and yields misleading public policy recommendations. In reality, a rent-to-own agreement offers consumers a series of valuable services and options unavailable in the installment purchase contract.

A RECONSIDERATION OF RENT-TO-OWN

So what could be the reason behind such significant differences in conclusions between Anderson’s study and earlier research? The answer lay in whether RTO agreements were classified as rentals or purchases, which was also the topic of Anderson’s second paper, “Rent-to-Own Agreements: Purchases or Rentals?” published in The Journal of Applied Business Research. If most customers carried their RTO contracts to term, then they could be classified as purchases, as was the finding in the FTC telephone study, then the agreements could be viewed as installment contracts, resulting in customers paying extremely high annual percentage rates.

In his second paper, however, Anderson’s research proved otherwise. “Our main result, derived from an analysis of disposition and duration, is that RTO agreements are more frequently used for short-term needs rather than as a method of acquisition. Legislative and legal efforts to classify RTO agreements as primary installment contracts cannot be justified by their pattern of use in the marketplace,” says Anderson. The second paper was significant from an RTO perspective because it revealed how customer surveys, as helpful as they were in determining demographic information, were severely limited in other ways. Primarily, studies based upon customer interviews seemed to be unable to predict accurately whether items would be returned or rented to term and purchased. “The FTC report is based on survey data and ours is based on transactional data,” says Sanjiv Jaggia. “They both have their own appeal in some ways, but there is no doubt, in any academic’s mind, that transactional data is more reliable.

In a survey you ask somebody, ‘Are you going to return the item or purchase it?’ The person will say ‘yes’ or ‘no’ based on what they are feeling at the time, but we don’t know what that person will really do.” This criticism of customer survey data, now that it has been accepted into reputable academic journals, could be helpful in lobbying for the RTO industry, says APRO’s Richard May. “The second study goes at certain lengths to question the validity of the conclusions of the FTC report, which we have had difficulty explaining on Capitol Hill,” says May. “Before we had the FTC report saying the RTO customers’ ownership ratio is 70 percent, which we have always questioned because that is just not how it is in this business.”

FUTURE RESEARCH AND ARTICLES

After the publication of the first two papers, detailing the work he did with Raymond Jackson, Anderson has continued his RTO industry research with Jaggia, who he met in graduate school at Indiana University. The pair has co-authored two more papers, which are currently in the peer review process, awaiting publication. “Rent-to-Own Agreements: Customer Characteristics and Contract Outcomes” and “A Multiple Destinations Analysis of Rent-to-Own Transactions” delve more deeply into statistical analysis and economic theory.

“Michael contacted me two-and-a-half years ago with a proposal to work on a few projects concerning rent-to-own,” says Jaggia. “I didn’t know much about the industry, but he told me about the data he had, which was really a fabulous data set. My specialization is statistics and econometrics, so we discussed some things and discovered we had many ideas that we could pursue,” he says. Econometrics is the application of mathematical and statistical methods to economics. “We are trying to explore these things with cutting edge statistical methods and being as careful as we can to make transactional data more solid and reliable,” says Anderson. “At the same time, we’re trying to understand some consumer behaviors, such as how does one pay [weekly or monthly] and how long the agreement is and how these factors contribute to the actual outcome of transactions.”

For their part, Anderson and Jaggia believe the future of their research into the economics of the rent-to-own industry and its transaction is very bright. Both expect their partnership to continue to grow and additional papers could be inevitable. High Touch’s Rogers is also looking forward to future research by the professors because he thinks the more detailed data will provide a deeper analysis of the RTO transaction, which will be invaluable to RTO store owners. “I don’t believe that most dealers manage their business using industry benchmark data,” he says. “Though the industry has done well regardless, having this independent data will be eye-opening and could improve a company’s records and annual report.” “We are very optimistic about this research because it also gives insight into areas outside of the rental-purchase industry,” says Jaggia.

“For example, we are finding that whether it is a weekly or a monthly rental has a big impact on whether the item will be returned or not and there should be absolutely no reason in pure economic terms why that should make a difference. This, I think, should have interest for any economist, not just one studying rent-to-own stores.”

To download a copy of “A Reconsideration of Rent-to- Own” or “Rent-to-Own Agreements: Purchases or Rentals?,” go to www.APROVision.org/legalchannel.html. Stephen Schenck is a free-lance writer.

Do Not Call: Once and For All

by Ed Winn III

For some time, the American public made it clear that it was tired of being interrupted at home by unsolicited sales calls coming at odd times during the day, but most often during the dinner hour. The public outcry culminated with the U.S. Congress enacting the Do-Not-Call Implementation Act (2003) and a Federal Communications Commission rule that went into effect October 1, 2003. FCC Chairman Michael Powell called the new rule “the most sweeping consumer protection measure ever adopted by the FCC.” Since consumers began listing home telephone numbers on the federal do-not-call list last summer, more than 50 million numbers have been accumulated. S Rental dealers are not primarily telemarketers— the specific group at which the rule was aimed—but some rental dealer marketing activities will fall within the coverage of the new rule. This article will summarize how the new rule will impact rental dealers. Dealers wanting more specific information can find the full text of the FCC’s 164-page report and order at www.fcc.gov/cgb/donotcall/. While the new rule has decimated the telemarketing industry, it should only have a minor impact on rental industry practices. It will, however, have some impact as the rule specifically covers telephone calls made to consumers “for the purpose of encouraging the purchase or rental of…goods or services.”

RENTAL DEALERS AND THE FCC RULE

The new rule will affect rental dealers in at least three areas: 1. There are a few rental dealers who conduct true telemarketing. They purchase lists of consumers, use telephone directories and otherwise make cold calls to consumers at their homes and attempt either to rent them something on the phone or get them to come down to the store to rent something or at least look around. 2. Some rental dealers regularly revisit old customer files and make telephone calls to former customers and perhaps their references as well to see if they are interested in coming back in to rent something. 3. Some rental dealers, when they are calling references on an account, add a rental pitch to the verification process. This practice is becoming increasingly frequent in the industry. Each of these activities is covered by the broad language in the new rule and qualifies the dealers as a telemarketer.

EXCLUSIONS TO THE FCC RULE

What is not covered under the rule are regular conversations with existing customers and telephone collection efforts by rental dealers. Some customers might wish that placing their home phone number on the federal do-not-call register would keep rental dealers from being able to call them about their past due accounts, but that was never the intent of Congress or the rule makers and that is not how the rule reads. The do-not-call rule has no applicability to rental dealers’ collection efforts. Cold calls to potential customers, however, are covered by the rule. Telephone calls to former customers are not covered by the rule as long as they are made within 18 months of the last transaction with that customer. Fairly read, the rule allows rental dealers to make solicitation calls to former customers within 18 months of the expiration of the last paid rental period on an agreement with that customer. The rule also excludes calls made to prospective customers within 90 days of the customer’s last contact with the store.

Rental dealers can call consumers who fill out a rental order/application for 90 days without having to comply with the rule. The commentary suggests that a consumer who calls the store merely inquiring about pricing or availability may not fit within the 90-day exclusion, although there is consumer conduct contemplated by the rule short of filling out a rental order/application that would be included within the 90- day exclusion. The 18-month and 90-day exclusions are the most important exclusions for rental dealers. The FCC considered and rejected a small business exception. Other exclusions that dealers may use from time to time include the following:

1. Business to business calls. Only consumer home phone and cell phone numbers can be put on the federal do-not- call list. There are no restrictions on rental dealers soliciting commercial accounts on the phone.

2. Signed written consent. Rental dealers may call consumers who have given the dealer a signed written consent to do so, even if their telephone number is on the federal list. The consent will be valid until the consumer revokes it in writing.

3. Family and friends. Rental dealers and their employees may make unsolicited telephone solicitations to people with whom they have a personal relationship without checking the federal list.

A personal relationship means a family member, friend or acquaintance. Unless a rental dealer can fit the telephone call into one of these exclusions, then the call is covered by the rule and the dealer must comply with it. Dealers should note that the rule purports to regulate both interstate and intrastate calls. It remains to be seen whether the FCC has the constitutional authority to regulate calls made entirely within a state, but the FCC has concluded that it does have that authority since having one national do-not-call database is the most efficient and economical way to regulate unsolicited sales to consumers in their homes.

Telemarketing companies immediately challenged the rule last October on First Amendment freedom of speech grounds and a federal district court initially determined that the rule was unconstitutional. However, the 10th Circuit quickly overruled the district court and allowed the rule to become effective. In theory, the federal government only has the power to regulate interstate commerce under the Constitution. The authority of the FCC to regulate purely intrastate telephone calls has not yet been challenged, but surely will be. Until then, the rule is in effect and will apply to a one-store dealer who makes unsolicited telephone calls with customers only in that state.

STATE DO-NOT-CALL STATUTES AND THE FCC RULE

Today, there are 36 states with their own do-not-call statutes and databases of telephone numbers. Some state statutes offer more consumer protection than the federal rule; some less. The FCC has announced its intention to harmonize the state and federal do-not- call lists and rule as much as possible and toward that end has adopted an 18-month transition period to allow states to download their lists into the federal lists. Some states are currently prohibited from doing just that by their own state enactments. There is an ongoing debate as to the future of the various state do-not-call statutes. State attorneys general, for example, do not want to lose their ability to sue telemarketers in state court using their state’s statutes.

The FCC has declared that the federal rule is merely a floor and that the states can enact more rigorous consumer protections relating to telephone solicitations. At the same time, however, the Commission has announced its decided preference for one list and one rule to ease the compliance burden. It is too early to tell whether the states will fall in line and allow the one list, one-rule notion to prevail. In the meantime, rental dealers will have to check in their own states to see if theirs is a more restrictive do-not-call statute than the FCC rule. For example, Louisiana, Missouri, Pennsylvania, Tennessee and Texas all have established business relationship exclusions shorter than the FCC’s 18-month period. Presumably, those shorter state periods will prevail in those states unless those states adopt the legislation to conform their laws to the FCC rule.

COMPLIANCE ISSUES WITH THE FCC RULE

What does it mean to be covered by the FCC rule? It means that rental dealers will have to compare the telephone numbers that they want to call in any one of the three categories listed above against the numbers on the national do-not-call list and then refrain from calling any of the numbers on the federal list. Rental dealers can download up to five area codes on the list for free. After the first five, dealers will have to pay $25 per area code. The entire national list with all area codes will cost $7,350. The lists can be downloaded from www.telemarketing.donotcall.gov. Rental dealers will have to update their lists quarterly. There is not yet software generally available that will compare telephone numbers automatically, but there soon will be. In the meantime, dealers must compare lists manually before making any calls covered by the rule.

COMPANY-SPECIFIC DO-NOT-CALL LISTS

In addition, the rule requires that rental dealers who make telephone solicitations covered by the FCC rule must also maintain an internal company- specific do-not-call list. Consumers can request that the dealers put their number on the company list and not call it. Dealers must keep numbers on the list for five years. The rule also requires dealers to have written policies in place concerning the company list. A dealer must make the policy available to a consumer upon request. The rule specifically allows consumers who would otherwise fall under an exception to the rule, e.g. a former customer within the past 18 months, to get on the company do-not-call list, in which case, the company cannot call. The rule requires dealers to process requests to be put on a company-specific list within 30 days of the request.

SAFE HARBOR UNDER THE FCC RULE

There is a safe harbor defense to allegations that the dealer has violated the rule by calling someone whose number is on the federal list. There is no liability for a dealer who, as a part of its routine business practices, has

1) established and implemented written procedures to comply with the do-not-call rules,

2) trained employees in the procedures established pursuant to the do-not-call rules,

3) maintained and recorded a list of telephone numbers that may not be contacted,

4) uses a process to prevent telemarketing to any telephone number on any list established pursuant to the do-not- call rules using a version of the federal list dated not more than three months prior to the call and maintains records documenting this process, and

5) any subsequent call otherwise violating the do-not-call rules is the result of error. There are separate rules for telemarketers using prerecorded messages, auto-dialers, fax machine solicitations and ID blocking devices on their phones that are beyond the scope of this article. If dealers find the FCC rule too cumbersome, they can, of course, make the decision not to make the kinds of telephone calls that trigger coverage under the regulations. Otherwise, rental dealers should be aware that the issue and the rule have gotten a lot of publicity and that consumers are generally aware of the do-not-call list, especially if they have taken the time to get on it. They are quick to file complaints against companies who call them when they shouldn’t. There have already been some six-figure fines assessed under the rule. APRO member dealers wanting more information about how the rule works or information about state laws should contact the APRO office at 800/204-2776 or e-mail Ed Winn at edwinn@e-bylaw.com. Ed Winn III is APRO’s legal counsel.

Overcoming Organizational Indifference

by Linda Keefe

We hear the phrases every day: “That’s not my job.” “I can’t help you; talk to my boss.” “That’s just how we do things around here.” “Someone else was supposed to do that.” Such are the warning signs of organizational indifference. X Organizational indifference occurs when your employees no longer care about the company’s success. They’re simply working for a paycheck, doing only what it takes to not get fired and not looking for opportunities that will help the organization thrive. Unfortunately, organizational indifference exists in companies of all sizes and in all industries. It hits the bottom line.

No one is immune. How much organizational indifference is in your company? What percent of your employees come to work just to get a paycheck or to add the organization to their résumé? Ten percent? Twenty-five percent? Maybe 75 percent? Realize that no matter what percent you perceive, the reality is usually much greater. When you consider all the labor costs involved in recruiting, hiring, training and paying benefits, do you really want even one organizationally indifferent person on your team? When you rid your team of organizational indifference, your employees are eager to express new ideas and genuinely want to help clients. They are excited to come to work because they know their contributions matter and they have a definite purpose in the organization.

As a result, customers enjoy doing business with the company, thus increasing your revenue and profitability. Additionally, your operating expenses and turnover decrease as employees take a more active role in the company. Productivity soars as each employee strives to make a positive impact on the bottom-line. Think the above scenario couldn’t possibly come true in your organization? Think again. It is possible to overcome organizational indifference and transform your team into a unified workforce with an entrepreneurial spirit that sustains focused effort, flexibility and the willingness to seize new opportunities. To analyze where your team is on the indifference scale and begin to fill any gaps that exist, rate how well your employees perform each of the following tasks.

1. COMMUNICATE THE ORGANIZATION’S VISION

The company’s vision is more than words on paper. It’s a lofty goal of where you want the company to be and how you want the community to perceive the organization. While the business owners and senior level executives usually know and strive to uphold the company’s vision, front line employees typically have only a vague idea of the vision and cannot fully grasp its importance. This is unfortunate, because if you want a unified, entrepreneurial spirit to take hold in your organization, your team must understand and believe the vision you set forth. Your employees can only operate at their best when they have a reason to do so. When your employees know and embrace the vision, they’ll have a newfound purpose for their everyday activities.

They’ll have a sense of the “big picture” and will be able to understand how their actions, routine as they may be, contribute to the greater goal. Studies show that people want to do their best; they want to excel, to be involved and to take an active leadership role in their job. However, they can only do that when they believe that their contributions matter and they see value in their actions. Walk around your organization and ask your employees if they know 1) the company’s vision, 2) what it means, and 3) how their actions contribute to it. If they are unable to answer all three parts of the question, it’s time to explain the vision in detail and exemplify it with your actions.

2. USE THE TECHNOLOGY TOOLS THEY HAVE AVAILABLE IN AN EFFECTIVE MANNER

Most employees know how to “get around” in various computer programs and they know how to create a sales piece, a spreadsheet or a brochure; however, many of those people could reduce the amount of time they spend on their tasks if they simply knew the productivity skills for the given technology. The fact is that no matter how much you invest in technology and no matter how many training sessions you send your people to, you’ll never know if your employees are using the technology effectively unless you measure their performance. You must know where your people are in terms of their technological skills as well as where you want them to be. Ask yourself, “How effective is the technology training we’ve done?” “Do my employees really get their tasks done in the shortest amount of time?” and “How much downtime do my employees have as a result of equipment malfunctions?” Most company leaders find that their employees actually have very little understanding of the skills that would increase their productivity and make their documents better. To accurately uncover the truth behind the technology in your office and your employees’ skill level, have an outside consultant track your team’s productivity and downtime. Also, have the consultant question your employees about their comfort level with various technologies so your team can tell you where they want additional training. The more proficient your employees are with the technology tools available, the more capable they’ll be able to serve clients and create results.

3. ROUTINELY GIVE PRAISE AND RECOGNITION

For an organization to thrive and for employees to feel valued, there must be a company-wide environment of praise and recognition. An ideal environment is one where not only does management praise and recognize employees, but also employees praise and recognize each other and the management team. Why is this so important for dispelling organizational indifference? Because any kind of team endeavor is going to be enhanced when the team members approve, praise and encourage each other’s efforts. Conversely, when team members have a negative view towards each other, then the team typically falls apart. In order to create an environment of praise and recognition, CEOs and senior managers must lead by example. Answer this: Have you given praise and/or recognition to your employees in the past seven days? Do your employees know what is expected of them? Do you give your employees opportunities to learn and grow? If you answered “no” to any question, then you need to give greater focus to your praise and recognition efforts. Establish avenues where employees can receive recognition, such as in company newsletters, postings on bulletin boards or even with handwritten thank-you notes from the management team. Show your employees that they’re valued and they in turn will value the company.

4. KNOW WHEN THEY HAVE THE AUTHORITY TO TAKE ACTION ON BEHALF OF THE ORGANIZATION—AND DO IT

Many company leaders talk about empowering their employees, but when it comes time for employees to exert their authority in a situation, they quickly learn that empowerment does not exist. That’s because too many company executives fail to realize that empowerment is more than assigning authority; rather, empowerment is a three-fold process that builds trust between the employees and the corporation. First, when employees are empowered, they know precisely how much latitude they have in any given situation. They don’t have to second-guess themselves when they make decisions because managers have detailed what each person can do. Second, when empowered employees have reached the limit of their authority, they know the steps to take to find out additional information or to make suggestions. Finally, empowered employees are not afraid to think outside the box or offer ideas because they know they have management’s support and that the senior executives want their input. They feel that the company values their ideas and strive to devise new ways to help the organization perform better. As you strive to empower your workforce, take the time to detail the latitude each person has, the processes in which to channel new ideas and ways for managers to show their support. And remember that empowerment is a two-way street. It’s a shared responsibility between employees and managers that instills trust and responsibility in every team member.

PROVEN RESULTS

When your employees know what the organization is about, how to use their technology effectively, how to instill team motivation and what their empowerment processes are, you lay the groundwork for eliminating organizational indifference. And when your employees care about the organization and are excited about their work, they’ll solve more problems, serve customers better and contribute to the company’s success significantly, thus increasing bottom- line profits. It’s the combination of these four elements that moves the organization forward and unifies people with the entrepreneurial spirit that leads to long-lasting results.

Linda Keefe is a speaker, consultant and CEO of Shared Results International, a business focused on helping companies achieve faster growth and higher productivity. She provides solutions to companies which allow them to overcome organizational indifference, communication problems and technological skill deficiencies. She can be reached at 888/ 689-8077 or lindakeefe@ sharedresults.com.

There’s No Place Like Home: An APROfile of Jim Brown

by Kristen Card

There came a time when we were trying to grow ABC [Rent-to-Own], and we just couldn’t seem to get it up and going like we wanted,” says Brown. “And it just wasn’t a real pretty business back then. We were mostly dealing with welfare people and that sort of thing. We were at 90 percent of our marketing effort, but getting only 10 percent of the potential business. “So I went down to Houston, Texas, and spent a week with Chuck Sims at his Remco stores,” says Brown. “I saw what he was doing—he was targeting his business more toward a middle-class population, upgrading his merchandise to brand-name and adjusting his prices some. He was doing a lot of business and becoming very successful. And I saw where we probably could do that, too.

“So I came back and started implementing some of that stuff and just right off, we started drawing, too. We became very successful doing it that way,” says Brown. “I’ve always thought Chuck Sims was the first one to really revolutionize the rent-to-own business. He’s one of the main reasons I’m so successful today. I can’t thank him enough.” “Y’know,” says Brown, “he’s from Kansas, too. It’s funny how a lot of the trails lead right back here to Wichita.” And that’s how Jim Brown stayed in the rental-purchase industry—and stayed and stayed.

Today, with almost 40 years under his belt, Brown is a tried-and-true RTO veteran, one of the few remaining charter members of the Association of Progressive Rental Organizations. And he’s right—it does seem a little more than coincidental how many RTO legends not only hail from the Sunflower State, but also happened to cut their professional teeth at Mr. T’s Rental in Wichita. Ernie Talley, an industry pioneer and former CEO of Rent-A-Center, owned the business. Among his notable hires were Rent-A-Center founder Tom Devlin, Chuck Sims and Bud Holladay.

But while his RTO peers blazed trails away from Wichita, Brown is the one who stayed on the home front. Born and bred in this south-central Kansas city, 57-yearold Brown has simply never seen a reason to leave. If he ever experienced Dorothy Gale’s feeling of not being in Kansas anymore, Jim Brown clearly didn’t care for it. Brown was a 19-year-old Wichita State University student when he began working part-time at Mr. T’s in 1965. “I was pretty young,” says Brown, “and I thought it was a fun job. We went out and delivered and a lot of people we dealt with didn’t even have telephones yet, so we did a lot of collecting in peoples’ homes. I just thought it was fun. It wasn’t hard.”

Within a year of Brown’s hire, Talley decided to move out of Wichita and on to bigger markets. He sold Mr. T’s rental accounts to brothers John and George Parsons, the owners of competitor ABC Rental. Brown began working full-time for the Parsons brothers, managing the Wichita store and, when they opened up an Oklahoma City location, Brown oversaw it, too. In 1972, the brothers decided to dissolve their partnership. George Parsons teamed up with Brown to run ABC’s two Wichita stores; they also bought a Kansas City location. Brown and Parsons eventually sold the Kansas City store and opened up a third Wichita location. And those three Wichita-based stores make up the ABC Rent-to- Own chain today.

“When I was traveling back and forth, I didn’t like being gone from home too much,” says Brown. “I guess I kind of made the decision back then that I wasn’t all that interested in going into markets outside of Wichita. I always think we can do better in our market here, expanding into different products, different areas. I’m satisfied being in this market, but we want to expand our stores and the business we do here.” Brown’s heartland stick-to-itiveness and hometown devotion may well be what gives ABC Rent-to-Own its competitive advantage.

“We’ve offered better products and better service for a longer period of time than anybody else,” says Brown. “There’s nobody else in this market who can say they’ve been in business close to 40 years, so that says something for itself. “And that shows up in our repeating business,” he says. “Once we get a customer, we usually keep him. I think if you offer your customers good service, good products at competitive prices, and always put your customers first— along with your employees—then you can’t go wrong. Rent -to-own customers are not any different than regular retail customers.

Their situation may be a little different from time to time, but they want good products, they want good service and they want to be treated fairly, friendly and with respect. It’s just pretty simple, really.” Brown says he sees plenty of opportunity for expansion in the consumer/residential product area, in high-tech electronics, computers and higher-end furniture. “We were the first Wichita store to rent color televisions and everybody thought we were nuts,” says Brown. “But when we started to do that, we saw growth. The same thing happened when we got into renting furniture. I’ve always thought you have to find out what people want, find out where the need is. Then just meet it and you’re there.”

Despite his longtime partnership with George Parsons, Brown might sound like he’s used to running his business alone. But that’s only partially right. Parsons was actively involved in the company at the beginning of their partnership, but for the past 20 years or so, Brown has been directing the day-to-day activity of ABC Rent-to-Own while Parsons developed a real estate business, became politically active and consulted from the sidelines. So when Parsons, 73, succumbed to advanced Parkinson’s disease last October, Brown knew how to keep the business running smoothly. What he didn’t know was how to fill the hole where Parsons’ invaluable insight and camaraderie had been.

“We officed together, saw one another every day,” says Brown in understated brevity. “We were together over 37 years. It’s a sad thing. I really miss him.” Part of the legacy Parsons left behind is Brown’s continuing participation in APRO—particularly in the organization’s government relations and legislative efforts. “In the late ’70s and early ’80s, [George] began to get more involved in politics at the local level, the state level and, finally, the national level,” says Brown.” Then, about 10 years ago, he went with me to Washington for the APRO legislative trip and really opened some doors for me. “Together, we developed good relationships with all our congressmen, our senators and everybody in their offices.

We were able to persuade all four Kansas congressmen and both of our senators to co-sponsor the [rental-purchase industry’s] federal legislation. I’m really proud of that— it’s very important and a very big achievement for me and for our trade organization.” Through his individual efforts, Brown has illustrated his strong belief in APRO’s work to secure HR 996/S 884, the Consumer Rental-Purchase Agreement Act. But he also realizes the power of strength in numbers and hopes APRO’s aspirations to grow its membership come to fruition.

“As far as industries go, we’re still probably sort of young,” says Brown. “But any industry, any business, cannot operate to its full potential without a good trade organization like APRO. As you look across the country, every successful industry has a successful trade organization supporting it. You’ve got to band together if you’re going to get anything done and have a good quality organization.

I’d put APRO up against anybody.” As a charter member of the organization, says Brown he’s definitely satisfied with APRO’s current direction, leadership and priorities, which include approval of the federal bill, addressing health insurance issues and enhancing industry ethics standards. “Well, I said it before, but early on, the rent-to-own business wasn’t really well-respected,” says Brown. “Chuck Sims figured it out and helped me and was instrumental in helping the trade organization do something about it. One of the things I’m proudest of professionally is the way the industry, and even ABC [Rent-to-Own], has turned the business around to where it’s a valued, well-respected business and how now we all can be proud to be in the rent-to-own business.”

Yep, Jim Brown sticks around—and not just professionally. A committed family man, he’s been married for 36 years; he and his family have lived on the same acreage just outside Wichita for more than two decades; and, while he enjoys fishing and hunting, he’s typically spent his weekends rodeoing—team and calf roping—since he was 21. So what about all those new-age gurus who insist you’ve got to smash the molds, break the patterns and take risks to make progress? Plainly put, Brown isn’t buying. “People have asked me through the years, ‘How have you been able to be successful?’” says Brown.“ And my answer is that it’s really not all that difficult. If you show up every day and you honestly do your job, well, that’s about 75 percent of it right there. And then you always watch for new ways to improve things.”

Brown might consider adding one more essential element to that simple formula: When you find something you like, stay with it. Sometimes, it’s gets even better. “There was a time in our industry—and a lot of people won’t admit this—but sometimes, when people asked you what you did for a living, you’d mumble it under your breath,” says Brown. “But nowadays, everybody can hold their head high and I think it’s just fantastic. “I’ve always liked the rent-to-own business. Still do. That’s really about it.”

Kristen Card is an independent business writer in Austin, TX.