Rent-A-Center
Encyclopedia
Rent-A-Center (commonly referred to as RAC) is an American
public
furniture
and electronics
rent to own
company based in Plano, Texas. The company was incorporated in 1986 and as of 2010 operates 3,007 company-owned stores in the United States, Canada
, Puerto Rico
and Mexico
, accounting for 38% of the rent-to-own market in the United States based on store count.
Rent-A-Center's operations include 23 retail installment stores called Get It Now (based in Wisconsin
); 18 Home Choice stores in Illinois
and Minnesota
; 18 rent-to-own stores in Canada that go by Rent-A-Centre and Better Living; and 134 RAC Acceptance kiosks housed within retail partner stores. Its subsidiary, ColorTyme Inc., is a national franchiser which has 210 stores in 33 states. The company also offers Rent-A-Center Corporate Leasing which provides businesses with furnishings for short-term employee living arrangements and National Product Service, a merchandise warranty and repair service. Within 353 Rent-A-Center retail store locations.
In 2009, Fortune Magazine listed Rent-A-Center at number 706 on the Fortune 1000
list of the largest U.S. corporations, based on a composite ranking of revenues, profits, assets market value and other measures. Competitors include Aaron’s, Inc., easyhome, Best Buy Co. Inc., and Wal-Mart Stores.
during the 1960’s when he told customers of his store, Mr. T’s Rental, that they had rented a washer and dryer for a long enough duration that they had paid for it in full and now owned it. Thomas Devlin, a former employee of Mr. T’s rental, recognized the potential of renting name-brand products and partnered with W. Frank Barton and founded the Rent-A-Center brand in Wichita, Kansas in 1973.
Mark Speese
joined Rent-A-Center in 1979. In 1986, Mr. Speese and a colleague left Rent-A-Center and started a competing business known as Vista Rent-To-Own. Ernest Talley then joined Vista Rent-To-Own as Chairman of the Board of Directors in 1989 and remained Chairman through Vista’s transition to Rent-A-Center. In 2001, Talley retired and Speese was appointed as Rent-A-Center’s Chairman and CEO. Vista Rent-To-Own changed its name to Renters Choice, Inc. in December 1993, in connection with the acquisition from DEF Investments, Inc. and certain related entities of an 84 store rent-to-own chain operating in 12 states.
Renters Choice went public on the NASDAQ
stock exchange in 1995 under the symbol “RCII.” In August 1998, Renters Choice acquired Thorn Americas, Inc., which operated 1,474 stores in 49 states and the District of Columbia under the name “Rent-A-Center.” On December 31, 1998, Renters Choice changed its name to Rent-A-Center, Inc. and began operating all of its stores under the “Rent-A-Center” brand name.
In February 2003, Rent-A-Center acquired 295 stores from Rent-Way, Inc. In March 2004, Rent-A-Center commenced operating in Canada with the acquisition of five stores located in Edmonton
and Calgary, Alberta. Later that year in May 2004, Rent-A-Center completed the acquisitions of Rainbow Rentals, Inc. and Rent Rite, Inc. Rent-A-Center completed its acquisition of competitor Rent-Way, Inc. on November 15, 2006, for a price of approximately $600.3 million. At the time of the acquisition, Rent-Way was ranked number three in the rent-to-own industry with 782 stores in 34 states. The Rent-Way store acquisition program brought the store total to 3,535 stores. Given that the acquisition resulted in over-penetration in some markets, Rent-A-Center carried out the closing or merging of 282 stores between 2007 and 2009.
, Toshiba
, Whirlpool Corporation, Dell
and HP. As part of their rent-to-own business model, Rent-A-Center generally makes its items available with no down payments or long term obligations. Customers can return an item at any time, for any reason, without penalty and also have the option to re-rent the same item and pick up the payments where they left off. Delivery, pick-up, service and repair are also included in the stated rental price. Customers can also upgrade items while they are renting--the payments will change accordingly. The total paid for an item is usually between four to six times the retail value of said item.
In March 2007, the corporate office moved to a new location at 5501 Headquarters Drive, Plano, Texas
, in the Legacy Business Park. Construction began on the 175000 square feet (16,258 m²) building in January of 2006. Employees moved into the building on March 16, 2007. The current headquarters measures three stories and includes structured parking for 400 vehicles, a fitness center, and lunchroom.
, collected by means of fund raisers held on an annual basis in Rent-A-Center stores, combined with a match from the company up to $100,000. As of April 2010, the cumulative total of this program was reported as being "more than $2 million." Between 2005 and 2010, Rent-A-Center donated and set up 115 “RAC Rooms” at Boys and Girls Clubs of America locations, in which each club selects $5,000 worth of new furniture, electronics and computers for their room. Rent-A-Center has annually allocated $60,000 worth of scholarships to customers and the children of customers and coworkers. Through the Random Acts of Caring initiative, which was launched in 2008, RAC has donated merchandise and funding to charitable organizations located in communities where Rent-A-Center maintains retail locations. The company has been recorded as having supported Junior Achievement with grants to 35 locations to teach financial literacy; and has provided funding to food banks including Feeding America and the North Texas Food Bank
. Rent-A-Center’s “Soup to Nuts” initiative has involved its 3,000 stores acting as collection points for cans of soup, jars of peanut butter and other canned goods which have been subsequently donated to food pantries in the U.S. An initiative begun in 2010 is Rent-A-Center’s Military Donation Program, in which merchandise with a wholesale value of $175,000 is delivered to 10 Army garrisons. Contributions have been allocated to Family & Morale Welfare and Recreation operations that provide community and family services, such as the Soldier and Family Assistance Centers that in turn serve wounded, ill and injured soldiers and their families.
concerns have been raised about the rent-to-own
industry, including accusations of predatory lending
. Consumer advocates believe that rent-to-own transactions such as those offered by Rent-A-Center should be treated as credit sales, and point out that the price of a product can be two or three times the retail price. However, some are quick to note that 73 percent of rent-to-own customers have a high school diploma and all prices are shown on the customer contract. In an April 2000 Federal Trade Commission
study on the industry, 75 percent of respondents stated that they were satisfied with their rent-to-own experience. The rent-to-own industry also received an “A” or excellent regarding customer service in a 2009 study conducted by America’s Research Group.
In 2000, Rent-A-Center was sued for sexual bias in the hiring of women. The 2002 settlement agreement resulted in a $47 million cash payment by Rent-A-Center and mandated that Rent-A-Center offer 10% of future vacancies over the following 15-month period to women who were found to be past victims of discrimination. The settlement also led Rent-A-Center to seek qualified women to serve on its Board of Directors, develop equal employment training programs, and hire a new human resources vice president to implement hiring policies that ensured equal employment opportunity for female job applicants and current employees.
In 2006, Rent-A-Center settled for $7 million in restitution and $750,000 in civil penalties for deceptive business practices in California
. The State of California claimed RAC, in violation of state law, engaged in unfair competition and illegally misrepresented the price of certain merchandise. As a result of the settlement, RAC also deposited more than $7 million into a special consumer protection fund that is used to enforce consumer protection laws.
In 2010, seven months after the Washington Attorney General’s Office sued Rent-a-Center and accused the national lease-to-own chain of unfair and deceptive collection practices under Washington’s Consumer Protection Act, Rent-A-Center agreed to settle.
Another prominent case occurring in 2010 included Rent-A-Center vs. Jackson which arose out of an employment discrimination claim brought on by former RAC employee Antonio Jackson. The case went all the way to the Supreme Court
, who sided with RAC in a 5-4 decision. The court held that if a company's arbitration agreement includes a clause delegating fairness challenges to the arbitrator, a court must enforce that agreement and send the matter to arbitration. When Jackson first sued, Rent-A-Center cited its arbitration agreement and claimed that any challenges to the agreement had to be decided by the arbitrator.
stores to Get-It-Now! credit sale outlets after a judicial decision held that the state’s consumer protection laws defining credit sales included rent-to-own businesses.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
public
Public company
This is not the same as a Government-owned corporation.A public company or publicly traded company is a limited liability company that offers its securities for sale to the general public, typically through a stock exchange, or through market makers operating in over the counter markets...
furniture
Furniture
Furniture is the mass noun for the movable objects intended to support various human activities such as seating and sleeping in beds, to hold objects at a convenient height for work using horizontal surfaces above the ground, or to store things...
and electronics
Electronics
Electronics is the branch of science, engineering and technology that deals with electrical circuits involving active electrical components such as vacuum tubes, transistors, diodes and integrated circuits, and associated passive interconnection technologies...
rent to own
Rent to own
Rent-to-own, also known as rental-purchase, is a type of legally documented transaction under which tangible property, such as furniture, consumer electronics and home appliances, is leased in exchange for a weekly or monthly payment, with the option to purchase at some point during the agreement...
company based in Plano, Texas. The company was incorporated in 1986 and as of 2010 operates 3,007 company-owned stores in the United States, Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, Puerto Rico
Puerto Rico
Puerto Rico , officially the Commonwealth of Puerto Rico , is an unincorporated territory of the United States, located in the northeastern Caribbean, east of the Dominican Republic and west of both the United States Virgin Islands and the British Virgin Islands.Puerto Rico comprises an...
and Mexico
Mexico
The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...
, accounting for 38% of the rent-to-own market in the United States based on store count.
Rent-A-Center's operations include 23 retail installment stores called Get It Now (based in Wisconsin
Wisconsin
Wisconsin is a U.S. state located in the north-central United States and is part of the Midwest. It is bordered by Minnesota to the west, Iowa to the southwest, Illinois to the south, Lake Michigan to the east, Michigan to the northeast, and Lake Superior to the north. Wisconsin's capital is...
); 18 Home Choice stores in Illinois
Illinois
Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...
and Minnesota
Minnesota
Minnesota is a U.S. state located in the Midwestern United States. The twelfth largest state of the U.S., it is the twenty-first most populous, with 5.3 million residents. Minnesota was carved out of the eastern half of the Minnesota Territory and admitted to the Union as the thirty-second state...
; 18 rent-to-own stores in Canada that go by Rent-A-Centre and Better Living; and 134 RAC Acceptance kiosks housed within retail partner stores. Its subsidiary, ColorTyme Inc., is a national franchiser which has 210 stores in 33 states. The company also offers Rent-A-Center Corporate Leasing which provides businesses with furnishings for short-term employee living arrangements and National Product Service, a merchandise warranty and repair service. Within 353 Rent-A-Center retail store locations.
In 2009, Fortune Magazine listed Rent-A-Center at number 706 on the Fortune 1000
Fortune 1000
Fortune 1000 is a reference to a list maintained by the American business magazine Fortune. The list is of the 1000 largest American companies, ranked on revenues alone...
list of the largest U.S. corporations, based on a composite ranking of revenues, profits, assets market value and other measures. Competitors include Aaron’s, Inc., easyhome, Best Buy Co. Inc., and Wal-Mart Stores.
History
The rent-to-own business was started by J. Ernest Talley in Wichita, KansasWichita, Kansas
Wichita is the largest city in the U.S. state of Kansas.As of the 2010 census, the city population was 382,368. Located in south-central Kansas on the Arkansas River, Wichita is the county seat of Sedgwick County and the principal city of the Wichita metropolitan area...
during the 1960’s when he told customers of his store, Mr. T’s Rental, that they had rented a washer and dryer for a long enough duration that they had paid for it in full and now owned it. Thomas Devlin, a former employee of Mr. T’s rental, recognized the potential of renting name-brand products and partnered with W. Frank Barton and founded the Rent-A-Center brand in Wichita, Kansas in 1973.
Mark Speese
Mark Speese
Mark E. Speese is an American businessman who is currently the Chairman and CEO of Rent-A-Center.Speese has served on the Board of Directors since 1990. Until 1999, he was the president and chief operating officer of the company. For a period of about one year, until December 2000, Speese served...
joined Rent-A-Center in 1979. In 1986, Mr. Speese and a colleague left Rent-A-Center and started a competing business known as Vista Rent-To-Own. Ernest Talley then joined Vista Rent-To-Own as Chairman of the Board of Directors in 1989 and remained Chairman through Vista’s transition to Rent-A-Center. In 2001, Talley retired and Speese was appointed as Rent-A-Center’s Chairman and CEO. Vista Rent-To-Own changed its name to Renters Choice, Inc. in December 1993, in connection with the acquisition from DEF Investments, Inc. and certain related entities of an 84 store rent-to-own chain operating in 12 states.
Renters Choice went public on the NASDAQ
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
stock exchange in 1995 under the symbol “RCII.” In August 1998, Renters Choice acquired Thorn Americas, Inc., which operated 1,474 stores in 49 states and the District of Columbia under the name “Rent-A-Center.” On December 31, 1998, Renters Choice changed its name to Rent-A-Center, Inc. and began operating all of its stores under the “Rent-A-Center” brand name.
In February 2003, Rent-A-Center acquired 295 stores from Rent-Way, Inc. In March 2004, Rent-A-Center commenced operating in Canada with the acquisition of five stores located in Edmonton
Edmonton
Edmonton is the capital of the Canadian province of Alberta and is the province's second-largest city. Edmonton is located on the North Saskatchewan River and is the centre of the Edmonton Capital Region, which is surrounded by the central region of the province.The city and its census...
and Calgary, Alberta. Later that year in May 2004, Rent-A-Center completed the acquisitions of Rainbow Rentals, Inc. and Rent Rite, Inc. Rent-A-Center completed its acquisition of competitor Rent-Way, Inc. on November 15, 2006, for a price of approximately $600.3 million. At the time of the acquisition, Rent-Way was ranked number three in the rent-to-own industry with 782 stores in 34 states. The Rent-Way store acquisition program brought the store total to 3,535 stores. Given that the acquisition resulted in over-penetration in some markets, Rent-A-Center carried out the closing or merging of 282 stores between 2007 and 2009.
Business operations
RAC provides new and used brand-named electronics and household furnishings including washers and dryers, refrigerators, televisions, and furniture from brands such as Ashley Furniture, SonySony
, commonly referred to as Sony, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan and the world's fifth largest media conglomerate measured by revenues....
, Toshiba
Toshiba
is a multinational electronics and electrical equipment corporation headquartered in Tokyo, Japan. It is a diversified manufacturer and marketer of electrical products, spanning information & communications equipment and systems, Internet-based solutions and services, electronic components and...
, Whirlpool Corporation, Dell
Dell
Dell, Inc. is an American multinational information technology corporation based in 1 Dell Way, Round Rock, Texas, United States, that develops, sells and supports computers and related products and services. Bearing the name of its founder, Michael Dell, the company is one of the largest...
and HP. As part of their rent-to-own business model, Rent-A-Center generally makes its items available with no down payments or long term obligations. Customers can return an item at any time, for any reason, without penalty and also have the option to re-rent the same item and pick up the payments where they left off. Delivery, pick-up, service and repair are also included in the stated rental price. Customers can also upgrade items while they are renting--the payments will change accordingly. The total paid for an item is usually between four to six times the retail value of said item.
In March 2007, the corporate office moved to a new location at 5501 Headquarters Drive, Plano, Texas
Plano, Texas
Plano is a city in the state of Texas, located mostly within Collin County. The city's population was 259,841 at the 2010 census, making it the ninth-largest city in Texas and the 71st most populous city in the United States. Plano is located within the metropolitan area commonly referred to as...
, in the Legacy Business Park. Construction began on the 175000 square feet (16,258 m²) building in January of 2006. Employees moved into the building on March 16, 2007. The current headquarters measures three stories and includes structured parking for 400 vehicles, a fitness center, and lunchroom.
Charitable activities
Beginning in 2003, the company has made donations to the Big Brothers Big Sisters of AmericaBig Brothers Big Sisters of America
Big Brothers Big Sisters of America is a 501 non-profit organization whose mission is to help children reach their potential through professionally supported, one-to-one relationships with mentors that try to have a measurable impact on youth....
, collected by means of fund raisers held on an annual basis in Rent-A-Center stores, combined with a match from the company up to $100,000. As of April 2010, the cumulative total of this program was reported as being "more than $2 million." Between 2005 and 2010, Rent-A-Center donated and set up 115 “RAC Rooms” at Boys and Girls Clubs of America locations, in which each club selects $5,000 worth of new furniture, electronics and computers for their room. Rent-A-Center has annually allocated $60,000 worth of scholarships to customers and the children of customers and coworkers. Through the Random Acts of Caring initiative, which was launched in 2008, RAC has donated merchandise and funding to charitable organizations located in communities where Rent-A-Center maintains retail locations. The company has been recorded as having supported Junior Achievement with grants to 35 locations to teach financial literacy; and has provided funding to food banks including Feeding America and the North Texas Food Bank
North Texas Food Bank
The North Texas Food Bank is a social benefit organization located in Dallas Texas. The organization distributes donated, purchased and prepared foods through a network of nearly 1,000 feeding programs in 13 North Texas counties...
. Rent-A-Center’s “Soup to Nuts” initiative has involved its 3,000 stores acting as collection points for cans of soup, jars of peanut butter and other canned goods which have been subsequently donated to food pantries in the U.S. An initiative begun in 2010 is Rent-A-Center’s Military Donation Program, in which merchandise with a wholesale value of $175,000 is delivered to 10 Army garrisons. Contributions have been allocated to Family & Morale Welfare and Recreation operations that provide community and family services, such as the Soldier and Family Assistance Centers that in turn serve wounded, ill and injured soldiers and their families.
Reception and litigation
A number of consumer protectionConsumer protection
Consumer protection laws designed to ensure fair trade competition and the free flow of truthful information in the marketplace. The laws are designed to prevent businesses that engage in fraud or specified unfair practices from gaining an advantage over competitors and may provide additional...
concerns have been raised about the rent-to-own
Rent to own
Rent-to-own, also known as rental-purchase, is a type of legally documented transaction under which tangible property, such as furniture, consumer electronics and home appliances, is leased in exchange for a weekly or monthly payment, with the option to purchase at some point during the agreement...
industry, including accusations of predatory lending
Predatory lending
Predatory lending describes unfair, deceptive, or fraudulent practices of some lenders during the loan origination process. While there are no legal definitions in the United States for predatory lending, an audit report on predatory lending from the office of inspector general of the FDIC broadly...
. Consumer advocates believe that rent-to-own transactions such as those offered by Rent-A-Center should be treated as credit sales, and point out that the price of a product can be two or three times the retail price. However, some are quick to note that 73 percent of rent-to-own customers have a high school diploma and all prices are shown on the customer contract. In an April 2000 Federal Trade Commission
Federal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...
study on the industry, 75 percent of respondents stated that they were satisfied with their rent-to-own experience. The rent-to-own industry also received an “A” or excellent regarding customer service in a 2009 study conducted by America’s Research Group.
In 2000, Rent-A-Center was sued for sexual bias in the hiring of women. The 2002 settlement agreement resulted in a $47 million cash payment by Rent-A-Center and mandated that Rent-A-Center offer 10% of future vacancies over the following 15-month period to women who were found to be past victims of discrimination. The settlement also led Rent-A-Center to seek qualified women to serve on its Board of Directors, develop equal employment training programs, and hire a new human resources vice president to implement hiring policies that ensured equal employment opportunity for female job applicants and current employees.
In 2006, Rent-A-Center settled for $7 million in restitution and $750,000 in civil penalties for deceptive business practices in California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
. The State of California claimed RAC, in violation of state law, engaged in unfair competition and illegally misrepresented the price of certain merchandise. As a result of the settlement, RAC also deposited more than $7 million into a special consumer protection fund that is used to enforce consumer protection laws.
In 2010, seven months after the Washington Attorney General’s Office sued Rent-a-Center and accused the national lease-to-own chain of unfair and deceptive collection practices under Washington’s Consumer Protection Act, Rent-A-Center agreed to settle.
Another prominent case occurring in 2010 included Rent-A-Center vs. Jackson which arose out of an employment discrimination claim brought on by former RAC employee Antonio Jackson. The case went all the way to the Supreme Court
Supreme court
A supreme court is the highest court within the hierarchy of many legal jurisdictions. Other descriptions for such courts include court of last resort, instance court, judgment court, high court, or apex court...
, who sided with RAC in a 5-4 decision. The court held that if a company's arbitration agreement includes a clause delegating fairness challenges to the arbitrator, a court must enforce that agreement and send the matter to arbitration. When Jackson first sued, Rent-A-Center cited its arbitration agreement and claimed that any challenges to the agreement had to be decided by the arbitrator.
Other names
The Rent-A-Center company converted its WisconsinWisconsin
Wisconsin is a U.S. state located in the north-central United States and is part of the Midwest. It is bordered by Minnesota to the west, Iowa to the southwest, Illinois to the south, Lake Michigan to the east, Michigan to the northeast, and Lake Superior to the north. Wisconsin's capital is...
stores to Get-It-Now! credit sale outlets after a judicial decision held that the state’s consumer protection laws defining credit sales included rent-to-own businesses.