Aarons 2015 Annual Report Download - page 18

become less economical or desirable, our Progressive, Aarons.com and DAMI businesses would be negatively impacted, which would adversely affect our
operating results and financial condition. We cannot provide assurance that we will be successful in maintaining our relationships with these external data
source providers or that we will be able to continue to obtain data from them on acceptable terms or at all. Furthermore, we cannot provide assurance that we
will be able to obtain data from alternative sources if our current sources become unavailable.

We believe Progressive’s proprietary, centralized underwriting process to be a key to the success of the Progressive business. We assume behavior and
attributes observed for prior customers, among other factors, are indicative of performance by future customers. Unexpected changes in behavior caused by
macroeconomic conditions, changes in consumer preferences, availability of alternative products or other factors, however, could lead to increased incidence
and costs related to unpaid leases and/or merchandise losses.

Progressive’s relationship with its largest retail partners will have a significant impact on our operating revenues in future periods. The loss of any such key
retailers would have a material adverse effect on our business. In addition, any publicity associated with the loss of any of Progressive’s large retail partners
could harm our reputation, making it more difficult to attract and retain consumers and other retail partners, and could lessen Progressive’s negotiating power
with its remaining and prospective retail partners.
Many of Progressive’s contracts with its retail partners can be terminated by them on relatively short notice, and all can be terminated in limited
circumstances, such as our material breach or insolvency, our failure to meet agreed-upon service levels, certain changes in control of Progressive, and its
inability or unwillingness to agree to requested pricing changes. There can be no assurance that Progressive will be able to continue its relationships with its
largest retail partners on the same or more favorable terms in future periods or that its relationships will continue beyond the terms of our existing contracts
with them. Our operating revenues and operating results could suffer if, among other things, any of Progressive’s retail partners renegotiates, terminates or
fails to renew, or fails to renew on similar or favorable terms, their agreements with Progressive or otherwise chooses to modify the level of support they
provide for Progressive’s lease-purchase option.

Our Aarons.com e-commerce platform provides customers the ability to review our product offerings and prices and enter into lease agreements as well as
make payments on existing leases from the comfort of their homes and on their mobile devices. Our e-commerce platform is a significant component of our
strategic plan and we believe will drive future growth of our business. In order to promote our products and services and allow customers to transact online
and reach new customers, we must effectively create, design, maintain, and improve our e-commerce platform. There can be no assurance that we will be able
to create, design, maintain, and improve or grow our e-commerce platform in a profitable manner.


As discussed above, as we execute on our strategic plans, we may continue to expand into complementary businesses that engage in financial, banking or
lending services. For example, DAMI, which through its HELPcard® and other private label credit products, offers merchant partners one source for a variety
of open-end credit programs for below-prime consumers, is a business that differs in significant respects from our core business. Consequently, DAMI faces
different risks than are associated with Aaron’s sales and lease ownership concept, which Aaron’s and its franchisees offer through their own stores. Because
DAMI is operated as a wholly-owned subsidiary of Progressive, the risks DAMI faces could have a material negative effect on Progressive, which could result
in a material adverse effect on our entire business. These potential risks include, among others, DAMI’s:
• reliance on third party retailers (over whom DAMI cannot exercise the degree of control and oversight that Aaron’s core business, including
franchisees, can assert over their own respective employees) for many important business functions, from advertising through assistance with finance
applications;
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