Aarons 2012 Annual Report Download - page 20

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All franchisees are required to complete a comprehensive training program and to operate their franchised sales and
lease ownership stores in compliance with our policies, standards and specifications. Additionally, pursuant to the terms
of their franchise agreements with Aaron’s, Inc., each franchise represents and warrants its compliance with all
applicable federal, state and/or local laws, regulations and ordinances with respect to its business operations as well as
its good standing to conduct lawful operations at each location. Franchisees in general are not required to purchase their
lease merchandise from our fulfillment centers, although most do so in order to take advantage of Company-sponsored
financing, bulk purchasing discounts and favorable delivery terms.
On an annual basis, our internal audit department conducts a financial audit and an operational audit of each franchised
store. In addition, our proprietary management information system links each Company and franchised store to
corporate headquarters.
HomeSmart
Our HomeSmart division was established to serve weekly customers with products similar to those leased through our
Aaron’s Sales & Lease Ownership stores. We established the HomeSmart division in late 2010 and at December 31,
2012, we had 78 Company-operated stores and one franchised store in 11 states.
The typical HomeSmart store layout is a combination showroom and warehouse of 4,000 to 6,000 square feet, with an
average of approximately 5,000 square feet. In selecting locations for new HomeSmart stores, we generally look for
sites in well-maintained strip shopping centers with good access, which are strategically located in established working
class neighborhoods and communities. Many of our stores are placed near existing competitors’ stores. Each
HomeSmart store usually maintains at least two trucks and crews for pickups and deliveries and generally offers same
or next day delivery for addresses located within approximately ten miles of the store. We emphasize a broad selection
of brand name electronics, computers and appliances, and offer customers a wide selection of furniture, including
furniture manufactured by our Woodhaven Furniture Industries division.
We believe that our HomeSmart stores offer lower merchandise prices than similar items offered by traditional rent-to-
own operators. Approximately 38% of our HomeSmart agreements are currently monthly, 18% are semi-monthly and
approximately 44% are weekly. Through Aaron’s Service Plus, customers receive benefits including the 120 days same-
as-cash option, repair service at no charge to the customer, lifetime reinstatement and other discounts and benefits. We
re-lease or sell select merchandise that customers return to us prior to the expiration of their agreements. We also offer,
for select merchandise, an up-front cash and carry purchase option at prices that are competitive with traditional
retailers.
Manufacturing
Our Woodhaven Furniture Industries division has manufactured furniture for our stores since 1971. The Woodhaven
Furniture Industries division manufactures upholstered furniture and bedding predominantly for use by Company-
operated and franchised stores. The division has five furniture manufacturing plants and nine bedding manufacturing
facilities, totaling approximately 940,000 square feet in the aggregate, that supply the majority of our upholstered
furniture and bedding.
Our Woodhaven Furniture Industries division manufactures:
 upholstered living-room furniture, including contemporary sofas, chairs and modular sofa and ottoman
collections in a variety of natural and synthetic fabrics; and
 bedding, including standard sizes of mattresses and box springs.