Aarons 2014 Annual Report Download - page 30

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The loss of the services of our key executives, or our inability to attract and retain qualified managers, could have a
material adverse impact on our operations.
We believe that we have benefited substantially from our current executive leadership and that the unexpected loss of their
services in the future could adversely affect our business and operations. We also depend on the continued services of the rest
of our management team. The loss of these individuals without adequate replacement could adversely affect our business.
Although we have employment agreements with some of our key executives, they are generally terminable on short notice and
we do not carry key man life insurance on any of our officers. The inability to attract and retain qualified individuals, or a
significant increase in the costs to do so, would materially adversely affect our operations.
We are subject to legal and regulatory proceedings from time to time which seek material damages or seek to place
significant restrictions on our business operations.
We are subject to legal and regulatory proceedings from time to time which may result in material damages or place significant
restrictions on our business operations. Although we do not presently believe that any of our current legal or regulatory
proceedings will ultimately have a material adverse impact on our operations, we cannot assure you that we will not incur
material damages or penalties in a lawsuit or other proceeding in the future. Significant adverse judgments, penalties,
settlement amounts, amounts needed to post a bond pending an appeal or defense costs could materially and adversely affect
our liquidity and capital resources. It is also possible that, as a result of a future governmental or other proceeding or
settlement, significant restrictions will be placed upon, or significant changes made to, our business practices, operations or
methods, including pricing or similar terms. Any such restrictions or changes may adversely affect our profitability or increase
our compliance costs.
Our operations are regulated by and subject to the requirements of various federal and state laws and regulations.
These laws and regulations, which may be amended or supplemented or interpreted by the courts from time to time,
could expose us to significant compliance costs or burdens or force us to change our business practices in a manner that
may be materially adverse to our operations, prospects or financial condition.
For example, we must comply with annual disclosure and reporting rules adopted by the SEC pursuant to the Dodd-Frank Act
because of certain materials used in products manufactured by our manufacturing division, Woodhaven Furniture Industries.
Because our supply chain is complex and we do not source our minerals directly from the original mine or smelter, we incur
costs in complying with these disclosure requirements, including for due diligence to determine the source of the subject
minerals used in our products and other potential changes to products, processes or sources of supply as a consequence of such
verification activities.
Currently, 47 states and the District of Columbia specifically regulate rent-to-own transactions, including states in which we
currently operate Aaron’s Sales & Lease Ownership and HomeSmart stores, as well as states in which our Progressive business
has retail partners. At the present time, no federal law specifically regulates the rent-to-own industry, although federal
legislation to regulate the industry has been proposed from time to time. Any adverse changes in existing laws, or the passage
of new adverse legislation by states or the federal government could materially increase both our costs of complying with laws
and the risk that we could be sued or be subject to government sanctions if we are not in compliance. In addition, new
burdensome legislation might force us to change our business model and might reduce the economic potential of our sales and
lease ownership operations.
Most of the states that regulate rent-to-own transactions have enacted disclosure laws which require rent-to-own companies to
disclose to their customers the total number of payments, total amount and timing of all payments to acquire ownership of any
item, any other charges that may be imposed and miscellaneous other items. The more restrictive state lease purchase laws limit
the total amount that a customer may be charged for an item, or regulate the “cost-of-rental” amount that rent-to-own
companies may charge on rent-to-own transactions, generally defining “cost-of-rental” as lease fees paid in excess of the
“retail” price of the goods.
There has been increased legislative attention in the United States, at both the federal and state levels, on consumer debt
transactions in general, which may result in an increase in legislative regulatory efforts directed at the rent-to-own industry. We
cannot guarantee that the federal government or states will not enact additional or different legislation that would be
disadvantageous or otherwise materially adverse to us, nor can we guarantee that Canadian law will not be enacted that would
be materially adverse to our franchisees there.
In addition to the risk of lawsuits related to the laws that regulate rent-to-own and consumer lease transactions, we or our
franchisees could be subject to lawsuits alleging violations of federal and state or Canadian provincial laws and regulations and
consumer tort law, including fraud, consumer protection, information security and privacy laws, because of the consumer-
oriented nature of the rent-to-own industry. A large judgment against the Company could adversely affect our financial