Cash America 2009 Annual Report Download - page 35

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States Patent and Trademark Office including, but not limited to, “Cash America,” “Cashland,” “SuperPawn,”
“CashNetUSA” and “Mr. Payroll.” These trademarks have varying expiration dates. The mark “Prenda
Fácil” is registered with the Mexican Industrial Property Institute. The Company believes these trademarks
are of material importance to the Company and anticipates maintaining and renewing them.
Franchises. Each of the Company’s unconsolidated franchised pawn lending and check cashing
locations are subject to franchise agreements that have varying durations that are negotiated individually with
each franchisee. As of December 31, 2009, the Company had nine unconsolidated franchised pawn lending
locations and 120 unconsolidated franchised check cashing locations.
Personnel. At December 31, 2009, the Company employed 5,445 persons in its operations, of whom
516 were in executive and administrative functions. In addition to the employee count above, a third-party,
Huminal, S.A. de C.V., a Mexican sociedad anónima de capital variable ("Huminal"), employs 603 persons
who provide full-time services to Prenda Fácil.
Future Expansion
Storefront Expansion
The Company historically has expanded both by acquiring existing pawnshops and cash advance
storefront locations (collectively referred to as “lending locations”) and by establishing new start-up locations.
The Company intends to continue to increase the number of lending locations oriented more specifically to
pawn lending locations. Its business strategy is to continue expanding its lending business within its existing
geographic markets and into other markets that meet its risk/reward considerations. Management believes
that such expansion will continue to provide economies of scale in supervision, purchasing, administration
and marketing by decreasing the overall average cost of such functions per unit owned. By concentrating
multiple lending units in regional and local markets, the Company seeks to expand market penetration,
enhance name recognition and reinforce marketing programs.
In December 2008, the Company completed the Prenda Fácil acquisition, allowing the Company to
pursue new growth in Mexico. The Prenda Fácil acquisition initiated the first expansion into international
pawn markets since the Company sold its European pawn lending business in 2004. A key strength of this
acquisition is that Prenda Fácil has an established management team and infrastructure that has allowed and
will continue to allow the business to rapidly expand the number of pawn lending locations primarily in
central and southern Mexico in an effort to meet the needs of a large customer base. When entering new
markets, the Company strives to engage strong local management that is well versed in the culture and
business practices specific to the local market. For the twelve months ended December 31, 2009, Prenda
Fácil established 67 new locations and closed three locations for a net increase of 64 new locations, and the
Company plans to continue adding new locations in Mexico while actively evaluating further expansion into
other Latin American countries.
When considering acquiring an existing lending location, the Company evaluates, among other things,
the annual volume of loan transactions at that location, the carrying cost of merchandise, outstanding loan
balances and lease terms of the facility or, if it is to be purchased, the facility’s fair market value. When
considering the startup of a new lending location, the Company evaluates the location of the prospective site,
whether conditions in the surrounding community indicate a sufficient level of potential customers, and
whether a suitable facility is available on acceptable terms.
After the Company has leased or acquired a suitable location and obtained the required licenses, a
new pawnshop can be ready for business within four to six weeks and a new cash advance storefront location
can be ready within two to four weeks. The finish-out of a new location includes the completion of counters,
installation of vaults and a security system and, for pawnshop locations, the transfer of merchandise from
other locations. The approximate start-up costs, which consist of the investment in property (excluding real