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Revenues (Notes)
 3 Months Ended
Mar. 31, 2022
Revenues [Abstract]  
Revenues Revenues
The following table disaggregates our revenue for the periods ended March 31, 2022 and 2021:
 Three Months Ended March 31, 2022
 
Rent-A-Center Business
AcimaMexicoFranchisingConsolidated
(in thousands)
Store
Rentals and fees$442,695 $425,471 $14,881 $— $883,047 
Merchandise sales58,294 173,783 804 — 232,881 
Installment sales17,089 — — — 17,089 
Other427 123 27 713 1,290 
Total store revenues518,505 599,377 15,712 713 1,134,307 
Franchise
Merchandise sales— — — 18,521 18,521 
Royalty income and fees— — — 6,894 6,894 
Total revenues$518,505 $599,377 $15,712 $26,128 $1,159,722 
 Three Months Ended March 31, 2021
 
Rent-A-Center Business
AcimaMexicoFranchisingConsolidated
(in thousands)
Store
Rentals and fees$429,301 $302,526 $13,707 $— $745,534 
Merchandise sales77,378 154,630 785 — 232,793 
Installment sales17,773 — — — 17,773 
Other414 293 6 205 918 
Total store revenues524,866 457,449 14,498 205 997,018 
Franchise
Merchandise sales— — — 33,055 33,055 
Royalty income and fees— — — 6,709 6,709 
Total revenues$524,866 $457,449 $14,498 $39,969 $1,036,782 
Lease Purchase Agreements
Rent-A-Center Business, Acima, and Mexico
Rentals and Fees. Rental merchandise is leased to customers pursuant to rental purchase agreements, which provide for weekly, semi-monthly or monthly rental terms with non-refundable rental payments. At the expiration of each rental term, customers may renew the rental agreement for the next rental term. Generally, the customer has the right to acquire title of the merchandise either through a purchase option or through payment of all required rental terms. Customers can terminate the rental agreement at the end of any rental term without penalty. Therefore, rental transactions are accounted for as operating leases.
Rental payments received at our Rent-A-Center Business lease-to-own stores, certain Acima staffed locations formerly operating under the Preferred Lease brand, and Mexico stores must be prepaid in advance of the next rental term. Under the Acima Holdings business model, revenues may be earned prior to the rental payment due date, in which case revenue is accrued prior to receipt of the rental payment, net of estimated returns and uncollectible renewal payments. Under both models, rental revenue is recognized over the rental term. See Note 4 for additional information regarding accrued rental revenue.
Cash received for rental payments, including fees, prior to the period in which it should be recognized, is deferred and recognized according to the rental term. At March 31, 2022 and December 31, 2021, we had $36.3 million and $51.7 million, respectively, in deferred revenue included in accrued liabilities related to our rental purchase agreements. Revenue related to various payment, reinstatement or late fees is recognized when paid by the customer at the point service is provided. Rental merchandise in our Rent-A-Center Business, former Preferred Lease locations, and Mexico stores is depreciated using the income forecasting method and recognized in cost of sales over the rental term. Rental merchandise in Acima Holdings is depreciated over the rental term using a straight-line depreciation method.
We also offer additional product plans along with our rental agreements which provide customers with liability protection against significant damage or loss of a product, and club membership benefits, including various discount programs and product service and replacement benefits in the event merchandise is damaged or lost, and payment insurance in the event eligible customers become unemployed. Customers renew product plans in conjunction with their rental term renewals, and can cancel the plans at any time. Revenue for product plans is recognized over the term of the plan. Costs incurred related to product plans are primarily recognized in cost of sales.
Revenue from contracts with customers
Rent-A-Center Business, Acima, and Mexico
Merchandise Sales. Merchandise sales include payments received for the exercise of the early purchase option offered through our rental purchase agreements or merchandise sold through point of sale transactions. Revenue for merchandise sales is recognized when payment is received and ownership of the merchandise passes to the customer. The remaining net value of merchandise sold is recorded to cost of sales at the time of the transaction.
Installment Sales. Revenue from the sale of merchandise in our retail installment stores is recognized when the installment note is signed and control of the merchandise has passed to the customer. The cost of merchandise sold through installment agreements is recognized in cost of sales at the time of the transaction. We offer extended service plans with our installment agreements which are administered by third parties and provide customers with product service maintenance beyond the term of the installment agreement. Payments received for extended service plans are deferred and recognized, net of related costs, when the installment payment plan is complete and the service plan goes into effect. Customers can cancel extended service plans at any time during the installment agreement period and receive a refund for payments previously made towards the plan. At March 31, 2022 and December 31, 2021, we had $2.4 million and $2.6 million in deferred revenue included in accrued liabilities related to extended service plans.
Other. Other revenue consists of revenue generated by other miscellaneous product plans offered to our rental and installment customers. Revenue for other product plans is recognized in accordance with the terms of the applicable plan agreement.
Franchising
Merchandise Sales. Revenue from the sale of rental merchandise is recognized upon shipment of the merchandise to the franchisee.
Royalty Income and Fees. Franchise royalties, including franchisee contributions to corporate advertising funds, represent sales-based royalties calculated as a percentage of gross rental payments and sales. Royalty revenue is accrued and recognized as rental payments and merchandise sales occur. Franchise fees are initial fees charged to franchisees for new or converted franchise stores. Franchise fee revenue is recognized on a straight-line basis over the term of the franchise agreement. At both March 31, 2022 and December 31, 2021, we had $3.9 million and $4.1 million, respectively, in deferred revenue included in accrued liabilities related to franchise fees.