SOURCE: Franchise Capital Corporation

January 30, 2007 08:57 ET

Franchise Capital Corporation Files Form 8-K on Sale of Securities With Terms of Escrow

CEO Interview Scheduled for After Filing of Definitive 14A Proxy

TEMECULA, CA -- (MARKET WIRE) -- January 30, 2007 -- Franchise Capital Corporation (PINKSHEETS: FCCN) has filed a Current Report on Form 8-K with the Securities and Exchange Commission regarding the issuance of shares into escrow as part of debt settlement and stock purchase agreement with Golden Gate Investors.

The 8-K reports that from December 1, 2006 through January 29, 2007, under a stock purchase agreement between Golden Gate and the company dated October 31, 2006, Franchise Capital issued a total of 186,376 shares of Rule 144 restricted common stock to Golden Gate in exchange for cash of $186,376. Pursuant to the terms of the purchase agreement, Golden Gate is required to purchase $100,000 of the company's restricted common stock at a price of $1.00 per share for every $10,000 in convertible debentures paid down by the company.

The shares issued to Golden Gate were from an escrow set up as part of a settlement agreement between the Franchise Capital and Golden Gate relating to a June 25, 2004 debenture, and were issued with a restrictive legend pursuant to Rule 144. Under the terms of the escrow, Golden Gate is able to draw down shares in satisfaction of the debenture provided that it does not own or control more than 4.9% of the total issued and outstanding common shares of the company. The debenture is redeemed at a price per share equal to an average of the five lowest closing bid prices over the 45 days preceding the redemption request. The shares remaining in escrow are voted by the Company's Board of Directors. From December 14, 2006 though January 24, 2007, the Company paid down $18,636 of a convertible debenture dated June 25, 2004 through the issuance of 83,121,521 shares of restricted common stock. As of January 29, 2007, a total of 765,270,212 shares remained in escrow and the unredeemed balance on the debenture was $203,291.

Once the entire debenture has been redeemed, any shares remaining in the escrow will be returned to the Company's treasury and cancelled.

"The escrow agreement was designed to allow Franchise Capital to set aside a sufficient number of shares to cover both the settlement of debt and to allow access to capital as the company moves forward with its acquisition of Aero Exhaust," said Steven R. Peacock, chief executive officer of Franchise Capital Corporation. "By issuing the shares into escrow, the company is able to limit the release of the shares while paying down the remaining debt and maintaining voting control of the escrow shares."

"Management strongly believes that settling the debt to Golden Gate through the escrow, rather than to allow for massive dilution through the issuance of these shares without conversion limitations, is to the benefit of shareholders and will ultimately reduce the number of shares involved in the transaction. By coupling the debt settlement with the stock purchase agreement, Golden Gate became more than just a creditor -- it has developed into a financing partner with a vested interest in the future of the company," stated Mr. Peacock.

"We do realize that the terms of the escrow are somewhat complicated, and I look forward to personally addressing the most commonly asked shareholder questions in an upcoming interview. The interview will be scheduled for a date subsequent to the filing of the Definitive 14A, which we expect to occur very shortly," added Mr. Peacock.

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About Aero Exhaust:

Aero Exhaust is a world leader in performance exhaust airflow technology, manufacturing and distributing the most technologically advanced muffler on the market. Its product lines are built to the highest industry standards and offer the consumer a lifetime warranty. Aero Exhaust has been issued U.S. and Australian patents on its innovations and development in the exhaust industry, and its mufflers are available worldwide through major retailers, mass merchant centers, automotive aftermarket supply stores and wholesalers. Aero Exhaust mufflers are an exclusive National Association for Stock Car Auto Racing (NASCAR) Performance product and carry the prestigious NASCAR brand on product, packaging and related media. NASCAR legend Rusty Wallace is the official spokesperson for Aero Exhaust products. Additional information on Aero Exhaust's products, race team, and motorsports ventures can be found on its corporate web site,

Safe Harbor Statement: The statements in this release that relate to future plans, expectations, events, performance and the like are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. Actual results or events could differ materially from those described in the forward-looking statements due to a variety of factors, including the lack of funding, inability to complete required SEC filings, and others set forth in the Company's report on Form 10-K/A for fiscal year 2005 filed with the Securities and Exchange Commission.

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