SOURCE: Franchise Capital Corporation

January 22, 2007 12:09 ET

Franchise Capital Corporation Files Preliminary Proxy Material for Annual Meeting

Proposal to Authorize BDC Withdrawal Will Be Considered by Stockholders

TEMECULA, CA -- (MARKET WIRE) -- January 22, 2007 -- Franchise Capital Corporation (PINKSHEETS: FCCN) has filed preliminary proxy material with the Securities and Exchange Commission for an upcoming annual meeting of shareholders. The proposal to be considered by stockholders is an authorization for the Board of Directors to withdraw the company's election to be treated as a business development company (BDC) pursuant to Section 54(c) under the Investment Company Act. A definitive proxy statement, which will confirm the meeting date, is expected to be filed within 10 days and subsequently sent to shareholders of record.

Franchise Capital recently executed a definitive agreement to acquire the issued and outstanding shares of Aero Exhaust, Inc., a world leader in performance exhaust airflow technology and NASCAR Performance partner. The Board of Directors believes that to consummate the acquisition of Aero Exhaust and in the interest of the company's planned future operations, it is in the interest of Franchise Capital to withdraw its BDC election. Under former management, the company became aware that it might be out of compliance with the Investment Act of 1940, under which BDCs are regulated. These compliance issues were also taken into consideration by the Board in proposing the BDC withdrawal.

"Our intention in identifying Aero Exhaust as an acquisition and moving forward to secure a definitive agreement was that Franchise Capital would no longer be structured as an investment fund and that Aero's operations would become the company's major focus," stated Steven R. Peacock, chief executive officer of Franchise Capital Corporation. "The proposal to withdraw the BDC election is a critical element in positioning Franchise Capital to be a suitable public vehicle for Aero Exhaust, and we are asking that shareholders approve this proposal."

Included in the proxy material is a narrative description regarding the issuance of shares that are being held in an escrow account for the benefit of Golden Gate Investors, Inc. These shares were issued as settlement on past due convertible debentures and as part of an existing stock purchase agreement. While held in escrow, these shares are voted by the company's Board of Directors.

"We look forward to setting a date for the annual meeting and gaining approval for the withdrawal of the BDC election," 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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