Franchise Bancorp Inc. reports significant earnings increase in first quarter driven by Global Pet Food's continued growth



    Stock Exchange: TSX Venture Symbol: FBI.V
    Outstanding Common Shares: 7,432,662

    BRAMPTON, ON, Jan. 29 /CNW/ - Franchise Bancorp Inc. today announced the
unaudited results of the company's first quarter ending November 30, 2007. On
a consolidated basis of all divisions; Global Pet Foods, Liv Gift Group and
Living Lighting, earnings were $127,614, up from $21,615 in 2006. Operating
earnings yielded $335,735, an increase of $216,616 over the first quarter
ending November 30, 2006.
    Total Revenue was up 48% at $1,788,456, an increase of $583,735 over
2006.
    Royalty revenue increased by 7% for the period, up from $531,718 in 2006
to $573,217 in the first three months of the current fiscal year. Royalties
are derived from overall system wide sales of all three franchise divisions,
which increased by $2,468,000 (+12%) from $19,335,000 to $21,803,000.
    The pet food division, which operates under two trade names - Global Pet
Foods and Ryan's Pet Foods - continues to have the greatest impact on the
company's growth. During this quarter, Global opened eight new franchised
stores and one company owned store, bringing the total to 95 stores. Global's
total system-wide sales jumped 35.5% from $9,742,000 to $13,002,000.
Profitability in the Global division increased by 96%.
    The specialty pet food market continues to thrive as responsible pet
owners look to enhance their pets' diet program with nutritionally balanced
foods. The tainted pet food concerns that arose early in 2007 have led many
consumers to re-examine the diets they were providing the family pet. As a
result, Global Pet Foods and Ryan's Pet Foods were able to gain new customers.
    The gift and home décor division operates under the retail banners 'The
Panhandler' and 'Rafters Home Stores', was able to maintain its store count
for the three month period ending November 30, 2007. In total, there are 23
stores in the division at period end. However, this still represents a
significant decline from November 30, 2006, when the division had 30 stores in
operation. As a result, system-wide sales decreased by 25%, from $2,962,586 to
$2,205,870. Same store sales continued to increase for the fifth quarter in a
row. They were up by 3%, as remaining stores have been able to successfully
adjust their marketing mix. This division has consistently improved its
profitability by reducing its cost structure as the store counts have reduced.
    The lighting division, which operates under the Living Lighting trade
name, continued its trend of moderate unit growth, adding one new store in the
three-month reporting period. This brings Living Lighting's total store count
to 31 units, compared to 29 units at November 30, 2006.
    System-wide sales realized a slight decline of $35,656 (0.5%) overall
from $6,630,000 to $6,594,344. Same store sales declined by 3.4% for the
period. Revenues (which are almost all royalty revenue) were also flat for the
period, and net earnings had a slight gain of about $15,000, due to
administrative cost reductions. Management believes the softening sales trend
is tied to softening new home construction and home re-sales. The lighting
division intends to place greater emphasis on cost reductions, especially
store cost of sales, to ensure the franchise owners can maintain their profit
levels despite potentially weaker sales.
    In total, Franchise Bancorp operates 149 stores in the three divisions,
of which six are company owned and the balance are franchised. This is an
increase of ten (10) stores during the three month period ending November 30,
2007.
    Franchise Bancorp's overall cash position (cash and cash equivalents)
increased by $84,480 to $1,362,221 during the three months ending November 30,
2007. Working capital increased by $166,735 during the first three months of
fiscal year 2008, from a working capital deficit of $225,945 to a working
capital deficit of $59,210.

    %SEDAR: 00009247E




For further information:

For further information: Ted Loyst, Chairman or Paul Thomson, President,
Franchise Bancorp Inc., (905) 790-9023, info@franchisebancorp.com

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FRANCHISE BANCORP INC.

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