Fitch Downgrades & Affirms Certain FFCA -GE Capital- Franchise Transactions.

Business Editors

NEW YORK--(BUSINESS WIRE)--Dec. 2, 2002

Fitch Ratings has taken the following rating actions on certain FFCA franchise loan securitization transactions serviced by GE Capital Franchise Finance (GECFF). By way of acquisition in mid-2001, FFCA is now known as GE Capital Franchise Finance (GECFF).

FFCA Secured Franchise Loan Trust Certificates, series 1998-1

--class D downgraded to 'BB' from 'BBB';

--class A affirmed at 'AAA'

--class B affirmed at 'AA';

--class C affirmed at 'A';

--Classes B, C and D are removed from Rating Watch Negative.

FFCA Secured Franchise Loan Trust Certificates, series 1999-2

--class A-1-A downgraded to 'A' from 'AAA';

--class A-1-B downgraded to 'A' from 'AAA';

--class A-2 downgraded to 'A' from 'AAA';

--class B downgraded to 'BBB' from 'AA';

--class C downgraded to 'BB+' from 'A+';

--class D downgraded to 'BB' from 'A';

--class E downgraded to 'B' from 'BBB+';

--All the above classes remain on Rating Watch Negative.

FFCA Secured Franchise Loan Trust Certificates, series 2000-1

--class B downgraded to 'BBB-' from 'AA-';

--class C downgraded to 'BB-' from 'A-';

--class D downgraded to 'B' from 'BBB';

--class E downgraded to 'CCC' from 'BBB-';

--All the above classes remain on Rating Watch Negative.

As of the November 2002 reporting date, the 1998-1 transaction has experienced cumulative defaults of $39 million or 11.6% of original principal balance (OPB). Currently defaulted collateral is at $22.3 million, primarily due to the E-Z Serve default. Outstanding advances on the entire trust are at approximately $1.4 million. It should be noted that classes E, F, and OTC were not rated by Fitch.

With cumulative defaults of $160 million or 23.5% of OPB, the 1999-2 securitization has experienced the most stress out of all GECFF's deals in terms of the number of borrowers in default and level of impaired collateral (in both percentage and absolute dollar terms). The E-Z Serve exposure represents $28.8 million of the subject pool. Currently defaulted collateral is at $139 million (24%) due primarily to the E-Z Serve default. Outstanding advances on the entire trust are at approximately $14.1 million. The preceding was based on data as of the November 2002 reporting date. It should be noted that classes F, G, H and OTC were not rated by Fitch. The class A-1-C certificates are fully insured by MBIA, but the classes A-1-A and A-2 certificates have only a partial MBIA guarantee.

The 2000-1 securitization has experienced a high level of defaults at a very early stage of its life. As of the November 2002 reporting date, cumulative defaults were at $66 million or 16.2% of OPB. The E-Z Serve exposure represents $53 million or 13.7%. Currently defaulted collateral is at $65.6 million (17%) due primarily to the E-Z Serve default. Outstanding advances on the entire trust are at approximately $4.1 million. It should be noted that classes F, G, H and J were not rated by Fitch. The class A certificates are insured by MBIA.

As noted in Fitch Ratings Q3 Franchise Index (see 'Franchise Loan Performance Index 3Q02' available on the Fitch Ratings web site at 'www.fitchratings.com'), poor performance within the convenience and gas (C&G) sector has caused weakness in GECFF's franchise ABS performance. For the three subject pools in particular, the bankruptcies of several large C&G borrower relationships (Swifty Serve Corp./E-Z Serve Convenience Stores, Inc., and Clark Retail Enterprises, Inc.) has exacerbated the overall level of impaired assets within each pool. Fitch placed certain classes of the subject transactions on Rating Watch Negative in early September due mainly to the E-Z Serve default. E-Z Serve has since filed for bankruptcy and recent discussions with GECFF as servicer have allowed Fitch to update its assessment. It is anticipated that an accelerated divestiture of all E-Z Serve properties will occur via a sealed bid sales process. Accordingly, Fitch has assessed the range of potential impact of this occurrence in addition to expected resolutions of other impaired borrowers within the subject pools.

It should be noted that the current rating actions are without regard to the potential impact associated with the recent bankruptcy status of Clark Retail Enterprises, Inc. (CRE). CRE (which filed for bankruptcy protection in mid-October) is a significant borrower relationship in several GECFF securitizations. As of recent, the borrower and its creditors are in the process of developing a viable workout solution. Fitch continues to monitor the CRE bankruptcy, as well as overall pool performance to maintain an appropriate assessment of credit risk.

Noteworthy also, is the potential for recovery under environmental insurance policies, written by American International Group Inc. (AIG), that were intended to provide for claims payment in the event a property was determined to be both in monetary default of its loan documents as well as environmentally impaired. Typical AIG policies were written to cover either; (1) the lower of loan balance outstanding or the cost or remediation, or (2) the loan balance. GECFF has acknowledged that 70% to 90% of the defaulted loans also suffer from a 'pollution condition' and that GECFF has, or plans to, file claims under the accompanying AIG policies. Given that Fitch did not assume any particular value to the policies under its original assumptions, and further, that Fitch believes there is a high likelihood of dispute of claims or delay in payment of any claim proceeds, the actions Fitch takes today do not reflect any assumed benefit from the policies. If, in the future, material recoveries from filed claims are received, Fitch will, as a matter of course, reassess the subject transactions based upon these collections.