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<TR><TD valign=top width=638.4><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=638.4><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=638.4><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center>SECURITIES AND EXCHANGE COMMISSION</P>
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<TR><TD valign=top width=638.4><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center>Washington, D.C. &nbsp;20549</P>
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<TR><TD valign=top width=638.4><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center><B>FORM 8-K<BR>
</B></P>
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<TR><TD valign=top width=638.4><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center>Current Report <BR>
Pursuant to Section 13 or 15(d) of the<BR>
Securities Exchange Act of 1934</P>
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<TR><TD valign=top width=638.4><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=638.4><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt">Date of Report (Date of Earliest Event Reported): &nbsp;January 30, 2008 (January 28, 2008)</P>
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<TR><TD valign=top width=638.4><P style="line-height:normal; margin-top:0pt; margin-bottom:4pt; font-size:12pt" align=center><B>1<SUP>st</SUP> FRANKLIN FINANCIAL CORPORATION<BR>
</B><SMALL>(Exact Name of Registrant as Specified in Its Charter)</SMALL></P>
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<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=159.6></TD><TD width=159.6></TD><TD width=159.6></TD></TR>
<TR><TD valign=top width=212.8><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center>Georgia</P>
</TD><TD valign=top width=212.8><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center>2-27985</P>
</TD><TD valign=top width=212.8><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center>58-0521233</P>
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<TR><TD valign=top width=212.8><P style="line-height:10pt; margin-top:0pt; margin-bottom:4pt; font-size:8pt" align=center>(State or Other Jurisdiction of Incorporation)</P>
</TD><TD valign=top width=212.8><P style="line-height:10pt; margin-top:0pt; margin-bottom:4pt; font-size:8pt" align=center>(Commission File Numbers)</P>
</TD><TD valign=top width=212.8><P style="line-height:10pt; margin-top:0pt; margin-bottom:4pt; font-size:8pt" align=center>(I.R.S. Employer Identification No.)</P>
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<TR><TD valign=top width=319.2><P style="line-height:14pt; margin:0pt; font-size:12pt">213 East Tugalo Street, P.O. Box 880</P>
<P style="line-height:14pt; margin:0pt; font-size:12pt">Toccoa, Georgia</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center>30577</P>
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<TR><TD valign=top width=319.2><P style="line-height:10pt; margin-top:0pt; margin-bottom:4pt; font-size:8pt">(Address of Principal Executive Offices)</P>
</TD><TD valign=top width=319.2><P style="line-height:10pt; margin-top:0pt; margin-bottom:4pt; font-size:8pt" align=center>(Zip Code)</P>
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<P style="margin-top:0pt; margin-bottom:4pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=478.8></TD></TR>
<TR><TD valign=top width=638.4><P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">Registrant&#146;s Telephone Number, Including Area Code:</P>
<P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; text-indent:288pt; font-size:12pt">(706) 886-7571</P>
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<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=478.8></TD></TR>
<TR><TD style="border-bottom:0.5pt solid #000000" valign=top width=638.4><P style="line-height:14pt; margin:0pt; font-size:12pt" align=center>N/A</P>
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<TR><TD valign=top width=638.4><P style="line-height:10pt; margin-top:0pt; margin-bottom:4pt; font-size:8pt" align=center>(Former Name or former address, if changed since last report)</P>
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<TR><TD valign=top width=638.4><P style="margin-top:0pt; margin-bottom:5pt">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:</P>
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<TR><TD valign=top width=638.4><P style="margin-top:0pt; margin-bottom:-12pt; font-family:Wingdings"><FONT FACE="Wingdings">&#168;</FONT></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; text-indent:18pt"><FONT FACE="Times New Roman">Written communications pursuant to Rule&nbsp;425 under the Securities Act (17 CFR 230.425)</FONT></P>
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<TR><TD valign=top width=638.4><P style="margin-top:0pt; margin-bottom:-12pt; font-family:Wingdings"><FONT FACE="Wingdings">&#168;</FONT></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; text-indent:18pt"><FONT FACE="Times New Roman">Soliciting material pursuant to Rule&nbsp;14a-12 under the Exchange Act (17 CFR 240.14a-12)</FONT></P>
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<TR><TD valign=top width=638.4><P style="margin-top:0pt; margin-bottom:-12pt; font-family:Wingdings"><FONT FACE="Wingdings">&#168;</FONT></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; text-indent:18pt"><FONT FACE="Times New Roman">Pre-commencement communications pursuant to Rule&nbsp;14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</FONT></P>
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<TR><TD valign=top width=638.4><P style="margin-top:0pt; margin-bottom:-12pt; font-family:Wingdings"><FONT FACE="Wingdings">&#168;</FONT></P>
<P style="margin-top:0pt; margin-bottom:3.35pt; text-indent:18pt"><FONT FACE="Times New Roman">Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</FONT></P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center>1</P>
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<TR><TD valign=top width=638.4><P style="line-height:14pt; margin:0pt; font-size:12pt"><B>Section 5 &#150; Corporate Governance and Management</B></P>
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<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=65.4></TD><TD width=413.4></TD></TR>
<TR><TD valign=top width=87.2><P style="line-height:14pt; margin:0pt; padding-right:-3.9pt; font-size:12pt"><B>Item &nbsp;5.02</B></P>
</TD><TD valign=top width=551.2><P style="line-height:14pt; margin:0pt; padding-right:72pt; font-size:12pt"><B>Departure of Directors or Principal Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.</B></P>
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<TR><TD valign=top width=638.4><P style="line-height:14pt; margin:0pt; padding-right:4.5pt; font-size:12pt">On January&nbsp;28, 2008, the Company&#146;s 2008 Executive Bonus Plan (the &#147;Plan&#148;) was approved by the Executive Management Team (the &#147;EMT&#148;) of the Company. &nbsp;The Company is a family owned business, and Ben&nbsp;F. Cheek, III, Chairman of the Board and CEO, is the majority shareholder. &nbsp;The Company does not have an official compensation committee of the board of directors. &nbsp;The EMT establishes the bases for all executive compensation, which compensation is approved by Mr. Cheek, III. &nbsp;The EMT consists of: &nbsp;Ben&nbsp;F. Cheek, III, Ben&nbsp;F. Cheek, IV, Virginia&nbsp;C. Herring, A.&nbsp;Roger Guimond, J. Michael Culpepper, Kay&nbsp;S. Lovern and C. Michael Haynie.</P>
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<TR><TD valign=top width=638.4><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=638.4><P style="line-height:14pt; margin:0pt; padding-right:4.5pt; font-size:12pt">The EMT also established the criteria for determining bonus awards under the Plan for the 2008 fiscal year. &nbsp;For 2008, the EMT determined that the threshold goal for any payouts under the Plan is the achievement of a certain minimum amount of pre-tax income by the Company.</P>
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<TR><TD valign=top width=638.4><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=638.4><P style="line-height:14pt; margin:0pt; padding-right:4.5pt; font-size:12pt">If that threshold is met, payouts under the Plan are to be based on the number of strategic goals met by the Company. &nbsp;The combination of these goals is expected to provide a balanced measurement of 1<SUP>st</SUP> Franklin Financial Corporation&#146;s performance and will also support the achievement of our long term goals. &nbsp;For 2008, the Company has identified five strategic goals. &nbsp;These are:</P>
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<TR><TD valign=top width=595.2><P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:18pt; text-indent:-18pt; font-size:12pt">1.</P>
<P style="line-height:14pt; margin:0pt; padding-left:18pt; font-size:12pt">Corporate net receivables growth;</P>
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<TR><TD valign=top width=595.2><P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:18pt; text-indent:-18pt; font-size:12pt">2.</P>
<P style="line-height:14pt; margin:0pt; padding-left:18pt; font-size:12pt">Corporate delinquency control;</P>
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<TR><TD valign=top width=595.2><P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:18pt; text-indent:-18pt; font-size:12pt">3.</P>
<P style="line-height:14pt; margin:0pt; padding-left:18pt; font-size:12pt">Corporate expenses/revenue ratio; </P>
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<TR><TD valign=top width=595.2><P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:18pt; text-indent:-18pt; font-size:12pt">4.</P>
<P style="line-height:14pt; margin:0pt; padding-left:18pt; font-size:12pt">Corporate return on assets; and</P>
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<TR><TD valign=top width=595.2><P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; padding-left:18pt; text-indent:-18pt; font-size:12pt">5.</P>
<P style="line-height:14pt; margin:0pt; padding-left:18pt; font-size:12pt">Corporate pre-tax income (separate from the threshold pretax income goal).</P>
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<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=478.8></TD></TR>
<TR><TD valign=top width=638.4><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt">Bonus payouts under the Plan are expected to vary depending on the number of strategic goals met as follows:</P>
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<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=239.4></TD><TD width=239.4></TD></TR>
<TR><TD valign=top width=319.2><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center><U>No. of Strategic Goals Met</U></P>
</TD><TD valign=top width=319.2><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center><U>Bonus Payout (as of % of Salary)</U></P>
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<TR><TD valign=top width=319.2><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center>1</P>
</TD><TD valign=top width=319.2><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center>5% - 25%</P>
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<TR><TD valign=top width=319.2><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center>2</P>
</TD><TD valign=top width=319.2><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center>5% - 35%</P>
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<TR><TD valign=top width=319.2><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center>3</P>
</TD><TD valign=top width=319.2><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center>5% - 45%</P>
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<TR><TD valign=top width=319.2><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center>4</P>
</TD><TD valign=top width=319.2><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center>5% - 55%</P>
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<TR><TD valign=top width=319.2><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center>5</P>
</TD><TD valign=top width=319.2><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center>5% - 65%</P>
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<P style="margin-top:0pt; margin-bottom:6pt"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=478.8></TD></TR>
<TR><TD valign=top width=638.4><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt">Amounts to be paid may vary within each range depending on personal performance milestones as determined by the EMT.</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center>2</P>
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<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=478.8></TD></TR>
<TR><TD valign=top width=638.4><P style="line-height:14pt; margin:0pt; font-size:12pt">The foregoing description is qualified in its entirety by reference to the 2008 Executive Bonus Plan, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by this reference.</P>
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<TR><TD valign=top width=638.4><P style="font-size:2pt">&nbsp;</P></TD></TR>
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<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=41.4></TD><TD width=36></TD><TD width=63></TD><TD width=265.5></TD><TD width=72.9></TD></TR>
<TR><TD valign=top width=638.4 colspan=5><P style="line-height:14pt; margin:0pt; font-size:12pt"><B>Section 9 &#150; Financial Statements and Exhibits</B></P>
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<TR><TD valign=top width=103.2 colspan=2><P style="line-height:14pt; margin:0pt; font-size:12pt"><B>Item 9.01</B></P>
</TD><TD valign=top width=535.2 colspan=3><P style="line-height:14pt; margin:0pt; font-size:12pt"><B>Financial Statements and Exhibits</B></P>
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<TR><TD valign=top width=103.2 colspan=2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=535.2 colspan=3><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=103.2 colspan=2><P style="line-height:14pt; margin:0pt; font-size:12pt">(d) &nbsp;Exhibits</P>
</TD><TD valign=top width=535.2 colspan=3><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=103.2 colspan=2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=535.2 colspan=3><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=55.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=132 colspan=2><P style="line-height:14pt; margin:0pt; font-size:12pt" align=center><U>Exhibit Number</U></P>
</TD><TD valign=top width=451.2 colspan=2><P style="line-height:14pt; margin:0pt; font-size:12pt" align=center><U>Name</U></P>
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<TR><TD valign=top width=55.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=132 colspan=2><P style="line-height:14pt; margin:0pt; font-size:12pt" align=center>10.1</P>
</TD><TD valign=top width=451.2 colspan=2><P style="line-height:14pt; margin:0pt; font-size:12pt" align=center>2008 Executive Bonus Plan</P>
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<P style="margin-top:0pt; margin-bottom:6pt"><BR></P>
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<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=478.8></TD></TR>
<TR><TD valign=top width=638.4><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt" align=center><B>SIGNATURE</B></P>
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<TR><TD valign=top width=638.4><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.</P>
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<TR><TD valign=top width=350.4><P style="line-height:14pt; margin:0pt; font-size:12pt"><B>1<SUP>st</SUP> FRANKLIN FINANCIAL CORPORATION</B></P>
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<TR><TD valign=top width=350.4><P style="line-height:14pt; margin:0pt; padding-bottom:3pt; font-size:12pt; border-bottom:1.5pt solid #000000">&nbsp;/s/ A. Roger Guimond</P>
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<TR><TD valign=top width=350.4><P style="line-height:14pt; margin-top:0pt; margin-bottom:-14pt; font-size:12pt">By:</P>
<P style="line-height:14pt; margin:0pt; text-indent:36pt; font-size:12pt">A. Roger Guimond</P>
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<TR><TD valign=top width=350.4><P style="line-height:14pt; margin:0pt; font-size:12pt">Executive Vice President and</P>
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<TR><TD valign=top width=350.4><P style="line-height:14pt; margin:0pt; font-size:12pt">&nbsp;&nbsp;&nbsp;&nbsp;Chief Financial Officer</P>
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<TR><TD valign=top width=638.4><P style="line-height:14pt; margin-top:0pt; margin-bottom:6pt; font-size:12pt">Date: &nbsp;January 30, 2008</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center>3</P>
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<TABLE style="font-size:10pt" cellspacing=0><TR><TD width=239.4></TD><TD width=239.4></TD></TR>
<TR><TD valign=top width=638.4 colspan=2><P style="line-height:14pt; margin:0pt; font-size:12pt" align=center><B>EXHIBIT INDEX</B></P>
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<TR><TD valign=top width=319.2><P style="font-size:2pt">&nbsp;</P></TD><TD valign=top width=319.2><P style="font-size:2pt">&nbsp;</P></TD></TR>
<TR><TD valign=top width=319.2><P style="line-height:14pt; margin:0pt; font-size:12pt" align=center><U>Exhibit Number</U></P>
</TD><TD valign=top width=319.2><P style="line-height:14pt; margin:0pt; font-size:12pt" align=center><U>Name</U></P>
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<TR><TD valign=top width=319.2><P style="line-height:14pt; margin:0pt; font-size:12pt" align=center>10.1</P>
</TD><TD valign=top width=319.2><P style="line-height:14pt; margin:0pt; font-size:12pt" align=center>2008 Executive Bonus Plan</P>
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<P style="line-height:14pt; margin:0pt; font-size:12pt" align=center>4</P>
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_
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):  January 30, 2008 (January 28, 2008)
1
st
FRANKLIN FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Georgia
2-27985
58-0521233
(State or Other Jurisdiction of Incorporation)
(Commission File Numbers)
(I.R.S. Employer Identification No.)
213 East Tugalo Street, P.O. Box 880
Toccoa, Georgia
30577
(Address of Principal Executive Offices)
(Zip Code)
Registrant's Telephone Number, Including Area Code:
(706) 886-7571
N/A
(Former Name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
1
Section 5 – Corporate Governance and Management
Item  5.02
Departure of Directors or Principal Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On January 28, 2008, the Company's 2008 Executive Bonus Plan (the "Plan") was approved by the Executive Management Team (the "EMT") of the Company.  The Company is a family owned business, and Ben F. Cheek, III, Chairman of the Board and CEO, is the majority shareholder.  The Company does not have an official compensation committee of the board of directors.  The EMT establishes the bases for all executive compensation, which compensation is approved by Mr. Cheek, III.  The EMT consists of:  Ben F. Cheek, III, Ben F. Cheek, IV, Virginia C. Herring, A. Roger Guimond, J. Michael Culpepper, Kay S. Lovern and C. Michael Haynie.
The EMT also established the criteria for determining bonus awards under the Plan for the 2008 fiscal year.  For 2008, the EMT determined that the threshold goal for any payouts under the Plan is the achievement of a certain minimum amount of pre-tax income by the Company.
If that threshold is met, payouts under the Plan are to be based on the number of strategic goals met by the Company.  The combination of these goals is expected to provide a balanced measurement of 1
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Franklin Financial Corporation's performance and will also support the achievement of our long term goals.  For 2008, the Company has identified five strategic goals.  These are:
1.
Corporate net receivables growth;
2.
Corporate delinquency control;
3.
Corporate expenses/revenue ratio;
4.
Corporate return on assets; and
5.
Corporate pre-tax income (separate from the threshold pretax income goal).
Bonus payouts under the Plan are expected to vary depending on the number of strategic goals met as follows:
No. of Strategic Goals Met
Bonus Payout (as of % of Salary)
1
5% - 25%
2
5% - 35%
3
5% - 45%
4
5% - 55%
5
5% - 65%
Amounts to be paid may vary within each range depending on personal performance milestones as determined by the EMT.
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The foregoing description is qualified in its entirety by reference to the 2008 Executive Bonus Plan, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by this reference.
Section 9 – Financial Statements and Exhibits
Item 9.01
Financial Statements and Exhibits
(d)  Exhibits
Exhibit Number
Name
10.1
2008 Executive Bonus Plan
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
1
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FRANKLIN FINANCIAL CORPORATION
/s/ A. Roger Guimond
By:
A. Roger Guimond
Executive Vice President and
Chief Financial Officer
Date:  January 30, 2008
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EXHIBIT INDEX
Exhibit Number
Name
10.1
2008 Executive Bonus Plan
4