Brooke Franchise Franchise Information

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Brooke Franchise Franchise Details	^ Return To Top

Brooke Franchise Overview	^ Return To Top

Brooke franchises represent more than 1 percent of all U.S. independent insurance agencies. At the current franchise growth rates, Brooke franchisees will likely represent more than 2 percent of all U.S. independent insurance agencies within one year and, base on current trends, could represent more than 5 percent of all U.S. independent insurance agencies within five years.

Brooke Franchise History	^ Return To Top

The company was incorporated under the laws of the state of Kansas on January 17, 1986, under the name Brooke Financial Services, Inc. The Company subsequently amended Brooke Holdings, Inc., which owned 66.01% of the outstanding common stock of the Company as of February 28, 2003.

In the early years of the Company's operations, the Company sold its services primarily to bank insurance agencies; however, the bank market was limited because only the smallest banks were authorized to sell insurance. Therefore, the Company began focusing on the sale of its services to independent insurance agents.

Several significant events occurred in 1996 which affected the Company's operations including: (1) the expansion of the Company's processing center into a larger facility in Phillipsburg, Kansas, (2) the adoption of a "franchise" approach to expansion, and (3) the development of a lending program for agency acquisition by franchise agents.

From 1996 to 1999, the Company spent significant resources researching and developing the processing standards and marketing plans described herein, which represent the foundation of the Company's Master Agent program. During this period of time, the Company also rewrote its document management and commissions accounting software to accommodate these processing standards and began to present document images and commission statements on the Company's web site. Since 1999 the Company has maintained a web site at www.brookecorp.com, which provides general information about the Company and hyperlinks to other related web sites. In addition the Company maintains a web site at www.brookeprocessing.com, which the Company utilizes to provide document and commission information to its franchise agents. The contents of such web sites (including any web site connected by a hyperlink) are not incorporated in this Annual Report by reference.

In 1998 the Company developed a sales organization which had a full support staff in each state where the Company conducted operations. The result was the creation of a sales and support organization that was expensive and required more management resources than the Company could afford. In 2000 a regional office approach was adopted to consolidate state office facilities and staff. Regional offices are currently located in Kansas City, Missouri; Dallas, Texas; Denver, Colorado and Nashville, Tennessee, metropolitan areas.

In 2001 the Company's national office in Overland Park, Kansas, was expanded to provide additional marketing support to the Company's regional offices. In 2001 customer service centers were opened in Dallas and Brownsville, Texas, to assist agents, for an additional fee, in the servicing of their clients. In 2002 additional customer service centers were opened in Omaha, Nebraska; Las Vegas, Nevada; Tarpon Springs, Florida and Phoenix, Arizona.

Also in 2000, the Company elected to register its common stock under Section 12(g) of the Securities Exchange Act of 1934, as amended. The Company believes that such registration provides, among other things, a familiar and consistent format for disclosure to the existing and future holders of bonds issued by the Company's finance company subsidiary, Brooke Credit Corporation, and promotes shareholder liquidity by facilitating a possible future listing of the Company's securities on a national exchange, as reporting company status is required in connection therewith.

During 2001 the Company improved its methods for assisting agencies in transferring agency ownership which typically resulted in increased agency value and liquidity for those agencies. The Company refers to these methods, or group of activities, as "facilitator" activities and includes, in addition to the lending division established in 1996, separate divisions established in 2001 for consulting with agency sellers under the trade name of "Agency Business Consultants" and for consulting with agency buyers under the trade name of "Heritage Agency Consultants."

During 2002 the Company tailored its franchise disclosures to accommodate agent specialization, using the Master Agent Concept, in financial services other than property and casualty insurance. The Company acquired a property in Phillipsburg, Kansas, for renovation into a new processing center facility with increased office space and improved security. Also during 2002, the Company significantly expanded its insurance brokerage operations with the acquisition of CJD & Associates, LLC which does business under the trade name of Davidson-Babcock and the acquisition of Bornstein Financial Group. Davidson-Babcock is a property casualty general agency, and Bornstein Financial Group is a life health agency that specializes in annuities.

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