FIRST AMENDMENT TO FRANCHISEE FINANCING AGREEMENT

Exhibit 10.7

FIRST AMENDMENT TO FRANCHISEE FINANCING AGREEMENT

     This First Amendment to Franchisee Financing Agreement (“Amendment”) is made and entered into by and among Texas Capital Bank, National Association (“Lender”), ColorTyme, Inc., a Texas corporation (“ColorTyme”), and Rent-A-Center East, Inc., a Delaware corporation formerly known as Rent-A-Center, Inc. (“RAC”).

RECITALS

     A. Lender, ColorTyme and RAC entered into that certain Franchisee Financing Agreement dated April 30, 2002 (as the same has been amended, modified, restated or supplemented from time to time, the “Agreement”).

     B. Lender, ColorTyme and RAC desire to amend the Agreement in accordance with the terms of this Amendment.

AGREEMENT

     For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     1. Definitions. All capitalized terms not defined herein shall be construed to have the meaning and definition set forth in the Agreement.

     2. Amendment to Recital A. Effective as of the date hereof, paragraph A of the Recitals of the Agreement is hereby amended and restated to read in its entirety as follows:

     A. ColorTyme is a franchisor of “rent-to-own” stores (each such store is referred to herein as an “RTO Store”) operated by franchisees licensed by ColorTyme (each such franchisee is herein referred to individually as a “Franchisee” and collectively as the “Franchisees”), offering various home entertainment equipment, household equipment, and consumer products and parts, accessories, and other goods used in connection therewith (all such goods are referred to herein as “Inventory”), and certain Franchisees may open new stores for the origination and/or processing of payday loans and the other services incident to the foregoing (each such store is referred to herein as a “PayDay Store”). PayDay Stores may be located within existing RTO Stores or in separate locations attached to an RTO Store and owned and operated by a Franchisee (or its affiliate).

     3. Amendment to Recital B. Effective as of the date hereof, paragraph C of the Recitals of the Agreement is hereby amended and restated to read in its entirety as follows:

     C. ColorTyme desires a source of financing for its Franchisees for the purposes described herein.

     4. Amendment to Article I. Effective as of the date hereof, Article I of the Agreement is hereby amended and restated to read in its entirety as follows:

Article I

     1.1 Credit Facility. Bank shall provide a credit facility for Franchisees on the terms and subject to the conditions set forth in this Agreement. The amount of the credit facility shall be up to, but not in excess of, Twenty Million and No/100 Dollars ($20,000,000.00) in the aggregate; provided, however, that (i) up to, but not in excess of, Fifteen Million and No/100 Dollars ($15,000,000.00) of such credit facility may be utilized for Inventory Lines of Credit (as defined below) and/or RTO Term Loans (as defined below), and (ii) up to, but not in excess of, Five Million and No/100 Dollars ($5,000,000.00) of such credit facility may be utilized for Pay Day Lines of Credit (as defined below) and/or PDL Term Loans (as defined below). Bank will not finance any transaction or transactions which would cause the amount financed by Bank pursuant to this Agreement to exceed any of the limitations set forth in the preceding sentence. Each credit facility extended by Bank to a Franchisee shall be secured by a first priority security interest in (x) all of the Franchisee’s inventory, goods, chattel paper, accounts, contract rights, documents, instruments, note receivables, franchise rights, and general intangibles (specifically including leases and rental contracts), (y) 100% of the stock or equity interest in such Franchisee, and (z) such additional collateral as Bank may require, and shall be fully guaranteed by each of such Franchisee’s principal owners.

     5. Amendment to Article II. Effective as of the date hereof, Article II of the Agreement is amended and restated to read in its entirety as follows:

Article II

     2.1 Financing Procedures. The following procedures shall be employed in determining the availability of financing for Franchisees under this Agreement:

     (a) In the event a Franchisee shall indicate an interest in obtaining financing for any of the purposes described in Section 2.5, ColorTyme shall provide the Franchisee with a credit application and other credit documentation, to be developed by Bank and approved by ColorTyme, and shall assist the Franchisee in completing such credit application and other credit documents.

     (b) After the Franchisee has completed the credit application and provided the other credit documents specified by Bank, if such credit application and other credit documents are acceptable to ColorTyme, ColorTyme shall promptly forward the executed credit application and other credit documents to Bank at its office in Dallas, Texas or any other such location Bank may designate in writing to ColorTyme.

     (c) If, following completion of its review of such credit application and other credit documents and its credit investigation, Bank determines that it will provide the financing requested, it shall so notify the Franchisee and ColorTyme and, upon receipt of such additional closing documents and satisfaction of such

closing conditions as Bank determines to be necessary for the approval and documentation of the credit in its sole discretion, Bank shall establish one or more of the following: (i) a revolving line of credit for the Franchisee in accordance with the terms of this Agreement for such Franchisee’s acquisition of Inventory and/or such Franchisee’s acquisition or conversion of an RTO Store (an “Inventory Line of Credit”), (ii) a revolving line of credit for the Franchisee in accordance with the terms of this Agreement for such Franchisee’s funding or extension of payday loans (a “PayDay Line of Credit”), (iii) a term loan facility for such Franchisee’s acquisition of Inventory and/or such Franchisee’s acquisition or conversion of an RTO Store (an “RTO Term Loan”), and/or (iv) a term loan facility for such Franchisee in order to build and equip a PayDay Store (a “PDL Term Loan”). For purposes of this Agreement, the resulting obligation of a Franchisee to Bank pursuant to any of the credit facilities described above is referred to as a “Receivable”.

     2.2 Interest Rates. Unless otherwise agreed in writing by Bank and ColorTyme, the interest rate on each Receivable shall be in accordance with the following schedule: (i) for each Inventory Line of Credit with a Credit Limit (as that term is hereinafter defined) of $1,000,000 or less, the rate will be the Prime Rate plus 3.75%; (ii) for each Inventory Line of Credit with a Credit Limit of more than $1,000,000, the rate will be the Prime Rate plus 2.75%; (iii) for each RTO Term Loan, the rate will be the same as the rate applicable to the Franchisee’s Inventory Line of Credit on the date of such RTO Term Loan; (iv) for each PayDay Line of Credit, the rate will be the Prime Rate plus 4.75%; and (v) for each PDL Term Loan, the rate will be the Prime Rate plus 4.75%. For purposes of this subparagraph, the term “Prime Rate” shall mean the “Wall Street Prime Rate” as announced and published and so designated in the Money Rates Section of the Wall Street Journal (Southwest Region), as such rates may change from time to time, ColorTyme hereby acknowledging that the “Wall Street Prime Rate” may not be the lowest rate offered by Bank to its customers. If such Prime Rate shall cease to be published or is published infrequently or sporadically, then the Prime Rate shall be determined by reference to another Prime Rate or similar lending rate index, generally accepted on a national basis, as selected by Bank in its sole and absolute discretion. Fluctuations in the Prime Rate shall become effective on the last business day of the calendar month during which such changes in the Prime Rate occur. Interest will be calculated on the basis of a 360-day year.

     2.3 Credit Limits. Upon approval of an application for financing submitted by or on behalf of a Franchisee pursuant to this Agreement, Bank shall establish a credit limit for such Franchisee in an amount agreed upon from time to time by Bank, ColorTyme and such Franchisee (the credit limit established for each Franchisee with respect to any credit facility extended to such Franchisee is referred to herein as a “Credit Limit”). The amount of any Credit Limit may be adjusted from time to time upon written agreement by Bank, ColorTyme and such Franchisee. It is contemplated that (i) the Credit Limit for PayDay Lines of Credit will not exceed $85,000, and (ii) the Credit Limit for PDL Term Loans will not exceed $15,000 (provided that exceptions to this general rule may be agreed to by ColorTyme and Bank from time to time in their sole and absolute discretion).

2.4 Advance Limits.

     (a) Advance Limits for RTO Stores. Notwithstanding the amount of the Franchisee’s applicable Credit Limit(s), the total amount of credit available under a Franchisee’s Inventory Line of Credit and RTO Term Loan (collectively, the “RTO Receivables”) shall be limited to the product of the Franchisee’s Average Monthly Revenue multiplied by five (such advance limit established for each Franchisee is referred to herein as its “RTO Advance Limit”). For purposes of this Agreement, a Franchisee’s “Average Monthly Revenue” shall mean the average monthly total revenue (exclusive of sales tax and any fees or other income directly attributable to a PayDay Store) of the Franchisee from the sale, lease or rental of Inventory and other fees, calculated in accordance with generally accepted accounting principles applied on a consistent basis, for the three (3) calendar months preceding the most recent review of such Franchisee’s RTO Receivables. Notwithstanding anything in this section to the contrary, if the RTO Advance Limit established pursuant to this section would otherwise be an amount that is less than the then outstanding balance of such RTO Receivables (each such RTO Receivable is referred to herein as an “Overline Receivable”), the RTO Advance Limit for such Overline Receivable will be set at the then outstanding balance thereof, and such Overline Receivable will continue to be administered as provided herein, unless Bank and ColorTyme agree otherwise. The provisions of this section shall not apply to any RTO Receivable until the RTO Store for which the financing was provided under the RTO Receivable has been open for business for one (1) year.

     (b) Notwithstanding the amount of the Franchisee’s applicable Credit Limit(s), the amount of credit available under a Franchisee’s PayDay Line of Credit shall be limited to the product of the Franchisee’s Applicable PDL Ratio (as defined below) multiplied by its PDL Balance at the end of the immediately preceding month (such advance limit established for such Franchisee is referred to herein as its “PDL Advance Limit”). For purposes of this Agreement, (i) a Franchisee’s “Applicable PDL Ratio” shall mean, as applicable, a percentage equal to, 100% during the first six-month period following the initial extension of credit under a PayDay Line of Credit, 90% during the second six-month period following the initial extension of credit under a PayDay Line of Credit, 80% during the third six-month period following the initial extension of credit under a PayDay Line of Credit, 70% during the fourth six-month period following the initial extension of credit under a Pay Day Line of Credit, 70% during the fifth six-month period following the initial extension of credit under a Pay Day Line of Credit, 70% during the sixth six-month period following the initial extension of credit under a Pay Day Line of Credit, and 50% at any time thereafter, provided, that Pay Day Lines of Credit shall mature and be fully due and payable thirty-six (36) months following the initial extension of credit thereunder (unless the maturity thereof is extended with the written consent of both Bank and ColorTyme), (ii) a Franchisee’s “PDL Balance” shall mean, as of any date of determination, the outstanding principal balance of all of its Eligible PayDay Loans (as defined below), plus the amount of fees incurred and payable

thereunder, and (iii) the term “Eligible PayDay Loans” means, with respect to a Franchisee, each payday loan owing by a borrower thereunder (each such borrower hereinafter referred to as a “PayDay Borrower”) to such Franchisee which meets the following requirements at the time it comes into existence and continues to meet the same until such payday loan is paid in full:

     (1) it is a valid, legally enforceable and unconditional obligation of such PayDay Borrower;

     (2) it is evidenced by credit documents subject to a security interest in favor of Bank and conspicuously stamped with a notation indicating such documents have been collaterally assigned by the Franchisee to Bank, such notation to be similar in form to “COLLATERALLY ASSIGNED TO TEXAS CAPITAL BANK AND/OR ITS SUCCESSORS OR ASSIGNS”; and

     (3) it has not remained unpaid more than 30 days after the maturity date thereof.

     2.5 Use of Proceeds. Bank will advance funds to or on behalf of a Franchisee pursuant to this Agreement only for: (i) in the case of such Franchisee’s Inventory Line of Credit and/or RTO Term Loan, (1) such Franchisee’s acquisition of Inventory and/or (2) such Franchisee’s acquisition or conversion of an RTO Store, (ii) in the case of such Franchisee’s PayDay Line of Credit, such Franchisee’s funding or extension of payday loans and/or the opening of a PayDay Store and the other services incident to the foregoing, or (iii) in the case of such Franchisee’s PDL Term Loan, such Franchisee’s funding of the costs associated with the build out and equipping of a PayDay Store (to include such items as a CCTV system, safe, computer, computer printer, exterior signage and approved construction costs).

     (a) Inventory. Advances under the Inventory Line of Credit or RTO Term Loan for Inventory will be limited to the lesser of (i) the cost of the Inventory acquired by the Franchisee; (ii) the amount of the Franchisee’s applicable Credit Limit; or (iii) the amount of the Franchisee’s RTO Advance Limit.

     (b) Store Acquisitions and Conversions. Advances under the Inventory Line of Credit or RTO Term Loan for RTO Store acquisitions and/or conversions (i.e., the acquisition of existing RTO Stores and/or the acquisition of other “rent-to-own” stores for conversion to “ColorTyme” RTO Stores) will be limited to the lesser of (i) in the case of an RTO Store that has been open for business (either as a “ColorTyme” RTO Store or as another “rent-to-own” store) for one (1) year or more, the product of the Average Monthly Revenue, as defined in Section 2.4, of the individual RTO Store multiplied by nine (9); (ii) the amount that would cause the Debt-to-Revenue Ratio for the Franchisee to equal or exceed 5:1; (iii) except in the case of advances pursuant to an RTO Term Loan, the amount of the Franchisee’s applicable Credit Limit; and (iv) the amount of the Franchisee’s RTO Advance Limit. For purposes of this paragraph, “Debt-to-

Revenue Ratio” shall mean the ratio of (x) Funded Debt to (y) the Average Monthly Revenue, as defined in Section 2.4 of the Franchisee (calculated on an aggregate basis for all RTO Stores owned and/or operated by such Franchisee and any and all affiliates of such Franchisee); and “Funded Debt” shall mean, as of any date, the total amount of any liabilities (including the advance contemplated by this paragraph) that would be reflected on the consolidated balance sheet of Franchisee and its parent and any and all subsidiaries and affiliates, if any, in accordance with generally accepted accounting principles applied on a consistent basis. Financing for RTO Store acquisitions and/or conversions will be made available only to Franchisees that are, at the time, already indebted to Bank under a Receivable.

     (c) PayDay Stores. Advances under the PayDay Line of Credit will be limited to the lesser of (i) the amount of the Franchisee’s applicable Credit Limit; or (ii) the amount of the Franchisee’s PDL Advance Limit. All advances under the PayDay Line of Credit or a PDL Term Loan will be made available to the Franchisee only upon prior written authorization from ColorTyme, and such advances will be wired directly to the Franchisee.

For purposes of this section, Bank may rely fully on the representations and/or agreements of the Franchisee with respect to the use of funds, with no obligation to independently verify such information. The use of any such funds by a Franchisee for any purpose not permitted by this section will not affect the obligations of ColorTyme or Guarantor under this Agreement.

2.6 Payment Terms. Each Receivable will be repayable as follows:

     (a) In the case of the Inventory Line of Credit, (i) accrued and unpaid interest shall be payable monthly, and (ii) principal shall be payable in monthly installments as determined in accordance with Addendum A attached hereto and made a part hereof, as such Addendum A may be modified from time to time by the parties to this Agreement. In addition, at the option of Bank or ColorTyme, a mandatory principal payment shall be made on any Inventory Line of Credit that is an Overline Receivable (at any time following the initial month in which such Overline Receivable was first determined to exist) to the minimum extent necessary to cause the amount of the RTO Receivables to no longer exceed the RTO Advance Limit.

     (b) In the case of an RTO Term Loan, (i) accrued and unpaid interest shall be payable monthly, and (ii) principal shall be payable in equal monthly installments over the term of the RTO Term Loan, with the monthly principal installment to equal the amount of the RTO Term Loan divided by the number of months in the term thereof. In addition, at the option of Bank or ColorTyme, a mandatory principal payment shall be made on any RTO Term Loan that is an Overline Receivable (at any time following the initial month in which such Overline Receivable was first determined to exist) to the minimum extent necessary to cause the amount of the RTO Receivables to no longer exceed the RTO Advance Limit.

     (c) In the case of the PayDay Line of Credit, (i) accrued and unpaid interest shall be payable monthly, (ii) mandatory principal payments shall be made in such amounts as may be necessary to ensure that the outstanding principal balance under the PayDay Line of Credit does not exceed the PDL Advance Limit (any such mandatory principal payments are to be made within one (1) business day following the determination thereof), and (iii) all princ