<PAGE>   1

                                                                    EXHIBIT 4.8
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                              GUARANTEE AGREEMENT

                                 BY AND BETWEEN



                        FRANKLIN FINANCIAL CORPORATION,
                                  AS GUARANTOR


                                      AND


                                 SUNTRUST BANK,
                              AS GUARANTEE TRUSTEE


                             _______________, 2000



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<PAGE>   2

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                              Page No.
<S>                                                                                                           <C>
RECITALS

ARTICLE I
         DEFINITIONS AND INTERPRETATION
                  Section 1.1.  Definitions and Interpretation................................................    1

ARTICLE II
         TRUST INDENTURE ACT
                  Section 2.1.  Trust Indenture Act; Application..............................................    3
                  Section 2.2.  Lists of Holders of Securities................................................    3
                  Section 2.3.  Reports by the Guarantee Trustee..............................................    3
                  Section 2.4.  Periodic Reports to the Guarantee Trustee.....................................    3
                  Section 2.5.  Evidence of Compliance with Conditions Precedent..............................    3
                  Section 2.6.  Events of Default; Waiver.....................................................    3
                  Section 2.7.  Event of Default; Notice......................................................    4
                  Section 2.8.  Conflicting Interests.........................................................    4

ARTICLE III
         POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
                  Section 3.1.  Powers and Duties of the Guarantee Trustee....................................    4
                  Section 3.2.  Certain Rights of Guarantee Trustee...........................................    5

ARTICLE IV
         GUARANTEE TRUSTEE
                  Section 4.1.  Guarantee Trustee; Eligibility................................................    7
                  Section 4.2.  Appointment, Removal and Resignation of Guarantee Trustees....................    8

ARTICLE V
         GUARANTEE
                  Section 5.1.  Guarantee.....................................................................    8
                  Section 5.2.  Waiver of Notice and Demand...................................................    8
                  Section 5.3.  Obligations Not Affected......................................................    8
                  Section 5.4.  Rights of Holders.............................................................    9
                  Section 5.5.  Guarantee of Payment..........................................................    9
                  Section 5.6.  Subrogation...................................................................   10
                  Section 5.7.  Independent Obligations.......................................................   10

ARTICLE VI
         LIMITATION OF TRANSACTIONS; SUBORDINATION
                  Section 6.1.  Limitation of Transactions....................................................   10
                  Section 6.2   Ranking.......................................................................   10
</TABLE>


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<TABLE>

<S>                                                                                                              <C>
ARTICLE VII
         TERMINATION
                  Section 7.1.  Termination...................................................................   10

ARTICLE VIII
         INDEMNIFICATION
                  Section 8.1.  Exculpation...................................................................   10
                  Section 8.2.  Indemnification...............................................................   11

ARTICLE IX
         MISCELLANEOUS
                  Section 9.1.  Successors and Assigns........................................................   11
                  Section 9.2.  Amendments....................................................................   11
                  Section 9.3.  Notices.......................................................................   11
                  Section 9.4.  Benefit.......................................................................   12
                  Section 9.5.  Governing Law.................................................................   12
</TABLE>


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<PAGE>   4

                              GUARANTEE AGREEMENT


         THIS GUARANTEE AGREEMENT (this "Guarantee"), dated as of ____________,
2000, is executed and delivered by FRANKLIN FINANCIAL CORPORATION, a Tennessee
corporation, (the "Guarantor"), and SUNTRUST BANK, a banking corporation
organized under the laws of the state of Georgia, as trustee (the "Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to time
of the Preferred Securities (as defined herein) of FRANKLIN CAPITAL TRUST I, a
Delaware statutory business trust (the "Trust").

                                    RECITALS

         WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of ______________, 2000, among the trustees of the
Trust named therein, the Guarantor, as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Trust, the Trust is
issuing on the date hereof preferred securities, having an aggregate
liquidation amount of $____ million, designated the Floating Rate Trust
Preferred Securities (the "Preferred Securities");

         WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Guarantee, to pay to the Holders of the Preferred
Securities the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.

         NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee for the
benefit of the Holders.

                                   ARTICLE I
                         DEFINITIONS AND INTERPRETATION

         Section 1.1.  Definitions and Interpretation.  In this Guarantee,
unless the context otherwise requires:

                  (a)     capitalized terms used in this Guarantee but not
         defined in the preamble above have the respective meanings assigned to
         them in this Section 1.1 and the Trust Agreement;

                  (b)     terms defined in the Trust Agreement as at the date
         of execution of this Guarantee have the same meaning when used in this
         Guarantee;

                  (c)     a term defined anywhere in this Guarantee has the
         same meaning throughout;

                  (d)     all references to "the Guarantee" or "this Guarantee"
         are to this Guarantee as modified, supplemented or amended from time
         to time;

                  (e)     all references in this Guarantee to Articles and
         Sections are to Articles and Sections of this Guarantee, unless
         otherwise specified;

                  (f)     a term defined in the Trust Indenture Act has the same
         meaning when used in this Guarantee, unless otherwise defined in this
         Guarantee or unless the context otherwise requires; and


<PAGE>   5

                  (g)     a reference to the singular includes the plural and
         vice versa.

         "Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.

         "Covered Person" means any Holder or beneficial owner of Preferred
Securities.

         "Debenture Issuer" means the Guarantor.

         "Guarantor" means Franklin Financial Corporation, a Tennessee
corporation.

         "Guarantee" means this agreement between Guarantor and Guarantee
Trustee.

         "Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent
not paid or made by the Trust: (i) any accrued and unpaid Distributions that
are required to be paid on such Preferred Securities, to the extent the Trust
shall have funds available therefor, (ii) the redemption price, including all
accrued and unpaid Distributions to the date of redemption, to the extent the
Trust has funds available therefor, with respect to any Preferred Securities
called for redemption by the Trust, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust (other than in connection
with the distribution of Debentures to the Holders in exchange for Preferred
Securities as provided in the Trust Agreement), the lesser of (a) the aggregate
of the liquidation amount and all accrued and unpaid Distributions on the
Preferred Securities to the date of payment, to the extent the Trust shall have
funds available therefor, and (b) the amount of assets of the Trust remaining
available for distribution to Holders in liquidation of the Trust.

         "Guarantee Trustee" means SunTrust Bank until a Successor Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Guarantee and thereafter means each such Successor Guarantee
Trustee.

         "Indemnified Person" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives, nominees, custodians or agents of the Guarantee
Trustee.

         "Majority in Liquidation Amount of the Preferred Securities" means the
holders of more than 50% of the liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percentages are
determined) of all of the Preferred Securities.

         "Responsible Officer" means, with respect to the Guarantee Trustee,
the Chairman of the Board of Directors, the President, the Secretary or the
Treasurer; or any corporate trust officer within the Corporate Trust Office of
the Guarantee Trustee, including any vice-president, any assistant
vice-president, any assistant secretary, the treasurer, any assistant treasurer
or other officer of the Corporate Trust Office of the Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.


                                       2

<PAGE>   6

         "Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.

                                   ARTICLE II
                              TRUST INDENTURE ACT

         Section 2.1.  Trust Indenture Act; Application. (a) This Guarantee is
subject to the provisions of the Trust Indenture Act that are required to be
part of this Guarantee and shall, to the extent applicable, be governed by such
provisions.

         (b)      If and to the extent that any provision of this Guarantee
limits, qualifies or conflicts with the duties imposed by Section 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.

         Section 2.2.  Lists of Holders of Securities. (a) The Guarantor shall
provide the Guarantee Trustee with a list, in such form as the Guarantee
Trustee may reasonably require, of the names and addresses of the Holders of
the Preferred Securities ("List of Holders") as of the date (i) not less than
one day nor more than 15 days prior to every Distribution Date, and (ii) at any
other time within 30 days of receipt by the Guarantor of a written request for
a List of Holders as of a date no more than 15 days before such List of Holders
is given to the Guarantee Trustee; provided, that the Guarantor shall not be
obligated to provide such List of Holders at any time the List of Holders does
not differ from the most recent List of Holders given to the Guarantee Trustee
by the Guarantor. The Guarantee Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.

         (b)      The Guarantee Trustee shall comply with its obligations under
Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.

         Section 2.3.  Reports by the Guarantee Trustee. On or before July 15 of
each year, the Guarantee Trustee shall provide to the Holders of the Preferred
Securities such reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.

         Section 2.4.  Periodic Reports to the Guarantee Trustee. The Guarantor
shall provide to the Guarantee Trustee, the Commission and/or the Holders of
the Preferred Securities, such documents, reports and information as required
by Section 314 (if any) and the compliance certificate required by Section 314
of the Trust Indenture Act in the form, in the manner and at the times required
by Section 314 of the Trust Indenture Act.

         Section 2.5.  Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Guarantee as set
forth in Sections 314(c) and 314(e) of the Trust Indenture Act. Any certificate
or opinion required to be given by an officer pursuant to Section 314(c)(1) may
be given in the form of an Officers' Certificate.

         Section 2.6.  Events of Default; Waiver. The Holders of a Majority in
Liquidation Amount of Preferred Securities may, by vote, on behalf of the
Holders of all of the Preferred Securities, waive any past Event of Default and
its consequences. Upon such waiver, any such Event of Default shall cease to
exist,


                                       3

<PAGE>   7

and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.

         Section 2.7.  Event of Default; Notice. (a) The Guarantee Trustee
shall, within 90 days after receipt of notice by a Responsible Officer of the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default actually known to a Responsible Officer of the Guarantee Trustee,
unless such defaults have been cured or waived before the giving of such
notice; provided, in the case of an Event of Default other than a default in
payment obligations under the Guarantee, that the Guarantee Trustee shall be
protected in withholding such notice if and so long as a Responsible Officer of
the Guarantee Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders of the Preferred Securities.

         (b)      The Guarantee Trustee shall not be deemed to have knowledge of
an Event of Default unless the Guarantee Trustee shall have received written
notice of such Event of Default, or of which a Responsible Officer of the
Guarantee Trustee charged with the administration of the Trust Agreement shall
have obtained actual knowledge.

         Section 2.8.  Conflicting Interests. The Trust Agreement shall be
deemed to be specifically described in this Guarantee for the purposes of
clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.

                                  ARTICLE III
                 POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE

         Section 3.1.  Powers and Duties of the Guarantee Trustee. (a) This
Guarantee shall be held by the Guarantee Trustee for the benefit of the Holders
of the Preferred Securities, and the Guarantee Trustee shall not transfer this
Guarantee to any Person except a Holder of Preferred Securities exercising his
or her rights pursuant to Section 5.4(b) or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee. The right, title and interest of the Guarantee
Trustee shall automatically vest in any Successor Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Guarantee Trustee.

         (b)      If an Event of Default has occurred and is continuing, based
upon written notice to the Guarantee Trustee, the Guarantee Trustee shall
enforce this Guarantee for the benefit of the Holders of the Preferred
Securities.

         (c)      The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee, and no implied covenants shall be read into this Guarantee
against the Guarantee Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.6) and is actually known to
a Responsible Officer of the Guarantee Trustee, the Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Guarantee, and use
the same degree of care and skill in its exercise thereof, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.


                                       4

<PAGE>   8

         (d)      No provision of this Guarantee shall be construed to relieve
the Guarantee Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:

                           (i)    prior to the occurrence of any Event of
                   Default and after the curing or waiving of all such Events of
                   Default that may have occurred:

                                  (A) the duties and obligations of the
                           Guarantee Trustee shall be determined solely by the
                           express provisions of this Guarantee, and the
                           Guarantee Trustee shall not be liable except for the
                           performance of such duties and obligations as are
                           specifically set forth in this Guarantee, and no
                           implied covenants or obligations shall be read into
                           this Guarantee against the Guarantee Trustee; and

                                  (B) in the absence of bad faith on the part of
                           the Guarantee Trustee, the Guarantee Trustee may
                           conclusively rely, as to the truth of the statements
                           and the correctness of the opinions expressed
                           therein, upon any certificates or opinions furnished
                           to the Guarantee Trustee and conforming to the
                           requirements of this Guarantee; but in the case of
                           any such certificates or opinions that by any
                           provision hereof are specifically required to be
                           furnished to the Guarantee Trustee, the Guarantee
                           Trustee shall be under a duty to examine the same to
                           determine whether or not they conform to the
                           requirements of this Guarantee;

                           (ii)   the Guarantee Trustee shall not be liable for
                  any error of judgment made in good faith by a Responsible
                  Officer of the Guarantee Trustee, unless it shall be proved
                  that the Guarantee Trustee was negligent in ascertaining the
                  pertinent facts upon which such judgment was made;

                           (iii)  the Guarantee Trustee shall not be liable with
                  respect to any action taken or omitted to be taken by it in
                  good faith in accordance with the direction of the Holders of
                  not less than a Majority in liquidation amount of the
                  Preferred Securities relating to the time, method and place
                  of conducting any proceeding for any remedy available to the
                  Guarantee Trustee, or exercising any trust or power conferred
                  upon the Guarantee Trustee under this Guarantee; and

                           (iv)   no provision of this Guarantee shall require
                  the Guarantee Trustee to expend or risk its own funds or
                  otherwise incur personal financial liability in the
                  performance of any of its duties or in the exercise of any of
                  its rights or powers, if the Guarantee Trustee shall have
                  reasonable grounds for believing that the repayment of such
                  funds or liability is not reasonably assured to it under the
                  terms of this Guarantee or indemnity, reasonably satisfactory
                  to the Guarantee Trustee, against such risk or liability is
                  not reasonably assured to it.

         Section 3.2.  Certain Rights of Guarantee Trustee. (a) Subject to the
provisions of Section 3.1:

                           (i)    the Guarantee Trustee may conclusively rely,
                  and shall be fully protected in acting or refraining from
                  acting upon, any resolution, certificate, statement,
                  instrument, opinion, report, notice, request, direction,
                  consent, order, bond, debenture, note, other


                                       5

<PAGE>   9

                  evidence of indebtedness or other paper or document believed
                  by it to be genuine and to have been signed, sent or
                  presented by the proper party or parties;

                           (ii)   Any direction or act of the Guarantor
                  contemplated by this Guarantee shall be sufficiently
                  evidenced by an Officers' Certificate;

                           (iii)  whenever, in the administration of this
                  Guarantee, the Guarantee Trustee shall deem it desirable that
                  a matter be proved or established before taking, suffering or
                  omitting any action hereunder, the Guarantee Trustee (unless
                  other evidence is herein specifically prescribed) may, in the
                  absence of bad faith on its part, request and conclusively
                  rely upon an Officers' Certificate which, upon receipt of
                  such request, shall be promptly delivered by the Guarantor;

                           (iv)   the Guarantee Trustee shall have no duty to
                  see to any recording, filing or registration of any
                  instrument (or any rerecording, refiling or registration
                  thereof);

                           (v)    the Guarantee Trustee may consult with
                  counsel, and the written advice or opinion of such counsel
                  with respect to legal matters shall be full and complete
                  authorization and protection in respect of any action taken,
                  suffered or omitted by it hereunder in good faith and in
                  accordance with such advice or opinion. Such counsel may be
                  counsel to the Guarantor or any of its Affiliates and may
                  include any of its employees. The Guarantee Trustee shall
                  have the right at any time to seek instructions concerning
                  the administration of this Guarantee from any court of
                  competent jurisdiction;

                           (vi)   the Guarantee Trustee shall be under no
                  obligation to exercise any of the rights or powers vested in
                  it by this Guarantee at the request or direction of any
                  Holder, unless such Holder shall have provided to the
                  Guarantee Trustee such security and indemnity, reasonably
                  satisfactory to the Guarantee Trustee, against the costs,
                  expenses (including attorneys' fees and expenses and the
                  expenses of the Guarantee Trustee's agents, nominees or
                  custodians) and liabilities that might be incurred by it in
                  complying with such request or direction, including such
                  reasonable advances as may be requested by the Guarantee
                  Trustee; provided that, nothing contained in this Section
                  3.2(a)(vi) shall be taken to relieve the Guarantee Trustee,
                  upon the occurrence of an Event of Default, of its obligation
                  to exercise the rights and powers vested in it by this
                  Guarantee;

                           (vii)  the Guarantee Trustee shall not be bound to
                  make any investigation into the facts or matters stated in
                  any resolution, certificate, statement, instrument, opinion,
                  report, notice, request, direction, consent, order, bond,
                  debenture, note, other evidence of indebtedness or other
                  paper or document, but the Guarantee Trustee, in its
                  discretion, may make such further inquiry or investigation
                  into such facts or matters as it may see fit;

                           (viii) the Guarantee Trustee may execute any of the
                  trusts or powers hereunder or perform any duties hereunder
                  either directly or by or through agents, nominees, custodians
                  or attorneys, and the Guarantee Trustee shall not be
                  responsible for any misconduct or negligence on the part of
                  any agent or attorney appointed with due care by it
                  hereunder;

                           (ix)   any action taken by the Guarantee Trustee or
                  its agents hereunder shall bind the Holders of the Preferred
                  Securities, and the signature of the Guarantee Trustee or its
                  agents


                                       6

<PAGE>   10

                  alone shall be sufficient and effective to perform any such
                  action. No third party shall be required to inquire as to the
                  authority of the Guarantee Trustee to so act or as to its
                  compliance with any of the terms and provisions of this
                  Guarantee, both of which shall be conclusively evidenced by
                  the Guarantee Trustee's or its agent's taking such action;

                          (x)     whenever in the administration of this
                  Guarantee the Guarantee Trustee shall deem it desirable to
                  receive instructions with respect to enforcing any remedy or
                  right or taking any other action hereunder, the Guarantee
                  Trustee (i) may request instructions from the Holders of a
                  Majority in liquidation amount of the Preferred Securities,
                  (ii) may refrain from enforcing such remedy or right or
                  taking such other action until such instructions are
                  received, and (iii) shall be protected in conclusively
                  relying on or acting in accordance with such instructions.

         (b)      No provision of this Guarantee shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty.


                                   ARTICLE IV
                               GUARANTEE TRUSTEE

         Section 4.1.  Guarantee Trustee; Eligibility. (a) There shall at all
times be a Guarantee Trustee which shall:

                           (i)    not be an Affiliate of the Guarantor; and

                           (ii)   be a corporation organized and doing business
                  under the laws of the United States of America or any State
                  or Territory thereof or of the District of Columbia, or a
                  corporation or Person permitted by the Securities and
                  Exchange Commission to act as an institutional trustee under
                  the Trust Indenture Act, authorized under such laws to
                  exercise corporate trust powers, having a combined capital
                  and surplus of at least $50 million and subject to
                  supervision or examination by Federal, State, Territorial or
                  District of Columbia authority. If such corporation publishes
                  or files reports of condition at least annually, pursuant to
                  law or to the requirements of the supervising or examining
                  authority referred to above, then, for the purposes of this
                  Section 4.1(a)(ii), the combined capital and surplus of such
                  corporation shall be deemed to be its combined capital and
                  surplus as set forth in its most recent report of condition
                  so published or filed.

         (b)      If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).

         (c)      If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.


                                       7

<PAGE>   11

         Section 4.2.  Appointment, Removal and Resignation of Guarantee
Trustees. (a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor.

         (b)      The Guarantee Trustee shall not be removed in accordance with
Section 4.2(a) until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.

         (c)      The Guarantee Trustee appointed to office shall hold office
until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing executed
by the Guarantee Trustee and delivered to the Guarantor, which resignation
shall not take effect until a Successor Guarantee Trustee has been appointed
and has accepted such appointment by instrument in writing executed by such
Successor Guarantee Trustee and delivered to the Guarantor and the resigning
Guarantee Trustee.

         (d)      If no Successor Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within 30 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Guarantee Trustee.

         (e)      No Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Guarantee Trustee.

         (f)      Upon termination of this Guarantee or removal or resignation
of the Guarantee Trustee pursuant to this Section 4.2, the Guarantor shall pay
to the Guarantee Trustee all amounts accrued to the date of such termination,
removal or resignation.

                                   ARTICLE V
                                   GUARANTEE

         Section 5.1.  Guarantee. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without
duplication of amounts theretofore paid by the Trust), as and when due,
regardless of any defense, right of set-off or counterclaim that the Trust may
have or assert. The Guarantor's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the
Holders or by causing the Trust to pay such amounts to the Holders.

         Section 5.2.  Waiver of Notice and Demand. The Guarantor hereby waives
notice of acceptance of this Guarantee and of any liability to which it applies
or may apply, presentment, demand for payment, any right to require a
proceeding first against the Trust or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor,
notice of redemption and all other notices and demands.

         Section 5.3.  Obligations Not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:


                                       8

<PAGE>   12

         (a)      the release or waiver, by operation of law or otherwise, of
the performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be
performed or observed by the Trust;

         (b)      the extension of time for the payment by the Trust of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under, arising
out of, or in connection with, the Preferred Securities (other than an
extension of time for payment of Distributions, Redemption Price, Liquidation
Distribution or other sum payable that results from the extension of any
interest payment period on the Debentures or any extension of the maturity date
of the Debentures permitted by the Indenture);

         (c)      any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Trust granting indulgence or
extension of any kind;

         (d)      the voluntary or involuntary liquidation, dissolution, sale
of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Trust or any of the
assets of the Trust;

         (e)      any invalidity of, or defect or deficiency in, the Preferred
Securities;

         (f)      any failure or omission to receive any regulatory approval or
consent required in connection with the Preferred Securities (or the common
equity securities issued by the Trust), including the failure to receive any
approval of the Board of Governors of the Federal Reserve System required for
the redemption of the Preferred Securities;

         (g)      the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or

         (h)      any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.

         There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.

         Section 5.4.  Rights of Holders. (a) The Holders of a Majority in
liquidation amount of the Preferred Securities shall have the right to direct
the time, method and place of conducting of any proceeding for any remedy
available to the Guarantee Trustee in respect of this Guarantee or exercising
any trust or power conferred upon the Guarantee Trustee under this Guarantee.

         (b)      Any Holder of Preferred Securities may institute a legal
proceeding directly against the Guarantor to enforce its rights under this
Guarantee, without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other Person.

         Section 5.5.  Guarantee of Payment.  This Guarantee creates a guarantee
of payment and not of collection.


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<PAGE>   13

         Section 5.6.  Subrogation. The Guarantor shall be subrogated to all
(if any) rights of the Holders of Preferred Securities against the Trust in
respect of any amounts paid to such Holders by the Guarantor under this
Guarantee; provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under
this Guarantee, if, at the time of any such payment, any amounts are due and
unpaid under this Guarantee. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such amount
in trust for the Holders and to pay over such amount to the Holders.

         Section 5.7.  Independent Obligations. The Guarantor acknowledges that
its obligations hereunder are independent of the obligations of the Trust with
respect to the Preferred Securities, and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee notwithstanding the occurrence of any event referred to
in subsections (a) through (h), inclusive, of Section 5.3 hereof.

                                   ARTICLE VI
                   LIMITATION OF TRANSACTIONS; SUBORDINATION

         Section 6.1.  Limitation of Transactions. So long as any Preferred
Securities remain outstanding, if there shall have occurred an Event of Default
under this Guarantee, an Event of Default under the Trust Agreement or during
an Extended Interest Payment Period (as defined in the Indenture), then (a) the
Guarantor shall not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock (other than as a result of a
reclassification of its capital stock for another class of its capital stock)
and (b) the Guarantor shall not make any payment of interest or principal on or
repay, repurchase or redeem any debt securities issued by the Guarantor which
rank pari passu with or junior to the Debentures.

         Section 6.2   Ranking. This Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right
of payment to all other liabilities of the Guarantor, (ii) pari passu with the
most senior preferred securities or preference stock now or hereafter issued by
the Guarantor and with any guarantee now or hereafter entered into by the
Guarantor in respect of any preferred securities or preference stock of any
Affiliate of the Guarantor, and (iii) senior to the Guarantor's common stock.

                                  ARTICLE VII
                                  TERMINATION

         Section 7.1.  Termination. This Guarantee shall terminate upon (i) full
payment of the Redemption Price of all Preferred Securities, (ii) upon full
payment of the amounts payable in accordance with the Trust Agreement upon
liquidation of the Trust, or (iii) upon distribution of the Debentures to the
Holders of the Preferred Securities. Notwithstanding the foregoing, this
Guarantee shall continue to be effective or shall be reinstated, as the case
may be, if at any time any Holder of Preferred Securities must restore payment
of any sums paid under the Preferred Securities or under this Guarantee.

                                  ARTICLE VIII
                                INDEMNIFICATION

         Section 8.1.  Exculpation. (a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Guarantor or any
Covered Person for any loss, damage or claim incurred by


                                       10

<PAGE>   14

reason of any act or omission performed or omitted by such Indemnified Person
in good faith in accordance with this Guarantee and in a manner that such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Guarantee or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.

         (b)      An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Preferred Securities
might properly be paid.

         Section 8.2.  Indemnification. The Guarantor agrees to indemnify each
Indemnified Person for, and to hold each Indemnified Person harmless against,
any loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of
this Guarantee.

                                   ARTICLE IX
                                 MISCELLANEOUS

         Section 9.1.  Successors and Assigns. All guarantees and agreements
contained in this Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Guarantor and shall inure to the benefit of
the Holders of the Preferred Securities then outstanding.

         Section 9.2.  Amendments. Except with respect to any changes that do
not materially adversely affect the rights of Holders (in which case no consent
of Holders will be required), this Guarantee may only be amended with the prior
approval of the Holders of at least a Majority in liquidation amount of the
Preferred Securities. The provisions of Article VI of the Trust Agreement with
respect to meetings of Holders of the Preferred Securities apply to the giving
of such approval.

         Section 9.3.  Notices. All notices provided for in this Guarantee shall
be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail, as follows:

         (a)      If given to the Guarantee Trustee, at the Guarantee Trustee's
mailing address set forth below (or such other address as the Guarantee Trustee
may give notice of to the Holders of the Preferred Securities):

                  SunTrust Bank
                  424 Church Street, 6th Floor
                  Nashville, Tennessee 37219
                  Attention: Corporate Trust Department


                                       11

<PAGE>   15

         (b)      If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Preferred Securities):

                  Franklin Financial Corporation
                  230 Public Square
                  Franklin, Tennessee 37064
                  Attention: Richard E. Herrington, President
                             and Chief Executive Officer

         (c)      If given to any Holder of Preferred Securities, at the
address set forth on the books and records of the Trust.

         All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

         Section 9.4.  Benefit.  This Guarantee is solely for the benefit of
the Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.

         Section 9.5.  Governing Law.  THIS GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TENNESSEE.

         This Guarantee is executed as of the day and year first above written.

                                   FRANKLIN FINANCIAL CORPORATION
                                       as Guarantor


                                   By:
                                       ----------------------------------------
                                       Richard E. Herrington
                                       President and Chief Executive Officer


                                   SUNTRUST BANK,  as Guarantee Trustee


                                   By:
                                       ----------------------------------------
                                       Name:
                                       Title:


                                   By:
                                       ----------------------------------------
                                       Name:
                                       Title:


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