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Pause

Pause Franchisor Inc.
https://www.pausestudio.com
1-310-367-0031
13353 W. Washington Blvd, Los Angeles, CA 90066

How much does Pause cost?

Initial Investment Range

$880,600 to $15,149,000

Franchise Fee

$60,000 to $400,000

The franchise we offer is for the operation of a wellness studio under the name “Pau®e” featuring flotation therapy, vitamin infusion therapy, cold plunge/contrast therapy, sauna therapy, LED redlight therapy and may include cryogenic therapy and other related services and products.

Enjoy our partial free risk analysis below

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Pause April 29, 2025 FDD Risk Analysis

Free FDD Library AI Analysis Date: July 16, 2025

DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.

1

Franchisor Stability Risks

Start Here
Total: 10
4
1
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The FDD explicitly warns that the franchisor’s financial condition calls its ability to provide support into question. Audited financial statements in Exhibit E confirm this, showing a stockholder’s deficit (negative net worth) of over $110,000 and a net loss of over $243,000 for 2024. This pattern of losses could impair their ability to support you and grow the brand, posing a significant risk to your investment.

Potential Mitigations

  • An experienced franchise accountant must thoroughly review the financial statements of Pause Franchisor Inc. (Pause), including all footnotes and cash flow statements, to independently assess viability.
  • A business advisor should help you evaluate if Pause has sufficient capital to fund its support obligations without relying solely on new franchise sales.
  • It is crucial for your attorney to review any financial assurances, like the fee deferrals required by state regulators, and understand the protections they offer.
Citations: Item 1 (Special Risks), Item 21, Exhibit E

High Franchisee Turnover

High Risk

Explanation

The franchisor discloses a significant risk regarding 37 signed franchise agreements for outlets that are not yet open, compared to only 3 that are operational. Additionally, two franchises were terminated before opening in the last year. This high ratio of unopened to open units could indicate systemic problems with site selection, franchisee financing, or the franchisor's opening support process. This represents a substantial risk of delay or failure before you even open.

Potential Mitigations

  • It is essential to contact both operational franchisees and those on the 'not yet operational' list in Exhibit F to understand their experiences and reasons for delay.
  • Your attorney can help you formulate questions regarding the opening process and support provided.
  • A business advisor should help you assess the franchisor's capacity to support this large pipeline of new locations.
Citations: Item 1 (Special Risks), Item 20, Exhibit F

Rapid System Growth

High Risk

Explanation

The franchisor plans for extremely rapid expansion, with 37 agreements signed and projections for 95 new units in the next year. This aggressive growth, combined with their limited operating history and disclosed financial weakness, poses a significant risk. Their ability to provide adequate site selection, training, and operational support to such a large number of new franchisees simultaneously may be strained, potentially impacting your business's launch and ongoing success.

Potential Mitigations

  • Engaging a business advisor to scrutinize the franchisor’s plans for scaling its support staff and infrastructure is crucial.
  • Your accountant should review their financials to determine if they have the capital to support this growth.
  • Contacting recently opened franchisees to inquire about the quality and timeliness of the support they received is highly recommended.
Citations: Item 20, Item 21, Exhibit E

New/Unproven Franchise System

High Risk

Explanation

Pause is an emerging franchisor, having only started offering franchises in mid-2022 and with only three franchised units open at the end of 2024. The FDD explicitly highlights this "Short Operating History" as a special risk. Investing in a new system carries higher uncertainty regarding the viability of its business model, brand recognition, and the quality of its support systems, making it a riskier investment than a mature franchise.

Potential Mitigations

  • Your business advisor should help you conduct deep due diligence on the performance of the few existing franchisees.
  • A thorough review of the franchisor's financials and capitalization with your accountant is critical to assess their staying power.
  • You should work with your attorney to understand the full scope of risks associated with a new, unproven system.
Citations: Item 1 (Special Risks), Item 1, Item 20

Possible Fad Business

Medium Risk

Explanation

The business model centers on a unique combination of trendy wellness services like IV therapy, cold plunges, and floatation therapy. While popular now, there is a risk that consumer preferences could shift away from these specific modalities. You should consider the long-term sustainability and demand for this particular mix of services, as you will be bound by a 10-year agreement even if market trends change.

Potential Mitigations

  • Conducting independent market research with a business advisor to assess the long-term consumer demand for these specific services is advisable.
  • You should ask the franchisor about their plans for innovation and adapting the service mix to future market trends.
  • Your accountant can help model the financial impact if one or more key services fall out of favor.
Citations: Item 1

Inexperienced Management

Low Risk

Explanation

This risk was not identified. The executives listed in Item 2 appear to have significant experience operating the "Pause" studio business model through their affiliates since 2015. Additionally, the SVP of Franchise Operations has direct, high-level experience with other franchise systems. It is generally important, however, that a franchisor's management team has a blend of both industry-specific and franchising experience to effectively support franchisees.

Potential Mitigations

  • It's still wise to discuss the management team's accessibility and support philosophy with current franchisees.
  • A business advisor can help you formulate questions about how management's experience translates into effective franchisee support.
  • Always verify the background of key personnel mentioned in Item 2.
Citations: Item 2

Private Equity Ownership

Low Risk

Explanation

This specific risk was not identified in the FDD package. The franchisor does not appear to be owned by a private equity firm. When a franchisor is owned by a PE firm, there can be a risk that decisions prioritize short-term investor returns over the long-term health of the franchise system, potentially impacting franchisee support and profitability.

Potential Mitigations

  • Always confirm the ownership structure in Item 1 with your attorney.
  • If PE ownership were present, a business advisor could help research the firm's history with other franchise brands.
  • It's also important to understand the franchisor's long-term vision, regardless of ownership structure.
Citations: Not applicable

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified, as Item 1 clearly discloses the parent company, Pause Holdings, Inc. Proper disclosure of parent companies is important because the financial stability and business practices of a parent can significantly impact the franchisor, especially if the franchisor is a newly-formed or thinly-capitalized subsidiary, or if the parent guarantees the franchisor's obligations.

Potential Mitigations

  • Your attorney should always verify that the relationship between the franchisor and any parent or affiliate companies is clearly disclosed in Item 1.
  • An accountant should confirm if parent company financial statements are required and, if provided, review them carefully.
  • Discussing the parent company's role with your business advisor is also prudent.
Citations: Item 1, Item 21

Predecessor History Issues

Low Risk

Explanation

This risk was not identified as the franchisor states in Item 1 that it has no predecessors. In cases where a franchisor has acquired the system from a previous entity, it is important to review the predecessor's history for any signs of trouble, such as litigation, bankruptcy, or high franchisee turnover, as these issues could be inherited by the new franchisor.

Potential Mitigations

  • Your attorney should always confirm the predecessor disclosures in Item 1.
  • If predecessors existed, independent research into their business history would be a crucial step for due diligence.
  • Discussing the transition from any predecessor with long-term franchisees is a valuable source of information.
Citations: Item 1

Pattern of Litigation

Low Risk

Explanation

This risk was not identified, as Item 3 discloses no material litigation against the franchisor. A pattern of litigation, particularly franchisee-initiated lawsuits alleging fraud or breach of contract, can be a major red flag indicating systemic problems within a franchise. The absence of such litigation is a positive sign, though not a guarantee of future performance or lack of disputes.

Potential Mitigations

  • Your attorney should always conduct a thorough review of Item 3.
  • It is also wise to perform independent public records searches for litigation that may not meet the technical disclosure thresholds.
  • Discussing any past or current disputes with existing franchisees provides valuable context.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
6
3
6

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

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3

Financial & Fee Risks

Total: 10
4
5
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

4

Legal & Contract Risks

Total: 16
7
4
5

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

5

Territory & Competition Risks

Total: 5
2
2
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

6

Regulatory & Compliance Risks

Total: 10
5
3
2

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

7

Franchisor Support Risks

Total: 4
2
2
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

8

Operational Control Risks

Total: 12
3
7
2

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

9

Term & Exit Risks

Total: 18
8
7
3

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

10

Miscellaneous Risks

Total: 1
1
0
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.