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Pause
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 red-light therapy and may include cryogenic therapy and other related services and products.
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Pause April 29, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: August 19, 2025
DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The financial statements in Item 21 show that Pause Franchisor Inc. (Pause) has a history of significant net losses each year since its 2022 inception, including a loss of over $243,000 in 2024, and a negative stockholder's equity (deficit) of over $110,000. The FDD's 'Special Risks' section explicitly flags the company's financial condition. This financial weakness could impact its ability to provide promised support or remain a viable long-term partner.
Potential Mitigations
- Your accountant must conduct a thorough review of the audited financial statements, paying close attention to the net losses, working capital, and cash flow.
- It is vital to discuss the franchisor's plan for achieving profitability and its capitalization strategy with your financial advisor.
- A franchise attorney should review any state-mandated financial assurances, like fee deferrals, to understand the protections they may offer.
High Franchisee Turnover
Medium Risk
Explanation
Item 20 data shows zero operational franchisee closures, which is positive. However, it also discloses that 37 franchise agreements have been signed with outlets not yet open, a number explicitly flagged as a 'Special Risk.' Furthermore, Exhibit F lists two franchise agreements that were terminated before the outlets opened. This combination suggests there may be significant challenges or delays in the site selection and development process that prospective franchisees should investigate.
Potential Mitigations
- You should contact a significant number of the 37 franchisees who have signed but not yet opened to understand the reasons for any delays.
- A business advisor can help you assess the franchisor's capacity to support this large number of pending openings.
- Your attorney should inquire about the circumstances surrounding the pre-opening terminations listed in Exhibit F.
Rapid System Growth
High Risk
Explanation
The franchisor began franchising in 2022 and had only three franchised units open by the end of 2024. However, Item 20 Table 5 projects 95 new franchised outlets opening in the next fiscal year. This extremely rapid projected growth, combined with the company's history of net losses and negative equity shown in Item 21, raises concerns about whether its support infrastructure and financial resources can keep pace, potentially leading to inadequate franchisee support.
Potential Mitigations
- Question the franchisor directly on their specific plans for scaling up training, operational support, and field staff to service this rapid growth.
- Your accountant should analyze whether the company's financial condition can realistically support such a large and rapid expansion.
- A discussion with a business advisor about the common pitfalls of overly rapid franchise growth is recommended.
New/Unproven Franchise System
High Risk
Explanation
Pause began offering franchises in July 2022 and, as of the end of 2024, had only three operational franchised studios. The 'Special Risks' section of the FDD explicitly highlights this 'Short Operating History.' Investing in such a new system carries higher risk as the business model's long-term viability, brand recognition, and the franchisor's ability to support franchisees are not yet proven over time or across various market conditions.
Potential Mitigations
- A thorough due diligence process, including speaking with the first few operating franchisees, is essential for insight into the system's early performance.
- Your business advisor can help you evaluate the strength of the business model and its competitive advantages in the wellness industry.
- It is advisable to work with your accountant to develop conservative financial projections, given the lack of extensive historical data from franchisees.
Possible Fad Business
Medium Risk
Explanation
The business operates in the wellness industry, offering trendy services like flotation therapy, vitamin infusion, and cold plunges. While currently popular, the long-term, sustained consumer demand for this specific combination of services is not guaranteed. There is a risk that the business concept could be a fad, and a decline in popularity could significantly impact your revenue and the viability of your investment over the 10-year contract term.
Potential Mitigations
- You should conduct independent market research with a business advisor to assess the long-term demand for these wellness services in your specific area.
- It is important to ask the franchisor about their plans for innovation and adaptation to evolving consumer wellness trends.
- Your financial advisor can help you create financial models that account for potential shifts in market trends.
Inexperienced Management
Medium Risk
Explanation
The franchisor's principal executives, while having experience operating their own affiliate-owned studios, have limited history managing a franchise system, having started in 2022. While they have hired an SVP with prior franchise experience, the core leadership is new to the specific demands of supporting a franchise network. This could potentially lead to challenges in areas like franchisee support, supply chain management, and strategic system-wide development, which are different from running corporate-owned stores.
Potential Mitigations
- Engaging a business advisor to assess the management team's overall experience and the adequacy of their support structure is recommended.
- It is important to speak with the first operational franchisees about the quality and responsiveness of the support they have received.
- Inquire with the franchisor about the specific roles and experience of the franchise support team.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD package. Private equity ownership can sometimes lead to a focus on short-term profitability over the long-term health of the franchise system. This might manifest as increased fees, reduced franchisee support, or pressure to use specific vendors to maximize returns for investors over a defined holding period.
Potential Mitigations
- Your attorney can help you investigate the ownership structure of any franchisor to identify any private equity involvement.
- Should a franchisor be owned by a private equity firm, a business advisor can help research the firm's reputation and track record with other franchise brands.
- It is wise to ask existing franchisees about any changes in operations or philosophy since a private equity acquisition.
Non-Disclosure of Parent Company
Medium Risk
Explanation
The FDD discloses that Pause Holdings, Inc. is the parent company of the franchisor. However, the financial statements for this parent company are not provided in the FDD. Given that the franchisor entity itself has a history of losses and negative equity, the financial strength of the parent is a material factor in assessing the overall stability of the system. Without the parent's financials, your ability to fully evaluate the resources backing the franchise is limited.
Potential Mitigations
- A franchise attorney should confirm if, under these circumstances, the parent company's financial statements are required to be disclosed by law.
- You should ask the franchisor why the parent company's financials are not included and if the parent provides any financial guarantees.
- Your accountant can help assess the standalone risk of the franchisor entity, noting the lack of visibility into the parent's financial health.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. A predecessor is a company from which the franchisor acquired the business concept. If a franchisor has a predecessor, it's important to investigate that company's history for issues like bankruptcy, litigation, or high franchisee failure rates, as these problems could be inherited by the new franchisor.
Potential Mitigations
- An attorney should always carefully review Item 1 of the FDD for any mention of predecessors.
- If a predecessor exists, it is prudent to ask existing franchisees who operated under the previous company about their experience.
- A business advisor can assist in researching the public record and history of any predecessor company.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified in the FDD package. Item 3 requires the disclosure of certain types of current and past litigation. A pattern of lawsuits filed by franchisees against the franchisor alleging fraud, misrepresentation, or breach of contract can be a significant red flag, suggesting systemic problems or franchisee dissatisfaction.
Potential Mitigations
- Your attorney should always carefully review Item 3 for any disclosed litigation.
- It is important to discuss any disclosed litigation with current and former franchisees to understand their perspective.
- A business advisor can help research the background of any significant lawsuits to assess their potential impact on the franchise system.
Disclosure & Representation Risks
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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Financial & Fee Risks
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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Legal & Contract Risks
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.
Territory & Competition Risks
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.
Regulatory & Compliance Risks
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.
Franchisor Support Risks
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.
Operational Control Risks
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.
Term & Exit Risks
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.
Miscellaneous Risks
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.
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