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Pure Sweat Studios
How much does Pure Sweat Studios cost?
Initial Investment Range
$557,335 to $1,165,760
Franchise Fee
$52,500 to $35,000
The franchise that we offer is for Pure Sweat Studios, a studio that provides infrared sauna services with the option to add supplemental cold plunge and/or float therapy services.
Enjoy our partial free risk analysis below
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Pure Sweat Studios January 30, 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.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The franchisor explicitly flags its financial condition as a special risk. Audited financial statements reveal a significant net capital deficiency and recurring net losses for the last three years. The auditor’s report includes an “Emphasis of Matter” paragraph regarding these issues and the company's dependence on its owner for funding. This may call into question the franchisor's ability to provide ongoing support and grow the brand, posing a substantial risk to your investment.
Potential Mitigations
- A franchise accountant must thoroughly analyze the financial statements, auditor's notes, and cash flow to assess the company's long-term viability.
- Discussing the specific steps the franchisor is taking to address its financial condition with your business advisor is critical.
- Your attorney should determine if any state-mandated financial assurances, like a bond or escrow, are required and in place to protect your fees.
High Franchisee Turnover
High Risk
Explanation
Item 20 data indicates a significant level of franchisee turnover. In the most recent year, four franchised outlets were terminated out of a starting base of seven, representing an exceptionally high turnover rate of over 50%. While the system is also growing, such a high rate of units leaving the system is a critical red flag that may suggest systemic issues, franchisee dissatisfaction, or a challenging business model for franchisees.
Potential Mitigations
- Contacting a significant number of current and former franchisees listed in Exhibits G and H is essential to understand the reasons for this high turnover rate.
- A detailed analysis of the Item 20 tables with your accountant is necessary to calculate the precise churn rate over the last three years.
- Your attorney can help you formulate direct questions to the franchisor regarding the circumstances of these terminations.
Rapid System Growth
High Risk
Explanation
The franchise system is growing rapidly, doubling its number of franchised units in the last two years. While growth can be positive, this pace, when combined with the franchisor's disclosed financial weakness and high franchisee turnover, presents a risk. The franchisor's resources may be strained, potentially compromising their ability to provide adequate site selection, training, and ongoing operational support to all franchisees as the system expands.
Potential Mitigations
- In discussions with current franchisees, you should specifically inquire about the quality and responsiveness of franchisor support.
- Questioning the franchisor on how they are scaling their support infrastructure to match unit growth is a key due diligence step for you and your business advisor.
- Your accountant should review the financials to determine if the franchisor has the capital to support this rate of expansion.
New/Unproven Franchise System
High Risk
Explanation
The franchisor entity was established in late 2021 and began franchising in 2022. While the business concept has a predecessor dating to 2016, the franchising operation itself is very young and has a limited performance history. Investing in a new system carries higher intrinsic risk, as its support systems, brand recognition, and long-term viability are not yet fully proven. The high franchisee turnover noted in Item 20 further elevates this risk.
Potential Mitigations
- A business advisor can help you conduct extensive due diligence on the viability of the business model and the experience of the management team.
- Speaking with the earliest franchisees in the system to understand their experience with the developing support structures is crucial.
- Your attorney might be able to negotiate more favorable terms to help offset the higher risk associated with an emerging franchise system.
Possible Fad Business
Medium Risk
Explanation
The business, focused on infrared saunas, cold plunges, and float therapy, is positioned within the current health and wellness trend. While this sector is popular, specific services can be susceptible to changing consumer interests and fads. There is a risk that the long-term, sustainable demand for these specific services may not persist through the full 10-year term of your franchise agreement, potentially impacting future profitability after initial market enthusiasm wanes.
Potential Mitigations
- Working with a business advisor to independently research the long-term market trends for these specific wellness services is recommended.
- You should ask the franchisor about their plans for research and development to evolve the service offerings and stay ahead of market trends.
- Assessing the business's resilience to economic shifts and its dependency on discretionary consumer spending should be part of your financial analysis.
Inexperienced Management
Low Risk
Explanation
This specific risk was not identified in the FDD package. The management team described in Item 2 appears to have relevant prior experience in both the wellness industry and in franchising. Inexperienced leadership can be a significant risk, as it may lead to weak operational systems, inadequate franchisee support, and poor strategic decisions that negatively affect the entire brand. It is always important to vet the team you are investing with.
Potential Mitigations
- A thorough review of the executive team's background in Item 2 with a business advisor is a critical step in evaluating any franchise.
- Asking current franchisees about their direct experiences with the leadership team can provide valuable insight into their competence and supportiveness.
- Independently verifying the professional history of key executives mentioned in the FDD is a prudent due diligence measure.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified in the FDD package, as Item 1 does not disclose ownership by a private equity firm. When a PE firm owns a franchisor, there can be a risk that its focus on short-term returns might lead to decisions, such as cutting support or increasing fees, that may not align with the long-term health of the franchisees' businesses. It is a factor to consider when evaluating the franchisor's motivations and strategy.
Potential Mitigations
- Investigating the ownership structure in Item 1 with your attorney is crucial to understanding who controls the franchise system.
- If a PE firm is involved, researching their reputation and track record with other franchise brands they have owned is advisable.
- Engaging a business advisor to discuss the potential impacts of different ownership structures on a franchise system can be beneficial.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 indicates the franchisor does not have a parent company. In some franchise systems, a thinly capitalized franchisor subsidiary might be controlled by a larger, financially stronger parent. If the parent's financial information is not disclosed when required, it can obscure a full picture of the system's backing and stability. This FDD does not present that specific concern.
Potential Mitigations
- Your attorney should always verify the corporate structure disclosed in Item 1 to identify any parent companies or significant affiliates.
- If a parent company exists and guarantees the franchisor's performance, an accountant should review its financial statements carefully.
- Understanding the relationships between the franchisor and its affiliates is a key part of due diligence.
Predecessor History Issues
Low Risk
Explanation
This risk was not identified in the FDD package. Item 1 discloses a predecessor, but Items 3 and 4 do not indicate any negative history such as litigation or bankruptcy associated with it. When a franchisor acquires a system from a predecessor, it's important to know if the system had historical problems, such as high failure rates or franchisee dissatisfaction, as these issues could be inherited by the new ownership.
Potential Mitigations
- Your attorney should carefully review all disclosures related to predecessors in Items 1, 3, and 4.
- If a predecessor is named, asking long-term franchisees about their experience under the prior ownership can provide important context.
- A business advisor can help you research the history and reputation of any predecessor entities.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified in the FDD package. Item 3 states that no litigation is required to be disclosed. A pattern of lawsuits filed by franchisees against the franchisor alleging fraud or misrepresentation, or a high number of suits filed by the franchisor against its franchisees, can be a major red flag indicating deep problems within a franchise system. The absence of such litigation is a positive indicator.
Potential Mitigations
- It is crucial for your attorney to thoroughly review the litigation disclosures in Item 3 of any FDD.
- Even with no disclosed litigation, asking current and former franchisees about any informal disputes can provide additional insight.
- Performing a public records search for litigation involving the franchisor and its principals can sometimes reveal disputes not meeting the criteria for FDD disclosure.
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
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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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