Brother Pacesetter Embroidery Lettering Instruction Manual page 45

You accomplish this by inserting a special character, the tilde (~)
into your text. Inserting these characters divides your text
segment into sub-segments; each of the sub-segments that are
created this way gets its own color identifier label (Color1,
Color2, etc.) and can then be assigned its own thread color from
the Color Palette.
To insert thread color changes within a text segment:
1 Select the text segment.
2 In the Text field of the Text Properties panel, type a tilde (~)
between letters in each position that you want a color
change to occur.
3 Click Apply.
You see the colors change for all text sub segments after the
first one, which retains the original color.
The text segment, as it appears initially, after being divided into sub
segments. The first subsegment retains the original color, and the
subsequent ones are assigned arbitrary "placeholder" colors (until you chose
your own).
Creating Lettering 43