What is Scope 3 Category 14 Emissions?

Category 14 covers emissions from franchise businesses that aren't part of scope 1 or scope 2. A franchise is a business with permission to sell or offer another company's products or services in a specific area. This category is for companies that give out licenses (franchisors) to other businesses so they can sell their products or services, in exchange for fees like royalties.

Franchisors should count the emissions from the franchises they work with (franchisees' scope 1 and scope 2 emissions) in this category.

Franchisees, the businesses that run franchises and pay fees to franchisors, should add emissions from their own operations to this category if they haven't already included them in scope 1 and scope 2. This might be because of how they chose to consolidate their emissions data. Franchisees can also choose to report their franchisors' emissions related to their operations (franchisors' scope 1 and scope 2 emissions) in category 1 (Purchased goods and services) as part of their scope 3 emissions.

What Data is Needed?

To calculate Scope 3 Category 14 emissions (franchise emissions not included in Scope 1 or Scope 2), the following data is needed:

1. A list of franchisees: Identify all the businesses operating as franchises under the franchisor's license.

2. Franchisees' operational data: Obtain data on each franchisee's energy consumption and resource use, such as electricity, fuel, heating, and cooling.

3. Emission factors: Acquire accurate emission factors for the different types of energy consumption and resources used by the franchisees. This data can be sourced from governmental or industry-specific guidelines, or from organizations like the Intergovernmental Panel on Climate Change (IPCC) and the World Resources Institute (WRI).

4. Consolidation approach: Understand the franchisees' consolidation approach for their Scope 1 and Scope 2 emissions to determine which emissions should be included in Category 14.

Once this data is collected, it can be used to calculate the total Scope 3 Category 14 emissions by applying the relevant emission factors to the franchisees' energy consumption and resource use data.

What Method is Available?

These methods are listed in order of how specific the calculation is to the individual franchise. However, companies need not always use the most specific method as a first preference.

1. Franchise-specific Methods: The franchise-specific method involves collecting scope 1 and scope 2 emissions from franchisees. If franchisees have conducted corporate scope 1 and scope 2 GHG inventory report(s), the data can be applied immediately. If such reports are not available, site-specific fuel and energy data from individual franchises should be collected. The reporting company should determine whether the franchisee delivers business solely for the reporting company (i.e., franchisor), and if not, the franchisee or the reporting company should allocate the emissions accordingly.

2. Average Methods: The average-data approach involves estimating emissions for each franchise, or groups of franchises, based on average statistics, such as average emissions per building type, floor space, or franchise type. This approach should be used when purchase records, electricity bills, or meter readings of fuel or energy use are not available or applicable. Approaches include: • Estimated emissions based on occupied floor space by building type • Estimated emissions based on number and type of franchises. Note that the average-data approach may be relatively inaccurate and limits the ability of companies to track performance of GHG reduction actions.