Definition
A franchise is a company that holds a license to sell or distribute another company's goods or services at a specific location. Franchisors must account for the emissions generated by the operation of these franchises in their balance sheet, i.e. they must include the scope 1 and 2 emissions of the franchisees in their balance sheet.
Franchisees should include emissions from the activities they control in this category if they have not included these emissions in Scope 1 and 2 due to the choice of consolidation approach. They can optionally include the upstream Scope 3 emissions associated with the franchisor's activities (i.e. Scope 1 and 2 emissions of the franchisor) in Category 1.
Accounting for franchises
A distinction is made between two calculation methods:
- Franchisee-specific method: The Scope 1 and 2 emissions of the franchisees are multiplied by suitable emission factors.
- Average data method: Estimation of emissions for each franchisee and multiplication by suitable emission factors.
Franchisee-specific method:
If the franchisee has already created a corporate footprint, this data can be used immediately. If a corporate footprint is not available, site-specific fuel and energy data should be collected. In addition, the reporting company should determine whether the franchisee operates exclusively for the reporting company. If not, emissions should be allocated accordingly.
Required activity data:
- Scope 1, Scope 2 and (optionally) Scope 3 emissions data from franchisees.
- Site-specific data on fuel and electricity consumption as well as process and fugitive emissions, if applicable.
Required emission factors:
- Location or region-specific emission factors for energy sources (e.g. electricity and fuels) per unit of consumption (e.g. kg CO2 e/kWh for electricity, kg CO2 e/liter for diesel)
- Emission factors for process emissions and fugitive emissions (e.g. cooling and air conditioning)
- Upstream emission factors.
Average data method:
The emissions for each franchisee can be estimated based on the average emissions per building type, floor area or franchisee type. However, this approach is relatively inaccurate and should only be used if the data for the franchisee-specific method is not available.
Required activity data:
- Floor area of each franchise establishment, broken down by floor area
- Number of franchise establishments, broken down by building type
- Number of franchise assets that result in GHG emissions (e.g. company cars, trucks).
Required emission factors:
- Average emission factors by floor area, expressed in units of emissions per floor area per time period (e.g., kg CO2 e/m2 /day)
- Average emission factors by building type, expressed in units of emissions per building and time period (e.g., kg CO2 e/small office building/year)
- Emission factors by facility type, expressed in emission units per facility type and time period (e.g. kg CO2 e/car/year).
Data collection
The data sources of the franchise-specific method include:
- Public GHG inventory reports
- Utility bills
- Purchasing records
- Meter readings
- Internal IT systems
Data sources for the average data method include:
- Industry associations
- National statistics published by government agencies
Accounting for franchises in the Climate Hub
No predefined activities are stored in the Climate Hub. You can create new activities using the Add own activity button. A detailed description can be found here.
Further information can be found in the Technical Guidance for Calculating Scope 3 Emissions of the GHG Protocol in Chapter 14: Franchises from page 130.