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Definition

Scope 3 Category 14: Franchises

Scope 3 Category 14 records the operating emissions of licensed franchise businesses that fall outside the franchisor's Scope 1 and Scope 2 boundary.

What is Scope 3 Category 14: Franchises?

GHG Protocol Chapter 5 puts a franchisee's Scope 1 and Scope 2 emissions in Category 14 when the franchisor does not own or control the operator for Scope 1 and Scope 2 reporting. The operation therefore sits outside the franchisor's organisational boundary, meaning the companies and sites included in its direct emissions totals. You must include operating fuel, purchased energy, process releases, and refrigerant leaks; franchise-construction emissions are optional.

Why does Scope 3 Category 14 matter to you?

Your reporting-year franchise register and organisational boundary determine which licensed locations belong here. Chapter 11 requires each category total in metric tonnes of CO2e, plus the data sources, calculation methods, allocations, and assumptions used.

How do you calculate Scope 3 Category 14?

Formula 14.1 sums each franchise's Scope 1 and Scope 2 emissions. Ask for those totals or collect site fuel, purchased-energy, process, and refrigerant records. Allocate shared operations using a physical or economic measure matched to the activity.

When records are unavailable, Formulas 14.4 and 14.5 allow averages by floor area, building type, or asset count. Formula 14.3 extrapolates representative sample groups. Group franchises with similar expected emissions intensity by country, building type, floor space, product volume, or customer numbers.

What mistakes should you avoid?

  • Classifying every distributor or trademark licensee as a franchise without checking the agreement.
  • Including an operator already counted in your Scope 1 or Scope 2 inventory.
  • Collecting electricity data but omitting fuel, process emissions, or refrigerant leaks.
  • Applying one sample average across unlike buildings or production volumes.

When does a franchisee use Category 14?

A franchisee uses Category 14 only when its chosen organisational boundary excludes controlled franchise operations from Scope 1 and Scope 2. Otherwise, do not add the operation again.

What records should you request from franchise operators?

Request the reporting-year franchise list, agreements, site Scope 1 and Scope 2 totals, utility bills, fuel and refrigerant logs, factor files, allocations, sample groups, and assumptions.

Example

Suppose a pharmaceutical packaging supplier in Mexico licenses an independent operator to make and sell its branded cartons in Jalisco for a royalty. The agreement lets the operator use the supplier's brand and business format and requires it to follow the supplier's operating standards, which makes the arrangement a franchise in this hypothetical example. The operator also makes third-party packaging. The operator does not track emissions by brand, so the franchisor uses dispatch records showing branded cartons were 60% of comparable 2026 output as its physical allocation measure. The operator's small company car travelled 12,000 kilometres for site work, and its electricity calculation was 6,500 kg CO2e. Assume the operator has no other Scope 1 or Scope 2 emissions source in this simplified example.

The published Keslio factor is 0.14282 kg CO2e/km for a small car with unknown fuel, from UK DESNZ and DEFRA's 2026 conversion factors. Car emissions are 12,000 km x 0.14282 kg CO2e/km = 1,713.84 kg CO2e. The operator total is 1,713.84 + 6,500 = 8,213.84 kg CO2e. Allocating 60% gives 4,928.304 kg CO2e, or 4.928304 metric tonnes CO2e in Category 14. The UK distance factor is a disclosed substitute; use a suitable Mexico factor for formal reporting.

Where it comes up

GHG Protocol Category 14 definition and minimum franchise boundaryCorporate Value Chain (Scope 3) Standard, Table 5.4 and Chapter 5, Category 14Official sourceGHG Protocol franchise-specific, sampling, and average-data methodsTechnical Guidance for Calculating Scope 3 Emissions, Category 14, Formulas 14.1-14.5Official source

Related terms

Scope 3 Emissions

Scope 3 emissions are the indirect greenhouse gas emissions from goods, services, transport, product use, investments, and other upstream and downstream activities outside your company's Scope 1 and Scope 2 boundary.

Scope 1 Emissions

Scope 1 emissions are greenhouse gases released directly from sources your company owns or controls, including fuel-burning equipment and vehicles, industrial processes, and refrigerant or other gas leaks.

Scope 2 Emissions

Scope 2 emissions are the indirect greenhouse gas emissions from generating the electricity, steam, heat, and cooling your company buys and uses.

Scope 3 Category 13: Downstream leased assets

Scope 3 Category 13 counts operating emissions from assets your company owns and rents to customers when those emissions sit outside your Scope 1 and Scope 2 totals.

Scope 3 Category 15: Investments

Scope 3 Category 15 covers an investor's proportional share of Scope 1 and Scope 2 emissions from equity investments made with company capital, debt tied to a named project, and project finance outside its own inventory.

Sources

  • GHG Protocol

    Category 14 definition, franchisor and franchisee treatment, minimum boundary, and Scope 3 reporting requirements

    2026-08-20

  • GHG Protocol

    Franchise-specific, allocation, sampling, and average-data methods in Formulas 14.1-14.5

    2026-08-20

  • UK Department for Energy Security and Net Zero

    The 2026 small-car distance factor used in the worked example

    2026-08-20

Last verified 2026-08-20

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Scope 3 Category 14: Franchises Definition | Keslio