Franchises, tenancies and contractors

• Do franchises have to register separately for the CRC Energy Efficiency Scheme?
• How are franchisors that are also subsidiaries treated?
• What happens if a franchisee is a tenant and the landlord pays the bills for the energy it uses?
• How are landlord and tenant responsibilities defined under the CRC?
• Could landlords recover the cost of carbon allowances through tenant service charges?
• Is there any guidance for contractors who work on temporary sites and whose workloads may vary over time?

Do franchises have to register separately for the CRC Energy Efficiency Scheme?

No. Under the CRC Energy Efficiency Scheme, the franchisor will be responsible for the energy use of its franchisees when determining qualification for, and participation in, the scheme.

A franchise agreement in the CRC is defined by the presence of the following elements:

• An agreement exists between two organisations (the franchisee and the franchisor) for the sale or distribution of goods, or the provision of services.
• The franchisee carries out business using the name provided by the franchisor in the agreement.
• The premises where the franchisee carries out the franchisee business are used exclusively for that business.
• The presentation of those premises must have an internal or external appearance agreed by the franchisor and it must be similar to that of other premises operating a franchise business under an agreement with the franchisor.

Each of the conditions outlined above must be present for that business arrangement to be defined a franchise for the purposes of the CRC.

How are franchisors that are also subsidiaries treated?

If the franchisor itself is a subsidiary, then it needs to follow the guidance for group organisations for reporting its energy use, including that of its franchisees, to the primary member of its group.

What happens if a franchisee is a tenant and the landlord pays the bills for the energy it uses?

If the franchisee is a tenant and the landlord is the counterparty to the energy supply contract, the landlord has responsibility for the franchisee’s emissions, not the franchisor.

How are landlord and tenant responsibilities defined under the CRC?

Responsibility for energy use emissions is assigned to the organisation that is responsible for the energy supply. In the case of landlords and tenants the following applies:

• Where the landlord is responsible for the energy supplied to its tenant(s), then that landlord will be responsible for the energy use emissions incurred by the tenants. The landlord organisation must then include this energy use when assessing its qualification and participation in the CRC.
• Where the tenant is responsible for the energy supply, the tenant will have responsibility for its energy use emissions. The tenant organisation must then include this energy use when assessing its qualification and participation in the CRC.

Could landlords recover the cost of carbon allowances through tenant service charges?

There is no requirement for this under the CRC Energy Efficiency Scheme. It would be a commercial matter between the different parties involved.

Is there any guidance for contractors who work on temporary sites and whose workloads may vary over time?

For temporary sites, the emissions responsibility in the CRC lies with whoever is responsible for the energy supply. Therefore if an organisation is responsible for the supply at a given site for a given period, it is responsible for the energy use and its associated emissions.