5 Secrets to Be Aware of When Signing a Distribution Deal
Against all odds you finished your movie. It’s beautiful and it cost you a fair amount of sweat and blood to finish. You are now spending the few dollars you had left in your bank account in postal and entry fees to send your film to various festivals.
You deserve a reward – believe me, you do! – for all the effort you put in it. And what better reward can a filmmaker hope for than selling his movie? Luck is with you and you scored a couple of sales agents or distribution deals. Now, compared to the hell you’ve gone through, what is left should be like a walk in the park.
But it won’t be.
They’re coming to get you, Barbara!
Before signing a deal, here are a couple of facts you should acknowledge:
- An indie film maker will not have shot his first movie until it has been produced. Keep in mind that self-produced movies are a bitch to sell. And They know it.
- The deals you will be offered will most likely not be profitable at all.
- You will be told “we do not negotiate our template contract, sign it `as is’ or hit the road.” Prefer the “hit the road” option.
- You will need contracts with your fellow filmmakers at all times (see my previous contribution on the topic).
- If things go wrong you will be held responsible or you will end up spending money on legal counseling (have a look at that “indemnity” provision and keep in mind that legally proving that the co-contracting party’s failure might not be as easy as it seems, especially if it’s “not doing” something).
To avoid any major disappointment, let’s have a look at the clauses you should REALLY understand, since they are almost impossible to change.
What am I getting into?
What will you and the other party (whether it is a sales agent, a distributor or any other entity) be committed to? Keep in mind that whatever you sign will be legally binding, so you’d better understand what you are getting into. Read carefully the whole contract – DO NOT sign anything unless you fully understand every single provision.
First of all, pay close attention to the rights you are giving away. It’s very likely you are about to sign an exclusive deal (i.e. the co-contracting party will be the only one authorized to deal with your movie), so you won’t have a second chance until it expires.
Are you transferring the rights for theatre exploitation, VOD, DVD, TV, everything? Avoid as much as possible the “etc.” or “including but not limited to” type of wording. You won’t know exactly what you are getting into.
If you are signing with a Sales Agent, are you going to be party to the selling or licensing deals or not?
This will seem obvious, but make sure the other party is legally bound to release the movie. If after a certain amount of time the movie hasn’t been released, you should be able to terminate the deal for defaults on the co-contracting party obligations.
Territory and term
Territory is critical: being an exclusive deal, the territory is where the co-contracting party will be the only one able to deal with your film.
In case you are thinking of signing a deal with a Sales Agent, I would recommend keeping the local rights for yourself whenever possible (i.e.. if you are Canadian, keep Canada out of the Territory). Generally speaking, I would not recommend selling any territory on which you feel comfortable negotiating your distribution deals yourself. This might be your only wiggle room if things go bananas.
Likewise, with sales agents, always prefer short- term contracts. The shorter the better, just in case they are not entirely honest with you and are actually using your film for something else (i.e.: catalog garnishing). As for distributors, this will vary, but they will actually invest money to release your movie one way or another, so they are likely to ask for longer periods of exploitation.
Money: now or never
You’d think “the most important thing is how much I will get out of this deal.” It’s not. As an independent filmmaker, the real key is “when.” (Actually, this is true most of the time, when you are the most diligent party of an assignment agreement).
In an ideal world, you get paid a negotiated amount up-front. Always try to work that into your deal, however small the amount is, it is likely to be the only one you will get out of it.
Indeed, in the real world, more often than not, you only get a percentage with no up-front payment. It may be clearly stated (distribution deals), or it might just be what’s left over after the co-contracting party has deducted its commission.
However, there’s more to it than that (and less for you).
Back end deal
What you are likely to sign is a “Back End Deal” – as an independent filmmaker (screenwriter) I have never seen anything else.
Without entering into too many details, a “Back End Deal” is basically a contract where you sit at the end of the line: everybody gets paid before you, and all the expenses have to be covered before you even see a dime.
Because your distributor or Sales Agent knows how hard it is to verify their expenses and costs (especially since indie films are often sold in bundles), it will virtually never be profitable. And you will never get paid.
I know this article is not particularly uplifting. My background as a lawyer makes me look for the bad side of the deal first. Always envision the worse to be prepared.
The bottom line is: do not hesitate to clarify and detail things in the contract. If a provision needs to be explained orally to you, make sure everything that was explained to you gets written into the contract.
It’s likely you will not sign an ideal contract – but then again, if you wanted to be rich overnight, you picked the wrong career. So read carefully what you sign to make sure you’re not shooting yourself in the foot.
And remember, as long as you understand what you’re getting into, sometimes a bad deal is better than no deal.
Note: this article is not legally binding and merely expresses the point of view of the editor. It is your responsibility as a filmmaker to make sure you comply with the law and sign the proper documents.
Check out this video by Film Courage from their YouTube Channel
What Filmmakers Should Know About Negotiating A Film Distribution Deal
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