Hi! I hope you had a wonderful week. My work week was crazy good, as two of my clients’ projects sold internationally, I acquired a hip new Sci-Fi feature that I’ll be premiering to buyers in Berlin and I entered into a deal to package, produce and distribute a smart horror film franchise. On a personal note, my beloved San Francisco 49ers are now one win away from advancing to their first Super Bowl since January 1995, my Lakers won for the first time in 2013, (they suck this year) and my alma mater UCLA won both weekend games and returned to the Top 25 ranked teams in the country. Wahoo!
In the last edition of “Going Bionic,” we revealed four horribly deceiving contract clauses that are detrimental to your film. Since once of my missions is to keep you safe from the blood-soaked jaws of unethical distributors, today I’m revealing four more contract clauses that you should avoid. Thus, here are four more ways to keep you safe.
CREDIT
Distributor shall have the right to have a presentation/EP credit in the name of the distributor or its assign up front at the beginning of the feature and on all titles, advertisements and printed material, subject to the requirements of third party distributors, broadcasters and/or exhibitors.
Ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha! I love this one, because of how ridiculously insane it is. Why in the hell would you give “Executive Producer,” or “Presented By” credit, to your distributor, just for signing your film? Answer: you wouldn’t! While it’s common for distributors to take these credits, they do so when they either a) invest in the film, b) invest in completion funds for the film, c) secure a considerable amount of pre-sales d) secure an A-list element that helps to secure funding, e) secure major distribution, or f) a combination of some, or all of “a” through “e”. Any person wanting to “earn” a credit in this manner is not somebody you want to be associated with. Remember, once you give them “executive producer” or “presented by credit,” you will forever be tied to their reputation (or lack thereof).
ADMINISTRATIVE FEES.
Distributor shall receive an administrative fee in the amount of one hundred twenty-five thousand dollars ($125,000) to be paid directly to the distributor as an off-the top-expense upon the commencement of sales generated by the distributor. This fee does not cover advertising, duplication, artwork, graphic art, or any other costs needed to execute sales. Distributor may advance funds for various costs not covered under the administrative fee as described above. Producer agrees to pay the distributor a 36% service fee for all costs advanced by the distributor. The administrative fee and subsequent costs as described above are in addition to the 25% sales commission.
There are several things wrong the above clause. To start, a $125,000 administrative fee is quite a lot, unless a) your film’s budget is north of $2,500,000 b) has at least one legitimate star, c) your distributor secured several hundred thousand dollars or more of bankable pre-sales d) is inclusive of all admin costs for the length of the contract. Secondly, this clause doesn’t specify what the $125,000 actually covers; it just lists what it doesn’t cover. Make no mistake; you have to force your distributor to clearly explain what is covered within their administrative fee. Furthermore, you must place a ceiling on how much money your distributor can spend on “costs not covered under their admin fee”. Should they need to spend more, and then they must get written approval from you, before they proceed. Lastly, paying a 36% on anything – much less on service fees – is downright stupid. As it’s written in the clause, their service fee isn’t 36% annually (3% per month – which is bad enough) but it’s 36% up front – which means that you’re going to owe your distributor $36 for every $100 they spend on your film’s “costs.” Thus, don’t be surprised if your distributor is anxious to take care of these costs for you, because what they’re really intent on taking care of is their rent for the next two to three months, off the “service fees” they generate from your film.
INDEMNIFICATION.
Producer will indemnify distributor and hold harmless against, and in respect of claims, losses, expenses, costs, outside attorney’s fees, obligations and liabilities it may incur by reason of Producer’s breach of or failure to perform any of its warranties, guarantees and liabilities under this agreement.
This is a great clause to have in your contract. However, your distributor needs to indemnify you in the same way, and with the same wording, that you indemnify them. It’s the only way to secure your safety.
CONTROVERSY INDEMNIFICATION.
Producer agrees that the distributor is acting as an agent for the sale of The Film only and is not responsible for nor contributing parties to the creative process of the making of this Film, nor is the distributor responsible for controversy that arises from the Film’s release.
The nature of this clause is sensible and smart, but what if your distributor created the controversy? Furthermore, what if that controversy results in increased sales for your film? As you can see, this clause falls into a grey area. My advice is to just ask for clarification on what type(s) of controversies are covered.
Okay people those are my thoughts for today. Thank you once again for lending me your eyes, and I look forward to borrowing them again next Tuesday. Have a great week!
I can be followed on Twitter @Lonelyseal.
