What’s Included in a Motion Picture Investor Financing Agreement?

Along with any film comes a paper trail of contracts and agreements that are made at virtually every step of the process from the earliest inception of an idea when a copyright is obtained for the script on through to the distribution when a clean chain of title is expected to advance the rights down the line to the next invested party. And, when investments are involved. Specifically when you find an investor that’s willing to put up the production money for a feature film. A motion picture investor financing agreement will be necessary before any investor cuts you a check. 

But what’s included in a motion picture investor financing agreement? And how does this ensure that nothing stands in your way when it comes to advancing your film to the next steps?

What is a Motion Picture Investor Financing Agreement?

The motion picture investor financing agreement represents a contract that is entered into between the investor and the filmmaker. Outlining the details of the investment and how the investor will recuperate their funds.

Although many film investors realize the risk and know that there is little chance that their funding will be returned to them. The contract is an important step to providing the protection that the investor needs to feel comfortable with the deal.

This agreement puts into writing the key details on where investment funds will be held, how and when they will be released. And executes a completion guarantee which basically states that the film will be produced if the funding is provided.

In addition the motion picture investor financing agreement may also include the following:

• Information about how the investment will be repaid including any interest.
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• Details on net profits over and above the investment and a percentage of net profits that will be paid to the investor.
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• Details on approval rights granted to the investor. 

What’s Included in a Motion Picture Investor Financing Agreement?

While the exact details of a motion picture investor financing agreement will vary with each project, it’s important to keep in mind that without an investor agreement.

There is little chance that a film will ever get off the ground. Without investment funding, production is nearly impossible to surmount.

Thus, you’re going to want to familiarize yourself with the proper contracts and agreements. Especially those that pertain to film financing if you’re truly invested in producing and distributing a motion picture.

The following elements are included in a motion picture investor financing agreement in addition to those previously listed:

• Details on how net profits are calculated and what expenses will be deducted from total revenue.
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• Information on creative control and who will be in charge of approval of details.
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• Profit participation agreements that are made between the investor and the creators.
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• Deferred talent agreements or any deferred compensation details.
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• Rate of return that will be disbursed to the investor should the film be successful.

The Takeaway

Investors are savvy and incredibly intelligent. But they also realize extensive risk in terms of providing investment funding for motion pictures which may never make it in the mainstream.

The motion picture investor financing agreement represents key details of the agreement made between the investor and the creators of the motion picture.

As well as pertinent information about the sharing of profits and proceeds that come from the distribution of the film in the event of a successful production.

For this reason, the motion picture film financing agreement is one of the most important contracts in the production process.