What is a Film Profit Sharing Agreement?
Film investors frequently put forth funds in investment into a film production with the understanding that any such investment is risky and the potential for return on the investment is slim. While there are many different ways that a film investment agreement can be executed. And equally more ways for film profit sharing agreements to establish. The need for a clear, concise contract that outlines the agreement made between filmmaker and film investor following any such financial investment is prominent.
A film profit sharing agreement is between filmmaker and investor. To dictate the appropriate revenue-sharing model or agreement set between the two parties. But what is the contract like?
What is a Film Profit Sharing Agreement?
The film profit sharing agreement represents the agreement that one is entering into. Between anyone involved in the production of the film. Or involved in the investment financing of a film. That has an agreement made to receive a share of the net profits once the film breaks even.
Generally, the film profit sharing agreement will outline specific details as to:
- Who is entering into the agreement?
- What expenses to deduct before determining “net profit”.
- The percentage share of profits that each investor or individual has entitlement towards.
Dates of Importance
In addition to the details previously listed, a film profit sharing agreement is going to outline key dates of importance. Including the date the agreement is entered into. As well as the date.
In which a profit is expected as well as the final date in which the agreement expires. If there is to be an expiration.
Who’s Included in a Film Profit Sharing Agreement?
While the film profit sharing agreement may be entered into between the filmmaker and virtually any individuals that invest in.
Or otherwise play a role in supporting the creation of the film. And are entitled an interest in the future profits of the production. Just a handful of people make these agreements.
The film profit sharing agreement most often includes the following individuals:
- The producer.
- The investors.
- The lead actors.
- The supporting actors.
- The screenwriter.
In Summation
In outlining the profit sharing agreement, a percentage of the profits are allocated to each individual included in the agreement. With the final total of all percentages equal 100% of the profits.
Remember though that a film profit sharing agreement does not dictate the sharing of all proceeds from a film. But rather the net profit. Which is the amount of revenue that is left over after all expenses have been incurred and paid for. And when the film has reached a break even point.
