What is a Film Production LLC Operating Agreement

What is a Film Production LLC Operating Agreement?

Producing a feature film will almost certainly require that the filmmaker set up a limited liability corporation. That can accept the responsibilities and liabilities of the business. Rather than taking on the potential liabilities under the production company itself.  The first step to forming a motion picture business that will produce a movie or film is to form a business entity that will accept financial risk for the business. A film production LLC operating agreement is also necessary. But what does all of this mean?

contract agreement

Forming a Limited Liability Corporation

Filmmakers almost certainly know that forming a limited liability corporation (LLC) is the first area of business when a motion picture is planned.

Forming the business entity will separate the liabilities. And all other areas of the motion picture development into its own business. In which partnerships and agreements can be formed.

The LLC is owned by the members involved. And can be managed by those members. Or by managers that members appoint.

How Business Goes

Once the LLC has been formed, the business and rules dictating how the business is managed and ran are largely driven by the Film production LLC operating agreement.

Which is both customizable to the individual needs of the business. And flexible enough to include all of the important coverages and details required for the production.

The Company is the Owner of the Film

Furthermore, in forming an LLC, the company becomes the owner of the film. Thus, the chain of title begins with the formation of the LLC. Which grants ownership of the property rights to the limited liability corporation to the film.

The film production LLC operating agreement then forms the foundation agreement. In which they identify all operations of the film project.

Under the operating agreement, the following details show:

  • How copyrights and assets are owned.
  • The individuals that own the equipment.
  • The company that will hire performers and crew members.
  • The investments of the projects.

The Takeaway

Finally, as a filmmaker, entering into an LLC is an important step of the production process. Understanding and planning your film production LLC operating agreement is absolutely vital to establishing clearly defined processes and procedures for your film project.

And to keeping assets, liabilities, and any upcoming equity in the project separate from your own production company or your own individual assets.

In fact, most filmmakers choose to form the LLC. And to establish the film production LLC operating agreement. As a means of completely separating business entities to prevent any future loss. Or comingling of liabilities should the film not be profitable in the future. 

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