What’s a Film Finder’s Fee Agreement in a Film Deal?
When it comes to producing a feature film, one of the greatest challenges to production is raising capital to get started. Finding the capital investments that are required for a production will most certainly involve negotiations. And ultimately a film finder’s fee agreement which represents a unique agreement between the producer and the individual involved in actually raising capital for the production. While it may sound simple enough, the film finder’s fee agreement represents a complex document. Which details some pretty important information.
What is a Film Finder’s Fee Agreement?
A finder’s fee agreement represents a contractual agreement which dictates the relationship and proposed compensation which is expected as a result of the relationship. In which an incentive is offered in exchange for finding the appropriate capital investments.
As required to get a production off the ground. For example, a finder’s fee agreement will outline the compensation agreement made between the producer or production company. And the individual finding the financing or funding for the producer.
And may include wording something like this:
- If financing is consummated within XX months, Finder shall be entitled to a cash fee of XX% of the first XX of Financing.
- Additional compensation for finders in the form of equity interests in the company equal to XX% will be paid.
Depending
The actual wording of the finder’s fee agreement, and what’s included, will depend largely on the agreement. That is made between the producer or production company. And the ‘finder’ who is responsible for securing capital for the production.
What’s Included in the Film Finder’s Fee Agreement?
The film finder’s fee agreement is an important document that must be carefully planned between the film producer, his or her attorney, and the finder.
At Beverly Boy Productions, we highly recommend you work closely with legal counsel to ensure the appropriate drafting of your film finder’s fee agreement.
Here’s what’s included in your film finder’s fee agreement:
The term limits of the finder’s fee. This includes the amount of time that is granted for the “finder” to secure capital for the film. As well as the terms of how the service term will be terminated.
Any required meetings, or contacts that are to be included. Between the production company and the finder should also be addressed in the agreement. With appropriate dates or time frames listed, too.
Compensation is a major part of any film finder’s fee agreement. Thus, the agreement should outline the following details.
Regarding how the finder will be compensated for their work:
- The percent compensated to the finder for the amount raised.
- Whether escrow or a holding account will be used for the disbursement of compensation as well as whether the finder will be required to wait for release of their compensation.
- What happens if a particular threshold of capital escrow is not reached? Will the money be returned to investors? Will there be no finder’s fee if the threshold isn’t met or will a percentage be paid?
- Types of investments that count as capital for the purpose of the film finder’s fee investments – do loans count or is only investment money counted toward the total.
Finder's Payment
In addition to all of this data, the film finder’s fee agreement will also dictate details as to how the finder will be paid, specifically when the money is quite large.
For example, will a sliding scale be paid out for the raising of capital? Some choose an option like this such that, maybe for the first $1M raised the payout if 5% and for the second $1M raised the payout is 4% and maybe for the third $1M the payout is 3%.
Parameters
Some choose to set parameters. Such as for the first $1M to $5M. The payout for finder’s fee is 3%. And for each $1M after that the payout is 1%.
It’s really all about how the production company or producer works the agreement out with the finder. But the goal is to keep as much of the financing in the hands of the production company as possible.
This is where negotiations come in. As naturally the film’s producer wants to keep as much for the production as possible. But the finder wants to make as much as possible. Thus an agreement must be made that works mutually beneficial for both parties involved.
Terms in the Film Finder’s Fee Agreement
Because the film finder’s fee agreement represents a binding contract that is legally enforceable. It’s important to work on this with an Entertainment Attorney.
Someone who has a strong background in Film and negotiations. Some terms in the film finder’s fee agreement can dramatically alter the outcome of how the contract is enforceable. For example, the words “best efforts” versus “reasonable efforts,” can have very different meanings.
Consider This
For example, a contract might use the wording “best efforts” in an effort to reasonably seek to get the finder to try their best to secure the capital funding needed. However, while terminology like this might be “nice” or otherwise obliging to the Finder.
It can be ambiguous if there were to be a later court case involving the contract. As such, an entertainment attorney will draft your film finder’s fee agreement.
In such a way that it avoids the use of ambiguous terms like “best effort” or “reasonable effort”. As what one person finds to be a “reasonable effort” may not necessarily be “reasonable” to another.
Avoid Ambiguous Terms
To prevent litigation from taking a turn in the wrong direction due to the terms used in the film finder’s fee agreement. Film producers should understand the importance of avoiding terms that can be ambiguous.
Likewise, the document should outline very clear specifications on timelines. Dollar amounts for accomplished goals. And percentages connected directly to those dollar amounts in terms of payouts.
Further Definitions
The film finder’s fee agreement should further define any terms used in the contract that could be misinterpreted or interpreted in more than one manner. Thresholds should be specified in clear terms with dates or durations.
Such as “6 months from the signing of this agreement” or “60 days from” etc. Both parties should be focused on making the contract clear, detailed, well-defined enough.
To ensure there is amicable focus on accomplishing the objectives set forth without ambiguity or the potential for misunderstanding or misrepresentation of the agreement.
The Takeaway
Formatting a film finder’s fee agreement is certainly a big step that requires focus and the attention of an attorney. One with a background in expert entertainment law.
Before you sign or agree to sign anything? Make sure that you’ve had your attorney review the film finder’s fee agreement for accuracy. And to ensure there is no room for ambiguity among the terms, terminology, deadlines, or other areas of concern.