So think carefully and always consult a lawyer before entering into any of these agreements. And always use legal advice from a real lawyer. Some producers will offer an author a share of the film`s “net profits” instead of a fixed purchase price. A percentage of profits seem tempting, but net profits in the film industry will still be below zero. A better option, if you can get it, would be a percentage of “gross margin” between 2-5%. Everything is project specific and negotiable, so you can see that a percentage of gross profits is linked to an early purchase price. The manufacturer generally does not pay money under a purchase agreement. The producer`s promise to take advantage of her good efforts to obtain an offer of a development contract is usually the only sufficient consideration for the author`s right to purchase. This element of the shopping agreement of course benefits the producer, who is not obliged to spend her limited development funds as part of an option agreement. This is not a good thing for the writer, as much because he would normally be paid as part of an option agreement (and the money must be paid if the producer is the co-signer of the Writer`s Guild of America Basic Agreement) and because the producer probably does not have a “skin at stake” under the trade agreement and may not be very invested in the project.
The rights holder may feel that such an agreement is worth it, since the purchase price is not negotiated before. If the producer manages to create “buzz” around the project and set it up with a large film studio, or if there is interest from several directions, it is possible to get a higher purchase price than before. But in my experience, that`s not going to happen. Instead, the producer “sets up” the project (and the owner) by first agreeing and essentially presenting the terms and conditions for the purchase of rights as a fait accompli. Should this prevent us from dreaming? Heck no! So for you big dreamers in the crowd, there are two chords used in movies or TV chords that a writer should understand: the option and the shopping deal. However, I got a “free option” for the family-owned intellectual property that I obtained the rights to in this film project, and I received more than $50,000 for a network sale. Purchase agreements do not negotiate the purchase price in advance. If there is interest in the project, the author can order a higher purchase price that will certainly be better than the pre-negotiated option purchase price. The shopping agreement generally allows the author to have more participation in the sale of the property than the option agreement, while the manufacturer will be subject to more restrictions.