Film Financing 1: An Overview: 3 Things for Film Producers

Planning to produce a film? Here are three considerations you should bear in mind before proceeding with the film’s production.

A. Have a game plan for your finances

It is important to have a good game plan for your film’s finances. This will determine whether your film breaks-even and the amount of profits that you are able to generate.

There are three basic concepts to understanding your film’s finances:

  1. Money In: Where does the money to produce the film come from? How much is contributed? How is it contributed? When will it be paid? How to enforce the payment? Is there anyone to fund the unforeseen losses?
  2. Money Out: How are the profits divided? Who does money go to first? How much of the profits is given to each party? Are capital contributions returned first? Is interest payable on capital contributions? Are there different priorities and orders for payouts?
  3. Control: Who has control over the finances? Who has control over the creative aspect of the film? Who ensures that the film is within budget and delivered on schedule? Is there any one person who has veto power? Do third parties have control rights?

When it comes to finances, it is important to conduct background checks (such as company or individual profile searches and litigation checks) on your investors or those who purport to be able to provide the amount of financing that you require. Ask for written proof that their sources of financing are real. Be on alert. Prior to entering into an agreement, do not provide money up front in exchange for a future unverified promise of financing.

B. Keep your business structure simple

Keep the structure and transactions simple and you will avoid incurring unnecessary costs that result in a grossly over-budget film. It is important for you to understand your structure so that you can work around it.

C. Know the basics of contract law

Finally, it is important for you to know the basics of contract law because every film transaction rests on this.

A contract is enforceable where there is:

  • an identifiable agreement that is complete and certain (e. an offer by one party and acceptance by the other to be bound on the specified terms of the agreement);
  • consideration (e. something of value that is given by the promisee in exchange for the promisor’s promise); and
  • an intention to create legal relations (e. an intention by both parties to conclude a binding agreement).

Avoid acting in reliance on oral agreements as this will eventually cost you when it becomes the subject of litigation. Instead, always enter into written agreements and ensure that your team has control over the drafting of the agreement. Understand the terms of the contract and it would assist you greatly to have contracts that are drafted concisely and in simple words. Get a lawyer to go over your contract to make sure that all your grounds are covered.

Series Contents

Film Financing Intro: Producing a film, writing a screenplay, or acting in a film? What you need to know to navigate the law and finance of the film industry

1: An Overview: 3 Things for Film Producers

2: Understand the Different Types of Business Structures

3: The 3 Important Approaches To Negotiating A Fair Deal

4: Negotiating A Fair Deal With Writers

5: Raising Finances For Your Film

6: An Introduction To Completion Bonds

7: Distributing Your Film – Entering Into Distribution Licence Agreements

8: Get To Know Your Film’s Intellectual Property Rights – Copyright And Trademark Protection

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.