Film Financing 3: The 3 Important Approaches To Negotiating A Fair Deal

The best agreement is one that is fair to all parties. All too often parties attempt to negotiate by demanding for more than what is fair to them. Parties are suspicious of each other and the lack of trust ends with parties feeling short changed.

As such, it is crucial for producers to set the stage for an alternative negotiating style that builds on openness and trust. This approach is far more advantageous in the long run as parties build good relationships and the producers are able to work out a financially profitable objective. By setting the stage, producers influence all other parties to the deal to adopt an open and honest negotiating style. Below are 3 important approaches that producers can apply when opting for this strategy.

The “universal approach” – looking at the deal without preference to either side

This approach starts with parties looking at each parties’ perspective and considering what is fair from that perspective, and then negotiating to secure the best position for that party. When adopting this approach, it is important for parties to avoid taking the common bargaining position observed at flea markets, i.e. starting with a higher position than is fair and hoping to end with what one should reasonably get. The problem with such a position is that it creates an “us versus them” mentality, and leaves parties dissatisfied that they could perhaps have gotten a better deal.

Negotiating from the same side of the desk – prioritising the success of the film as the common objective

This approach complements the above “universal approach”. By placing the good of the film as the common priority of all parties, parties naturally ally themselves with one another. Negotiations take place by considering the elements of the deal in light of what is most fair and beneficial for the film.

Weighing a deal against the scope of the film

Finally, when negotiating deals with substantial contributors to the film such as writers, directors and the principal cast, producers can consider weighing the deal against the scope of the film. The producer assesses the deal as a percentage of the producer’s projected net profit (gross profit less the film’s budget). For example, if a film has a projected net profit of $2 million, the producer could offer the director a fee of $150,000 (7.5%), plus a further $50,000 (2.5%) if the film achieves its projected targets. The benefit of this approach is that it gives the contributor a greater sense of ownership over the success of the film and motivates the contributor to do its best in making the film.

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

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