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potential sticky situatiuon

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stwestpotential sticky situatiuon
by on Jan 17, 2006 at 5:13:08 am

A friend of mine is writing a screenplay which I plan to produce. My question is who owns what? How do we determine who owns what percent of the finished piece? One party is bringing the script to the table, the other party is bringing the crew, equipment, the financing, and probably the marketing to the table. What should the split be? The script is not quite finished, and I don't want to get into a big mess here. I know we both need to coexsist here, but what is the norm here? Any guidance would be appreciated.

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webfilmsRe: potential sticky situatiuon
by on Jan 17, 2006 at 6:51:39 am

The deal is what you make it. Why don't you pay your screen writer a good amount in the fourm of deferred payment. In contract each person who works on project gets paid after the investors have been paid back original investment and before any sharing of profit. Next you can sell investors points in project with a promise to pay back before any deferred payments are maid. Secondly, you can hand out points to project based on effort. Director and writer 5 points and one point for DP and editor on top of deferred payment. Remember you can give away 50 percent to investors and crew and talent and still keep 50 percent of the payoff. Keep in mind most projects don't make a lot of money once you start paying everyone back and deferred payments so be generous with the deffered payment. Maybe pay someone 100 day cash and 200 day deffered. Or 300 day deffered if depends on budget. Try to spent as little as possible as you will need money for iteams you can deffer.

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Frank OttoRe: potential sticky situatiuon
by on Jan 17, 2006 at 4:24:48 pm

Regardless of how the proceeds are divided up, you should take all the "partners" together and form an LLC or Limited Liability Company. This limits each partners' liability to specific areas of production as well as amount of return each partner should get. Most jusrisdictions have law firms that do this type of contract law. Plus it doesn't hurt from a tax situation to form the LLC, especially if you have multiple partners, multiple investors or multiple projects.

Anytime you are co-mingling assests (hard like equipment or soft like a screenplay) you need to spell out each contibution to the whole and how the profits (if any) as well as other assets (rights, royalties, purchased materials, etc) shall be divided when the temination of the company is finalized. Most production LLC's have a specific termination date when all parties have recieved the profits from the sale of the end product to a distributor. In the case of an LLC who has a distribution chain as a company asset, the company (if no new product is developed) ends up selecting (voting)for one member to serve as distributions officer to continue to make payments to all qualified parties.

This is also valid if you are going to use "deferred" payment to offset production costs upfront. Pay plus points, points, no-pay-distribution end profit are all methods of payment that can be placed as language in the LLC. The LLC also spells out who does what, who manages what and who gets what.

This is just a general idea for you to go forward on...really you should contact legal professionals before you get too deep in the production.


Frank Otto

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nestorlRe: potential sticky situatiuon
by on Jan 18, 2006 at 2:51:00 pm

It is a bit early to complicate things since there is no script yet. This is my suggestion: Have your friend finish the script and register it with the WGA and the US copyright office. He owns the script because he wrote it unless he is working as an employee or on commission

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