Contract with customer
I've recently launched my production company full time following steadily increasing business over the last two years.
I've just take on a job where there is not initial upfront monies and rather any payment for the job is purely on a 60/40 split (in favour of them) for any sponsorship we get. It's a beauty pagent competition. I thought it would be good publicity for me, so have opted for this set-up.
I gave them a price to start and then they turned it down saying it was too expensive, so rather than not do the job at all, I think this is potentially a better way.
My question is, the contract they have given me state that:
"the organisers own all rights to the footage however give permission to the production team to post footage to their own sites for publicity providing..."
"Before, during and Following the XXX final, if any documentary or sponsorship packages are sold, after organiser costs such as sales of the packages the organisers will take 60% and the production team will be paid 40%"
"The production team is responsible for all taxes / insurance occurred with revenue streams as a result of this competition"
I do trust these people and they are protecting themselves from us running away with their footage and producing what we want by signing over the rights to them, but maybe there is another contractual way of doing that without me signing away my only insurance policy - that I own the footage.
Or maybe this doesn't matter as they said they will give me 40% anyhow.
The other bits re costs I think are poorly worded and I wondered if I could be held to pay ALL taxes from the competition?
Anyway, I am meeting them at 10:00 tomorrow, so any advice would be appreciated.
I hope you got kissed....
...My rude way of saying I think this was a bad idea. You are not a bank. But you're giving these guys free zero-interest loans on YOUR money, with an unspecified date for any return. Further, you agreed to a deal where you end comes to you not only at the end of the entire project, but after all their other expenses have been paid. This is like the Hollywood accounting artihmatic that pays points only after all expenses... in the top examples, Gone With The Wind and Wizard of Oz failed to pay off any of those points until just a few years ago.
And, you gave up the footage, your only real leverage. This is like a textbook of what not to do.
I'm trying not to laugh at your comment. But obviously this is a serious issue.
I didn't realise how much time I would spend doing this. However I think it is a good way of getting myself known by putting lots of my work out there. I know it's a risk but its only my time. However I do realise I need to balance that with how much money I'm getting from other jobs. I don't think that they'll run away with the money. But you're right I need to clarify around the expenses because I don't want to end up with all my money being absorbed by expenses.
If I was an experienced long-term production company this would probably be a crazy idea. However, I think for a new fledgeling business this might be a good way of getting myself known more.
Regarding signing over the footage. They are just worried that I can use the footage for anything I like so by giving them the rights they're protecting themselves. Also it's a franchise model and therefore they couldn't allow me to remain to have the rights to the footage.
By the way. It was a mistake in the contract that all the expenses will be taken out of 40%. This will be changed so a small percentage of around 10% will be taken from the initial hundred percent before it split 60/40.
"If I was an experienced long-term production company this would probably be a crazy idea. However, I think for a new fledgeling business this might be a good way of getting myself known more."
Time to address this up front. You are a professional, you don't need to enter into bad deals to get yourself known, or you will become known as the guy willing to enter into bad deals.
I did this plenty when I first started, big mistake, didn't lead to other paying gigs, just caused a huge headache and having my skills not appreciated. The "publicty" you get from short changing yourself is not worth it.
You run a business now, think like a businessman.
And read this article now!
Clients or Grinders
Media Production Services
Winnipeg, Manitoba, Canada
Are you going to pull your pants down for them in the meeting tomorrow morning?
Please don't sign that piece of paper!
As Mark and Scott are pointing out, you are giving them;
interest free credit, free unlimited use of your time, free hire of your equipment and facilities, and storage of the project materials for an un-determined time. Are you going to buy the extra hard drives for this? Are you going to pay the upfront cost to the the dupe house when 5000 DVD's are needed with full colour printing? Are you really going to give them your time for free and then pay them 60% of whatever revenue is made just for the privelige of working for them for x months for nothing?
As Scott rightly says - if expenses are being deducted before you get paid, then expect for some nice big lunches, business clothes, hotels and car hire to be paid before you do.
Franchise model or not, if you are the first one to be asked then decline on these terms. How do you know that your rushes and materials aren't going to end up on the edit bench of a swanky Soho post house when this client's project gets very succesful? Nothing in that contract seems to protect you from them using your nicely shot rushes for whatever they like, and with whichever producer they want(the cynic inside me even wonders whether someone inside this fashion outfit has something to do with media production and needs someone to film the events for free).
I know it's a risk but its only my time
No matter how scarce work is, keep your pride and dignity in your trade. Your time is precious, you can't buy more of it, and you can't earn more money while you are on this project working for free for them. This isn't just your time, it is the start of a business relationship that is unfairly balanced. Walk away, or tell them how you want this changed so you are paid up front, or maintain control over what you are creating.
I would have thought that a better business decision would be to offer some free production services to a local business. Who knows, if you shoot it and then own the footage, they might have to pay you something to use it for a project in the next year.
I'm in the renegotiate camp. If you want to give time and equipment time away, find a worthwhile charity or a project that interests you personally / might advance your career.
Yes, doing free (or next to free) work for a non-profit is where you can build a network, it makes you look good and is more likely to get you good contacts.
My personal policy is that I will only do this if I am the one approaching the folks, I don't do it if people come to me for free production, that means they think my skills are worth nothing.
This fashion company is just looking to get something for nothing.
At the beginning of my companys life I had an offer about working with an entertainment company for a % of profits from a particular DVD and Pay-Per-View project. A year later that entertainment company was out of business and I never got any $ from the profits of the project, which there were some.
Media Production Services
Winnipeg, Manitoba, Canada
Thanks for your advice.
I should explain a bit more I think and also I have pasted the contact (with a couple of bits removed) for obvious reasons.
Firstly, I do trust these people not to double cross me, however, I would still like to firm up the contract more in my favour - just in case...
They didn't bully me into this decision, I agreed to film the 'first shoot' for free and then I said they would want to film the others and these would be charged. They then came up with a 60/40 split on sponsorship (for which we have both agreed 2 packages). It may well be the case that I end up having learned the hard way not to enter into these agreements, but I like to be optimistic and make the best of a situation.
I don't feel like I can bail out the agreement as I have already filmed a few shoots and my word is my bond - I have already agreed to this in principal and to exit it now would be breaking that. I also believe breaking it would damage my reputation more than making the mistake of committing my time for free.
Whether the fruits of my labour are realised remains to be seen, but my main aim is to firm up the contract right now so I feel more comfortable with it and limit any possible future negative consequences.
You've given some really helpful advice so far and I would really appreciate it if you could extend that to helping me achieve this aim. Although I respect your opinion that you wouldn't enter into agreement.
By the way, it is raising money for charity and the people running it are more than likely to make a loss from this project.
I've pasted the agreement and highlighted some bits (there are some typos):
THIS AGREEMENT is made between -
< XXX a nanu incorporated under the laws of England
and Wales (Company Number XXX» t ^L^red office is at XXX
2. ME at MY COMPANY
(A) The parties have agreed to with Video Production for the event XXX
provide and allow access to each other s Confidential Information (defined below) to discuss
learning and development plans and THUS' success crrteria with a view to the parties
establishing commercial relations (the "Purpose")
(B) The organisers XXX Have agreed for MY COMPANY to work with them for the project XXX with
(C) Each party agrees to protect the Confidential Information of the other
1. INTRODUCTION, PARTIES AND TERMINOLOGY
The Organisers - XXX - The Organisers of XXX
The Production Team - MY COMPANY. The company providing video shoots / editing service
throughout the XXX competition.
The Contestants - The finalists of XXX
2. PRODUCTION AGREEMENT
2.1 XXX Organisers give the Production Team permission to film events
throughout the XXX campaign providing the organisers see any
footage for sign off before it is released to the public and that it is an organised event agreed
with the organisers and the productions team.
2.2 The organisers own all rights to the footage however give the Productions team rights to post footage to their own sites for publicity providing that content had been pre approved
2.3 The production team with give the Organisers raw footage of any event if required.
2 4 Any videos released in association with the competition must state XXX or
YYY along with the website XXX organised by XXX along with the organiser's logos
2 5 The Video production team may put their logo onto the footage created for the XXX event and may use the title of Official Video Production team / service or This Video was produced by MY COMPANY
2.6 The organisers will not charge the production team a fee for being the official video
2 7 Before. During and Following the XXX final, if any documentary or sponsorship packages are sold, after organisers costs such as sales of the package the organisers will take 60% and the production team will be paid 40%.
2.8 The video production team is responsible for all taxes / insurance occurred with revenue
streams as a result of this competition
2 9 The video campaign will be agreed with the organisers and the production team
2 10 All video footage released to the public view, must show the competition in good light, not
discriminating or mocking any contestant or organiser.
2 11 Should any sponsor or person associated with XXX event require video production services as a result of seeing your work, this must go through us and the standard agreement will pay the production company 80% and XXX 20%
2 12 XXX will actively sell your services following on from our final. The organisers will take a 20% cut and 80% will go to the production team
2 13 The Production team will act in a professional manor to all contestants ensuring no favouritism is showed to any contestant
2.14 Should the production team want to use any contestant of XXX for other productions, this must come through XXX.
3. OUR DUTIES
The Organisers hereby undertakes
3.1 To give the production team access to all girts at any organised events
3 2 To allow the production team creative ideas for making the best of the video edits whilst
maintaining the class and reputation of the competition
3 3 To promote the production company to future clients providing further paid work during and
after the competition
3.4 To pay the agreed cut of 40% less costs associated with the organisers running costs of
selling the packages throughout the competition
3.5 To pay 80% of further work sold not associated with the competition. To only use the agreed
production team for this event
4. YOUR DUTIES
4.1 To abide by the terms set in this agreement
4.2 To conduct work in a professional manor providing ethical and moral conduct
4.3 Use your best efforts to promote and publicise the event, organisers and production company
with class and style
4 4 You must permit the XXX organisers full rights to the video footage taken
4.5 Agree to the cuts stated in the agreement
4.6 To ensure no favouritism is shown to any contestant
The bold items are the ones that I need to clarify on and also the fact that I will have to talk through how much time I actually have to give to this.
Let me just say this again just for clarity. I trust these people and I do think there is a possibility of making money from this venture. Plus they are helping to promote me to other businesses.
Still, I have been burnt in the past from not firming up a contract.
Run Forrest, Run!
Production is fun - but lets not forget: Nobody ever died on the video table!
I'm neither a bank nor a barrister, I would be practicing contract law without a license, writing your contract for you, so you need to have your solicitor look this over, and if you don't have a legal rep yet, Olly, get one, you WILL need them.
In the States, we have the concept of "work for hire"; in a work for hire situation, the guy that hired you owns everything you've made: He pays you, you hand it over, there are no residuals or continued payments, no attached rights after the fact, it's a single, clean transaction.
If the job is not a work for hire, and there is nothing on paper, American rules default to the premise that the guy that shot it, owns it, whatever it is, not the guy that paid, the guy that shot owns the work, and has the say in what can be had and for how much. The flipside of that coin though is that the shooter may not be able to do anything with the footage he shot and owns, without permission of the guy that paid for the job in the first place, for copyright reasons. So it's often a stalemate when those deals go sour; nobody gets to use the footage until there's a meeting of the minds.
I have no idea what Crown law has to say about your situation, wish I could be more help. I would suggest after this current mishigas, you stick to these principles:
It didn't happen if it's not in writing.
Get a third of the expected price up front as a down payment: "consideration" featuring actual cash strengthens the legitimacy of your contract claims in court, should a dispute come up.
Do not front expenses for clients ever again. Repeat to yourself: "I am not Greece OR Germany."
You never give up the product until you've been paid for it - the product and the client's ticking deadline to make use of it is your only true leverage.
Protect your rights to reference samples of the work for a portfolio and self-promotion. Get that access to the work for that specific purpose in writing.
Any time a customer tells you they will give you all their future business in exchange for a break on the first job, you can bank on it that it is a lie and that you will never see those people again after you hand over their free production.
So basically if I want to go ahead, ask for the contract to state:
1. That the footage rights are JOINTLY owned and that neither party can sell or otherwise any of the footage without the other parties concent.
2. Tax matters are the responsibility of EACH party for THEIR share only
3. Cost associated with the production are fronted by BOTH parties jointly, BEFORE any 60/40 split.
That should at least limit any damage a disagreement in the future might cause...right?
Well, just to make it clear, you say...
[Olly Lawer] "the people running it are more than likely to make a loss from this project."
Ergo, you are pretty much admitting that you'll never see a dime on this project. If you want to do it just for fun, then do it. But don't go into this thinking it's a real paying job. The "contract" is completely stacked against you. Completely. There's not one thing in it that is to your advantage, and everything in theirs.
Among the most troubling (of many things), is...
[Olly Lawer] "The video production team is responsible for all taxes / insurance occurred with revenue
streams as a result of this competition"
That is among the craziest things I've ever seen in a contract.
Sounds like you are not going to be talked out of this, and I guess that's ok. You sound like a young glass-is-half-full kinda guy, not old and jaded like me and a bunch of others in here. I was once early in my career and optimistic as well. I've seen myself and numerous other people enter into agreements like this either out of optimism, naivety, hopefulness, or just not knowing any better. Never once have I seen any of them pay off, either for me or anyone else I knew. Never once. Not even close.
Just be forewarned, and careful. And chalk it up later as a "life experience."
Fantastic Plastic Entertainment, Inc.
This was already well-covered in this classic thread by some guy...
Perhaps I'm showing my age here but...
"Danger Will Robinson! Danger!"
In all seriousness, I agree with what other are posting here. This doesn't sound like it will end well for you.
But I've been wrong before... so, best of luck to you!
Production is fun - but lets not forget: Nobody ever died on the video table!
It's not their footage until they pay for it.
"It's not their footage until they pay for it."
Even if I sign it over in a contract?
But you have to state that at the get go and then stand firm on their complaints. You will probably say the following sentence often: When the check clears I will immediately send the deliverable.
You've been given some great advice by experienced and knowledgeable people after having asked for it. If you want to do it against their advice, go for it, but you've been warned.
It's only your time....that's all you have.
What I don't understand is....the 60/40 split for sponsorships. I assume that the sponsor will be paying specifically for the video part of the competition? If so, then why on earth would you agree to any kind of split? You're shooting it, editing it, and creating the DVD's.... Why would you share sponsorship money meant to cover the video?
If it's sponsorship of the pagent....then you should have access to the books to see how much it is.
As for rights and taxes, anyone who wants you to sign the conditions you stated IS NOT YOUR FRIEND. Let me repeat...THEY ARE NOT YOUR FRIEND.
Good luck to you.
Thanks for your advice. I know it sounds like I'm ignoring the good advice here. And it is sound advice. But for me I've left it too late. I've already agreed to film and edit the event and see where it leads. As I've said, pulling out now will do more damage than wasting my time. It's all too true that in hind sight I might look back and regret it - but I am where I am.
What this post was more about is limiting the risk to me. That's what's important now.
As I understand it with regards to the footage and them owning the rights, they want to protect themselves from me running off with the footage.
I am keen to know from those more experienced than me would do tomorrow - considering all that I have said and imagining you were in the same place, having made the decisions I have.
Olly, to answer specifically what you're asking, at this point I wouldn't give a flip about the footage, I'd be primarily interested in getting paid, full stop, and would have zero interest in the client's issues with their own bills. Your only tax concern is income tax on the pay they give you, because you've agreed essentially to a work for hire situation.
Your clause as regards your sample portfolio should be I think a separate deal memo on the side. Word it simply: DEAL MEMO: client company xyz gives Olly L permission to use samples of the ABCD footage shot on (date) for purposes of portfolio and self promotion only. Olly L agrees not to sell, give away, or market said footage in any way without company XYZ's permission.
Not a lawyer, (as my mom continually reminds me) but that memo by itself, stand-alone, should be pretty good indication to a judge that they are letting you show samples for your reel and not trying to profit off their wider production.
Remember though that anybody can sue anybody for anything at any time: what counts is what can be proven in court, once they drag you there, and can you (or they) afford the costs of the process, win or lose. If you have to go to court over anything, in a basic sense, you've already lost. Lost the time and money and energy and etc. to defend yourself or to win. The best strategy is to keep it out of court if at all practical. Leave a clear paper trail. Get everything in writing.
It isn't too late at all. If you want to make it seem as though you pulling is down to someone else, blame it on you solicitor. Tell them he/she looked over the contract and advised you not to sign it.
This is going to cost you money, time and a relationship with a client.
Best of luck.
Credit is one of the easiest carrot-stick combos. It's an easy, free way to lure talent. I have done tons of free film jobs (I'm serious, check my IMDB page: http://www.imdb.com/name/nm3538619/). With all due respect to the people who created, labored over, and financed these projects, I knew damn well there was little possibility of any long-term financial gain. Why? Most of these projects, while POTENTIALLY commercially viable, failed in the final execution - marketing and distribution. Which is more important than any of it, really. Even Robert Rodriguez had planned to distribute El Mariache to the Mexico TV market - he had a specific plan to make the film and release it to Mexico. It wound up in hollywood instead which was a surprise to him even.
Most projects have NO CLUE how they are going to regain any of their expenses. It's easy, just ask what will happen to the film. The director, producer, and writer may have some vague idea: "a few festivals" or "I know a guy..." This is not a marketing plan and yes, I think a marketing plan is vital. Most films sell at film markets not festivals (think international video distribution not US theater distribution). You can put an artsy, exploratory, or bad film in a festival and still win some awards, but if nobody wants to buy your film, a film market will prove to be an expensive learning experience.
Now, I make sure any projects I work on have a plan of some form. I ask to see it in written form or a PDF. Here's why: if I am signing a contract to receive monies from a production, that makes us partners. As such, I don't go into business with someone unless I know they are going to be viable. What have they done? What's the plan? How will you make money? I need to see the budget, where is the money coming from? Any legit producer will already have this information and may show it to you, but any legit producer would be paying for talent on an as-needed basis to keep profits up (the more you subdivide profits, the less you actually make).
Basically, if you are being promised money at some time in the future, demand a clause that states you will be paid a fixed amount if the production fails to pay you back by a specific date so you can recoup your expenses (labor, equipment - I'll guess you're using your own equipment, gas, food, insurance, etc.) and demand they get production insurance which covers equipment with your company specifically named and keep a copy of that policy info on file. Make sure the contract is with your company (not you, personally) so you can deduct expenses. Track all of your expenses including gas mileage and incidentals (oops I forgot a polarizer and I need to go get one at best buy or something). Ask to see a schedule and make sure they know you won't be at unscheduled shoots - puts the onus on them to have a solid schedule - they'll have tons of pickups, though, I guarantee it. Lastly, run the numbers to see what you will actually get based on similar distribution numbers - remember, hollywood rounds up quite a bit and the actual numbers are likely much smaller.
Learn from the experiences on this board rather than make the same mistakes.
As it turned out within their contract with the franchiser, they must give up all footage with no free at any time to franchiser wants it. Therefore it was pointless me going down the rate of trying to retain the rights to the footage. However, I did get a lot of the other parts changed and it seems they were simply mistakes, which is great.
Let's hope that in the future has some good returns for me. Only time will tell.
Thanks again for your advice. I'll be sure to come back here later and tell you the outcome either way.
If they had plenty of time to write a contract, and you have very little time to sign it, you are probably going to get screwed.
Providing services, and going into business with someone is a very different arrangement. If you have to ask weather or not to sign this agreement on a forum, sounds like you should not sign or at least get professional (legal) council to interpret the contract and then represent you when things go south.