July 19

NO FREE LUNCH

QUESTIONJoseph from Los Angeles asks:

A production company has shown interest in optioning my script. They seem very enthusiastic, but have little experience as producers and want me to option my script for free. I have looked at a few sample options online. However, since this would be my first option, I still have a few questions.

1) They mentioned when I met with them that if they are able to set up a deal with a studio they would like to purchase my script for a flat fee (as opposed to a percentage of the film’s budget or script’s selling price). If they state this in the contract, what would be a reasonable fee to pay to a screenwriter who is un-produced? Should I even agree to such a deal or should I hold out for a percentage of the film’s budget or a percentage of what the studio pays for the script? What is to keep them from stating in the contract that they will buy the script from me for 50 grand, but in a year’s time they find a studio that is interested in buying it for 100 grand or more?

2) During the optioning period am I allowed to use the script to try and get an agent or writing assignments?

3) Is the option agreement my only time to negotiate or do writers usually re-negotiate with the studio once the screenplay is sold? In other words, do I need to take care of re-write clauses, sequel rights, screenplay credit, etc now or will this happen once the script is actually purchased?

I plan to find and meet with a lawyer once I get the contract (which should be within a week) but would like to iron out the contract as much as possible beforehand because I am of limited income.

Thank you very much.

Joseph –

(Standard disclaimer – this is not legal advice, just thoughts on a blog.)

Congratulations on getting interest in your screenplay. Chances are, others will be interested, too.

Your questions present common dilemmas for beginning writers. Many writers (including me) feel that the producer should always pay something for an option. If they were WGA producers, they would be prohibited from asking for a free option. Why should a producer (especially an inexperienced one) have the right to tie up your screenplay for a long period of time without paying you anything? What do the producers intend to do during that time? Based on what they have told you, which is that they want to set it up with a studio, they do not really even need an option. If they want to present your script to studios, you can give them permission to do that without an option. Let them tell you who they wish to take it to and, if you want them to submit it, give them permission to submit it. Then, once they present it, you are free to negotiate your own deal as they are free to negotiate theirs. This is a common practice in the industry; it happens every day.

If, on the other hand, they intend to “package” the project themselves (which means, they intend to raise money and attract talent, director, and distribution without a studio), they should pay you money up front, especially if they have never packaged a film before. This is not a matter of greed or materialism on your part. Rather, it is a reality of the producing business that producers lose interest in projects when the next best thing comes along. They are not lying to you when they ask for the option. They are just under a tremendous amount of pressure to find the right project and, two months from now when they have gotten nowhere with your project, they are likely to feel they have a better shot with something else. If they have paid you money, they have a much stronger incentive to keep working on your project instead of jumping to the next thing. In addition, at least to a small degree, you are compensated for the lost opportunity.

If the producers are as excited about your script as they say they are, they will certainly not let it get away because you ask for a few thousand dollars up front. If your request makes them go away, that should tell you something about their real level of commitment.

As for the answers to the specific questions you asked:

1. If you enter into an option, percentage of the budget deals are not very common. A good place to start for your writer’s fee in the event the option is exercised is 110% of WGA minimum with negotiated bumps for specific events, which can include budget bumps, sole writer bumps, and box-office performance bumps. (For example, if the budget exceeds $75 million, you get paid an additional $250,000.)

2. If you enter into an option, you should make sure before you sign the option that you are entitled to present the script to agents and for writing assignments. If not, you should be compensated at the time you enter into the option for this additional loss of opportunity.

3. The option agreement is ordinarily the only time you negotiate your fees (and credits). If you enter an option, you should make sure it is a deal you can live with if the option is exercised.

Good luck….



Copyright © 2014. All rights reserved.

Posted July 19, 2005 by TW in category "Legal", "The Business

19 COMMENTS :

  1. By Joseph on

    Thank you very much for your advice. I should receive their offer before the end of the week and what you said here will help me immensely when I negotiate. I don’t want to get taken advantage of because I am new to this. On the other hand, I was afraid to ask for too much and sound unprofessional or greedy and therefore pass up this opportunity. But as you said, if they’re interested in my script chances are other people will be too.

  2. By Joshua on

    I’ve been in a couple of these situations, and my experience is, unless you know the producers well (like, they’re friends) dollar options (no money options) never work – repeat, never work. They should pay something . . . otherwise, what’s to stop them from taking the rights and doing nothing?

    Couple ideas – you can make it a part of the deal agreement that you will act as a producer / equal partner in the deal with the picture – with an exit clause if you feel that your “partners” are not acting in good faith.

    Also, you can use the deal as a way to approach an agent – contact and say you’re being approached by producers that wish to option your script –

  3. By Alex Epstein on

    I agree. If they’re not willing to pay money up front, then all they have a right to is an “attachment deal”: if they set up the project, they’re attached as producers, but you sign your own deal. If insisting on that scares them away, then you don’t want them producing your movie.

    Percentage of budget deals may be rare, but that’s because real options are 10% of purchase price. If all they’re paying is a thousand bucks, say, then they’re not risking very much, so there should be a corresponding upside. The deal I used to make as a development exec was 2% of budget if the writer got sole credit, 1% if the write shared credit, based on WGA credits. (In case of credit dispute, to be arbitrated by a mutually acceptable arbiter who’s a member of the WGA.) That’s essentially what Canadian screenwriters have the moment they sign a WGC contract: there’s an automatic 2.2% of budget shared by all credited writers.

  4. By TW (Post author) on

    Alex:

    Thanks for checking in, as always. For those who don’t know (and that’s probably no one, by now), Alex also worked as a development exec before becoming a writer and also negotiated deals from that side as well as from the writer side.

  5. By Chas on

    I have learned in business, that which you give away for free holds no value for the recipient. Feel free to check my grammar, I’m not a writer.

  6. By Joseph on

    I just wanted to give a quick update on how the option worked out. I ended up not doing it because when I mentioned money or a shorter option (6 months) they got cold feet. Plus they kept saying they would give me a contract or call on a certain date and never did. This happened three times so I told them I was no longer interested. They got upset but oh well. Even though nothing happened with it I did learn a lot and will be better prepared next time an offer to option comes my way. Thanks for all the advice everyone.

  7. By frank macarthur on

    hi, my name is frank, I,m an amateur writer. I have just received an option agreement on my script. I have been offered $30,000 as an upfront fee. however, I feel that my script is worth more than that. my question to you is, am I able to negotiate this amount or is the amount offered, a final one? by negotiating this offer, would I run the risk of him changing his mind? thankyou, i would be grateful for your oppinion. yours truly, Frank

  8. By TW (Post author) on

    Frank,

    Congratulations. Are you being offered the $30,000 upfront fee for the option, or only upon exercise of the option?

    If the money they offer is actually upfront (in other words, if they are paying you that when you sign the option agreement as opposed to that being a payment later to exercise the option), you probably should have someone knowledgable, such as a qualified attorney or an agent, negotiate the deal for you. As the writer, it is very difficult to negotiate anything with the producer simply because you do not want to be in an adversarial relationship with him or her. In addition, if you are not experienced, you do not know what points to negotiate. An attorney who regularly represents writers should not charge you more than five % to assist you with this.

  9. By karen on

    Hi,

    I wish I had run across this site before trying to renegotiate my expired option with a producer. The 18 month option ($1000 1st day of filming plus 3% net) expired but my script was still prominently featured on the company website and on other sites associated with it. I was pretty brave about what I wanted by email but then he wanted to talk on the phone. He barely got a few words out as to why he didn’t want to pay more to continue developing the script when I totally caved, allowing him to keep it for 90 more days for just a $100. I can barely look at myself in the mirror. I’m almost hoping he can’t get financing in time so I can just take my script and go elsewhere. (almost) I realize now that because I wasn’t willing to walk away (and he obviously could tell) I was really in no position to negotiate anything. Boy, do I need to grow a thicker hide and find an agent. He mentioned that he wanted to pay me out at the end of the extension – the now $700 left – and keep the script. No way would I consider doing that. So, I’m taking the next few months to get myself mentally prepared to let go and start all over. I don’t want to, but I’d feel like an idiot just letting him keep my script forever.

  10. Pingback: NO FREE LUNCH II at The Thinking Writer

  11. By MARK11 on

    No option!

    Here’s why and my experience.
    A producer optioned my script for free over a year ago.
    I gave it to him for free for one year because of his links as a produced tyv writer and film producer to George Lucas, among others.

    He let me know over dinner that there were more than a few compnaies he wanted my script to hit at…and I was adamant that if he had sole possession of it for a year…he’d really have to send it out to a lot.

    I even questioned about him actually getting it to a lit manager or agent and he didn’t beliueve in that at all.

    He sent it out steadily to a few for the first few months…and then he quit contacting me.

    When the script reverted back to me, I found out he quit sending it out the last 4 months because some “personal” problems had come up in his life during that time.

    How a so called professional allows personal problems to get in the way of a contractual obligation is beyond me.

    Believe me if it was on the other end…and I was contractually obligated to finish a rewrite…any producer wouldn’t want to hear about excuses.

    Don’t option anything without cash on the barrel head.

    Don’t listen to any producer’s excuyse otherwise.

    The real ones will be professional from the styart and play by the rules because they know it’s a business of reputation along with all else.

  12. By AK on

    I read all of the above (very insightful by the way), but I am still a bit confused. What is the difference between “attaching” a producer, and the same producer doing a “dollar-option” or free option?

    I have seen multiple attachment agreement’s, and in fact have one in front of me now. It states the producers/writer would have a set amount of time – from now till (a date a year from now) to exclusively represent and submit the project to third party financiers, production entities, etc. Is the main difference that when you are “attached” the writer is part of your team and can submit as well and that when you “option” the material the writer has no power and can not submit? If so, why would anyone do a free-option in that case??

    Also, when you option something – does the producer have the full right to sell that material for a price they agree to with the studio during the option period, regardless of what the writer thinks – or does the writer need to say in the option “if this sells i agree to ____amount upon sale?

    Just trying to figure this out – any help is greatly appreciated !!!

  13. By M. Mahar on

    I just stumbled onto this website and saw some interesting posts from novice writers and various opinions on “Options”.
    I would like to offer the perspective of a Writer, Consultant, Producer and Director.
    The film business is about “discovery” (creative intellectual property) and finding a market for it. As a Producer I will not market or attempt to advance anyone else’s project (meaning introduce it to a studio or my competitors) without being legally attached to the project.
    Here’s why:
    When a studio/backer is introduced to a script they have two simple business decisions to make. 1) Do we like it? and 2) Who do we have to deal with?
    If the studio isn’t required to deal with me (the guy who believed enough in the project to introduce them to the script) they can just buy the script directly from the Writer (or option it themselves). Why would I create a budget, analyze a script, build a team, etc…without being rewarded?
    In short- if you believe in someone enough to advance your project (novice or expert), you need to give them peace of mind that their efforts will be rewarded and that they will move forward when the script does- an option, commission or some other monetary compensation is necessary. Since Producers don’t build a career on commissions (they build a career on projects that actually get filmed) no sensible Producer will take on your script unless they think they can get it made.
    You can always ask your Producer to cancel an option…the only criteria is that “the people they introduced you to are still covered by the terms of the agreement” (meaning you can’t go talking to someone they introduced your project to).
    The most important measuring stick for a Producer is “how much do they believe in the project” (I’d option a script for $1 to the right Producer- even if they were a novice). No Producer is going to sign up projects just to have them in their roster- even a small company like mine doesn’t need scripts…we have dozens of writers at our disposal and no shortage of ideas. The reason we entertain outside scripts is because we are asked by writers…and we occasionally see something attractive in a story (like a role that is good for one of our hot contacts or a subject matter that is relevant to the times). The downside is that industry contacts and pop-culture are both constantly changing- what is hot today may not be hot tomorrow. Therein lies the argument for telling great character-driven stories with only a few locations.

    If you think a Producer is serious about making your script happen you should give them the opportunity to try.
    And remember…the people trying the hardest (regardless of their means) are the ones who are going to make NEW contacts. “I’ll shop it around and see what happens” is not producing (that is fishing) – make sure your Producer is saying “even if I don’t have a plan or the right contact today, I’m making this movie happen – It may take me years, but I love this script!”. Find the right person and show them you believe in them (with a way out for both parties).
    Writers compose ideas, Producers build a team to communicate a vision, Directors and their crew capture the vision on camera and Editors tell the story…Everyone is important- the Producer is momentum (but only if they have the passion to move a project forward). Measure their passion.

    $1 Option (18-24 months)
    $30-40k Purchase Price
    1-6% of “Producer’s Net Profit”

    #1 RULE
    Risk = Reward
    #2 RULE
    100% of Nothing is Nothing (keep it affordable for people to help you)
    #3 RULE
    When there is money, there is money (for everyone…period…name what you want when there is money).
    #4 RULE
    Passion doesn’t have a pricetag (and passion finds money).

    A high level of faith in a Producer should mean small numbers up front and big numbers in the back (reverse it if you don’t trust them). You have to charge something though (“free” is not a legal transaction- hence the $1).
    If it doesn’t feel right- walk away.
    If they don’t use the word “great” or “wow” – walk away.
    If money is your only motive write short stories (much more compelling)…and sell the rights (attaching yourself as the screenwriter).
    Best wishes!

  14. By c. andrade on

    I have been a professional writer/producer, and would like to have just a little more detail, on the Hollywood market that you all are talking about. I have a lawyer in LA and he has stated that the basic WGA right now is 100,000. for a script plus the percentage for rep. So I need to know if the producer above is only paying 30 or 40 is that for a non union shop? Non WGA?
    Thanks. This is an informative site, just want a little more clarity.

  15. By MAGNET on

    Hi!

    I am seriously considering producing a film
    within the next twelve months.

    I have written a Screenplay specifically tailored
    to shoot on a comparatively low budget
    $500,000 – $1,000,000

    Now to the unbelievable part of this.

    * I have never produced a film before.
    HOWEVER…

    * I have Directed – Theatre.

    * I have 25+ Years as An Actor behind me.
    40+ Film Performances Included In This.

    * I have Access to Potential Cast/Crew with
    whom I have previously worked.
    Cast – Including A Few Well Known Faces.
    Crew Members – Who I Know Are Extremely Capable
    in Their Respective Areas Of Expertise.

    * I have A Script which I believe is Marketable.
    I already have A Trailer in mind as well as
    Several Versions of Posters.
    AND
    * I have found A Potential Serious Investor.

    Now, I have already forewarned him
    that Investing In A Film Production is
    Most Definitely One Of The Biggest Financial Risks
    that Any Individual Could Make At Any Time,
    Never Mind During The Current Financial Climate!

    …And that there is No Guarantee that
    The Final Product will Make Money Nor Is
    There Any Guarantee That He Will Recoup
    His Investment If He Goes Ahead.

    I have been forthright in Advising him of this up front
    and have explained to him that once the thing is set
    in motion and people and services are hired and secured
    that you can’t suddenly take cold feet.

    Anyway, Even After All This He Still Wants To Invest.

    So I Definitely Want To Go Ahead.

    But I Also Want To Cover Myself Legally Too.

    At The Moment I am Totally Strapped For Cash!
    Broke In Fact! … In The Red!
    So I am in A Difficult Position.

    Is it feasible that I could
    Negotiate A Producer/Writer Fee Up Front?
    What in your estimation would be the
    Minimum Fee given The Budget of $0.5M/$1M?

    I do have A Friend/Producer Colleague who
    I am sure will be able to advise me of the Various
    Potential Pitfalls/Problems which I may encounter
    a long the way.

    Hopefully you can answer these questions and I would also be grateful for any additional advice which you
    feel would be useful to me.

    I look forward to your reply.

    Best Regards,

    MG

    ****************************************************************

  16. By Scott on

    Great to read this. I recently had an offer of an attachement agreement for my screenplay from a producer, no pay, and when I asked for a fee they balked. So good to see I’m not alone as a new screenwriter.

  17. By Bryan on

    Question – I have a producing partner that has wrote a script, he was going to option it to my production company for a small fee for 1 year with a renewal fee thereafter. Further, he wanted a min fee if made and a percentage of budget should budget reach a certain level. Seemed OK to me. Now he suggests an attachment agreement – what is that and since I am setting up the film by creating a PPM and getting seed monies in from the start how could this make any sense as the PPM requires me to include costs and a script is a cost. What is best for both parties as I love the script but not at the cost of good business sense.

Leave a Reply

Your email address will not be published. Required fields are marked *

*