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What is a Shopping Agreement…and is it Better Than an Option Agreement?

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AKA Producer Attachment Agreement, this is a great alternative and a much simpler arrangement than a traditional option agreement. The problem with an option agreement is that you have to negotiate the option price and purchase price which, depending on your ability to negotiate, you may not be able to afford. What a shopping agreement does is it allows you to be attached as a producer on a specific project at no cost, with the intention of finding people who do have the ability to both purchase the rights and finance the project. This contract gives a producer the exclusive right to “shop” a project to financing entities or partners for a set period of time – these entities could be networks, financiers, studios or other production companeis. If the producer cannot establish negotiations or attain financing for the project before the period is over, he/she is no longer attached as a producer unless the contract is renewed. The producer does not own or control the rights to the project, but he/she has the exclusive right to negotiate and set up the project with a third party (ie financing entity). Once the producer sets the project up at this third party, it’s up to the rightsholder to make his/her own purchase or option deal with them. The overall terms must be agreed upon by both the rightsholder and the producer. For example, let’s say you find a script you love. You approach the writer and tell him that you don’t have money to option or purchase the script, but you do have relationships with all the major financiers. You sign a shopping agreement with the writer which gives you and nobody else the right to submit this script to the financiers. Let’s say one financier loves the script and wants to provide the financing to make it into a movie. They then negotiate a purchase price for the script with the writer (or the writer’s reps). You will also negotiate a producing fee with the financier independent of the writer. The writer gets paid his fee, you get paid yours and you’re attached as a producer on a film that has financing. To protect the producer, if for some reason the negotiations don’t work out and the agreement expires, the writer isn’t allowed to engage with the same financier for a set period of time (usually a year).

To all the writers out there, this may feel like a rip off as the producer has nothing invested and no risk. It feels like they’re just getting the rights to your project for free. That being said, there are a lot of producers with no develpment fund but have great relationships with people who do (ie studios and financiers). Usually all it takes is a quick phone call and before you know it, your script is out to prominent executives in Hollywood. If you’re feeling hesitant about signing a shopping agreement with a producer, ask them to sign the agreement for six months with the intention of renewing if you feel they’re doing a good job submitting your script – think of it as a probationary period. If you’re a producer, a way you can protect yourself is by implelmenting an extension clause which states that if negotiations with a financier begins before the contract expires, the shopping period is extended by 90 days. Either way, as a writer, make sure you do your due dilligence and find out information about the producer’s track record before signing the agreement. At the end of the day, it’s up to you to negotiate a deal that’s right for you, and to evaluate whether or not the producer can sell your script better than you can on your own.

Here’s a link to an online template for a shopping agreement for you to checkout – CLICK HERE

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