So you’re a screenwriter lucky enough to have a producer interested in your screenplay? The said producer doesn’t have the cash to purchase your film script outright, so instead they option it while searching for finance.
Optioning is essentially renting your screenplay or other literary property for a pre-determined period of time at the exclusivity of other production entities.
There are three main areas you should focus on during your screenwriting option agreement negotiations:
TERM OF SCREENPLAY OPTION
The shorter the term the better for you because it limits the period of time your script is off the market. Typical terms vary from three to six months. Such a short period ensures the producer works hard to package your movie and raise finance. Option terms are renewable, so two consecutive three month terms are better than a single sixth month term. Either party should reserve the right to non-renewal.
Twelve month options are also common, but be wary of any longer terms, unless the project is complex or you’re waiting on the availability of talent.
SCREENPLAY PURCHASE PRICE
Obviously the higher figure you can negotiate, the better for the screenwriters. A good rule of thumb is to negotiate around 2.5%-5% of the total production budget. However, this rule may be difficult to adhere to on ultra low budget projects.
If you’re a writer/producer, you may reasonably negotiate higher. Part of the agreement should state the number of rewrite drafts, merchandising, profit sharing and other ancillary rights. Try to negotiate as much up front fee as possible as most back end deals don’t yield any points.
Once you sell your script, you lose the right to influence its exploitation. However, you should always negotiate the right to residuals. If you want the rights back you have to purchase them and pay for all expenses incurred by the purchasee. Many production companies parse their slate of projects they don’t wish to develop any further. This is called putting a project into TURNAROUND.
SCREENPLAY OPTION PRICE
A good starting point is around 10% of the purchase price. If the option lapses, all rights automatically revert to the writer. This is non negotiable. The writer keeps their entire option fee regardless of whether the optioning party raises the finance or not. Oftentimes, the option fee is offset against the purchase price when a movie script is sold.
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