Do You Know The Difference Between Screenplay OPTION and SHOPPING Agreements?


If you’re one of those screenwriters who’ve had their film scripts purchased outright, on the spot, in pitch meetings, you’ve conquered the virtually impossible. Congratulations, it is the pinnacle of your screenwriting career.

For most writers, they are typically offered one of two types of screenplay agreements, an option agreement or a shopping agreement.

Option agreements are the more traditional routes to purchase the rights to your movie script and secure funding to purchase it. Shopping agreements are reasonably modern, to account for the higher uncertainty and risk in today’s film market.

Here are the main differences between the two:

OPTION AGREEMENT

Option agreements typically last longer (12-18 months) and the screenwriter generally doesn’t need to agree on who the producer attaches your project.

The WGA stipulates that an option price must be 10% of the purchase price and satisfy WGA minima. Non-signatory production companies can offer as much or as little as they can afford (or get away with.)

Never accept a dollar option. A serious producer should float you a few thousand dollars at least. If they can’t do that, then how will they raise enough finance to produce a film?

Some more onerous option agreements have compulsory built in renewable clauses which guarantee the producer the right to a second option term at their discretion, rather than by mutual agreement. In this example, a producer can lock up your script for 2-3 years and you have no right to show it to other producers. These renewable clauses generally cannot be rescinded even if the writer refuses the additional compensation for the second term.

Be wary of immediately accepting these options, especially for a low option price. A non-pedigree producer may not be able to secure the necessary film finance. You don’t want to be stuck with them if they can’t get your film produced.

One advantage of option agreements is that they are more comprehensive. They include the option price, details of the exercise (purchase) price, payment terms and renewability. They may also include details of separation of rights, spinoff/sequel rights, merchandising rights, screenwriter’s credits, and how many drafts they must be offered to write. These terms (even the purchase price) are typically negotiated in shopping agreements when funding is being closed.

While option agreements provide security and pre-negotiated terms, they don’t offer the flexibility or screenwriter involvement of shopping agreements.

During option agreements, writers’ temporality relinquish their rights to their work. However, all rights automatically revert to them if the option lapses. Conversely, screenwriters maintain all rights to their work at all times during the term of a shopping agreement.

As such, the issues of warranties and indemnities are less clearly defined in shopping agreements, since legally,  the producer only controls the rights in an option agreement. It is essential that a clause be stipulated in an shopping agreement so that a writer doesn’t carry the legal liabilities of the producer and vice versa.

SHOPPING AGREEMENT

A shopping agreement (producer attachment agreement) is more flexible, yet still allows a producer enough time to introduce a project to partners and allow it to gain traction in the marketplace.

The terms of shopping agreements are typically shorter at 6-8 months. They too give the producer the option to renew, but they crucially allow the screenwriter the right to cancel the agreement after the first term.

Shopping agreements also give the screenwriter more involvement in their project. Writers have input on which talent, production companies and distributors to attach and what financing terms to accept. Even so, be mindful of having too many attachments on board, because they may not help your project get produced. In some cases, they may also hinder it, if your attachments aren’t bankable enough.

A shopping agreement often gives little (or no compensation) to the writer. This is the tradeoff for flexibility and greater writer involvement. Prior to signing such agreements, a producer should have a plan of which financiers and talent they will approach.

Unlike option agreements, shopping agreements may either be exclusive to one producer, or non exclusive. This allows screenwriters to maximize their chances of attracting funding to your movie script, without being bound to a single film producer. It is necessary to include a non-circumvention clause in these agreements so that multiple parties don’t approach the same funding sources and talent with the same project.

There is no better or worse agreement. It depends on the reputation of the film producer and their ability to set up projects. An option agreement may be better with unproven producers, although a shopping agreement may be more desirable with a pedigree film producer with an extensive professional network.

Don’t be afraid to reject a agreement with undesirable terms.

For in depth Film & TV script analysis visit Script Firm.scriptfirm final logo colour
STORYBOARD SCREENPLAY DEVELOPMENT GROUP – If you’re in the Los Angeles area, Storyboard meets at Fox Studios in Los Angeles on the second Monday of each month to comprehensively discuss scripts of soon to be released films.

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