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At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice. You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.
Shopping agreements are an increasingly popular contract tool that might just be revolutionizing the norms of intellectual property exchange.
But are the rewards really worth the risk?
In this post, we dive into a typical shopping agreement for TV or film to show you the pros, the cons, and a few tricky points in between.
Let’s get to it.
In the real world, no two shopping agreement samples will ever be exactly the same. Like any other contract, your own shopping agreement will need to be tailored to your specific situation, and a generic producer shopping agreement pdf will simply not fit that bill.
However, using a sample shopping agreement for TV or film to follow along with this post will help you understand the ins and outs of these agreements in general. A sample shopping agreement will help you connect the underlying principles of these agreements to the language of the contracts themselves. This can provide valuable insight into how these agreements might affect you on a practical level.
Take a moment to now download our shopping agreement.
Then, when you’re ready with your sample shopping agreement open, let’s dig into the basics.
A shopping agreement is a type of contract struck between an intellectual property owner and a film producer that grants the producer the right to “shop” the IP to production companies, studios, film distributors, networks, financiers, or literally any other type of backer for a limited period of time.
That might sound complicated at first, but stick with me; the appeal of film shopping agreements actually hinges on their relative simplicity.
In casual conversation, film shopping agreements may be referred to by any name plucked from a bursting cornucopia of informal titles. You’ll hear phrases like “producer attachment agreement,” “exclusive producer agreement,” “artist shopping agreement,” “television producer agreement,” and plenty of others.
But shopping agreements aren’t just another vague, industry buzzword from Overheard LA.
A shopping agreement for TV and film is a very real tool, and it’s popping up with increasing frequency, for better or worse.
Film shopping agreements create a legally-enforceable symbiosis between intellectual property owners and producers. For a limited period of time, the IP owner agrees to give the producer the exclusive right (thus, the term “exclusive producer agreement”) to pitch the IP directly to their own network for purposes of film financing or outright purchase. In theory, that means the intellectual property itself could pique the interest of stronger or more well-connected forces in entertainment than the IP owner would otherwise have access to and, therefore, become that much more likely to be adapted into a new film or television show.
Sounds great, right? But there is a catch…
With a shopping agreement for TV or film, there’s absolutely no guarantee that anyone gets paid.
That’s right. Neither the IP owner nor the producer makes any income upon entering this particular film and television producer agreement. In fact, that’s kind of the point.
But if there’s no money being made, that begs another question altogether…
True film shopping agreements are all about minimizing risk and maximizing leverage. To better understand how and why, let’s take a few moments to consider shopping agreements from the individual perspectives of both parties involved.
For a film or television producer, agreements that grant rights to intellectual property can also grant access to whole new worlds of deals and partnerships, even if the rights themselves are incredibly limited.
If you happen to be Nina Jacobson or Jane Goldman, you can probably walk into just about any production company or studio and make a deal of some kind, but what if you’re a lower-profile producer, still starting out? In that case, good luck getting past the first phalanx of executive assistants.
To change the equation, you’ll need some kind of leverage. It needs to be something unique, something valuable, something like a steaming hot slice of IP that you and only you can pitch for the next six months
And that brings us to an important point.
Remember the informal phrase I mentioned before, “exclusive producer agreement”? Well, it’s the “exclusive” part that really matters to a producer.
Shopping agreements grant producers exclusive rights to shop the intellectual property to whomever they wish, meaning that they alone effectively control its existence in the market for the length of the contract’s term.
They can’t sell the intellectual property- after all, they haven’t technically bought the rights themselves- but they will be able to partake in any deal that might come about thanks to their efforts made within that limited timeframe.
In other words, if the producer’s work under a shopping agreement leads to a deal for the IP owner, it will also lead to a deal for the producer themselves. As a bonus, the exclusivity of the contract ensures that no one will be able to undercut the producer in the process, leaving them to negotiate for cash and credit as they see fit.
And the risk for this potential payday?
Approximately, zero dollars and zilch cents.
Technically, the producer sacrifices time and effort under a shopping agreement, but the core of its appeal is that there is no direct monetary loss at stake in the event that a deal is not made. A producer working under a shopping agreement risks losing little for the opportunity to gain a whole lot.
For the intellectual property’s owner or original artist, shopping agreements are appealing in that they may offer a chance at a sale that would not likely have happened otherwise.
But notice that the key words in that sentence are “may” and “chance.”
Like producers, intellectual property owners are primarily risking time when dealing with film shopping agreements. Time during which the producer is given the right to shop the property is also time during which the IP owner is forbidden from doing the same on their own.
However, unlike producers, intellectual property owners may also be risking substantial opportunity. There’s a chance that the IP owner could be throwing away money or market position for what only seems like an advantage in the short term.
But notice that the key words here are, again, “may'' and “chance”. Why?
Because it all comes down to context.
On one end of the spectrum, items of intellectual property that are brand new or otherwise unknown may face difficulty in gaining the traction necessary to make a sale by its own merits. Under those circumstances, if the IP owner finds a capable and well-connected producer who’s passionate about the property but unwilling to take on the risk of purchase on their own, the flexibility inherent to shopping agreements may be exactly what they need to reach the next level and make something happen.
In that case, the risks are small, and the potential rewards are huge.
On the opposite end of the spectrum, items of intellectual property that already have some clout either on their own or by association tend to generate their own gravity. They won’t need to rely on a single producer’s network, and the compromised negotiating point of an exclusive producer agreement would only be a financial hazard. It’s highly unlikely, for example, that shopping agreements would have done much to help bring Game of Thrones, The Godfather, or Jurassic Park to the big (or small) screen.
If you’re unsure as to whether or not entering a contract would be worth it, you should always take time to consider the alternatives. In the case of shopping agreements, that quite literally means exploring your “options.”
The main difference between shopping agreements and option agreements is simple:
In an option agreement, someone actually gets paid.
Well, okay… It’s not that simple, but it’s close.
An option is a contract between an intellectual property owner and a producer that guarantees the producer the exclusive right to buy or use the IP within a limited period of time.
Like shopping agreements, options are exclusive, temporary, and- critically- not a final purchase of rights to use the intellectual property in question. To illustrate, let’s talk about the most common option in filmmaking: the screenplay option agreement.
The screenplay option agreement is an agreement between film producer and writer that grants the producer the right (or “option”) to purchase the screenplay for use within a contracted term limit. The implied but not explicitly defined agreement between film producer and writer is for the project to be developed until it’s ready to officially enter a pre-production phase, at which time the option will be exercised and the rights to use the screenplay will finally be purchased.
Unlike shopping agreements, options are usually signed with the intention of moving forward with a project, and- I wasn’t kidding- they most often do guarantee IP owners some form of monetary compensation. In general, the IP owner is entitled to a fee upfront, at the time of the option agreement’s signing.
If you’re an IP owner facing both an option agreement and a shopping agreement on the bargaining table, representatives from any top talent agency will almost certainly recommend that you take the former, simply because it guarantees that you’ll be paid.
However, again, it all depends on context. It is possible (though unlikely) that a shopping agreement may be your best choice. It helps to understand both what you’re selling and why you’re selling it.
Aside from their relative simplicity, one of the major draws of shopping agreements is their flexibility.
Shopping agreements can be applied to a variety of exchanges. They can be used for adaptations to film, television, or any other digital exhibition medium.
And the intellectual property they cover can range from novels to comics to finished screenplays all the way over to board games.
The good news is that shopping agreements will be fundamentally similar across different project types. A shopping agreement sample for film will look similar to a shopping agreement sample for television will look similar to a shopping agreement sample for new media.
Even agreements as divergent as a reality TV shopping agreement and a prestige feature film shopping agreement will be alike in basic shape. The only difference is that a reality TV shopping agreement generally covers IP related to a format or concept, rather than that of a best-selling novel or Pulitzer-winning article.
The bad news, of course, is that big picture similarities between all shopping agreements guarantee that the devil truly is in the details when it comes to any individual shopping agreement. If you want to know whether or not a shopping agreement is right for you, you’ll have to examine the contract’s component parts.
The basic structure of a shopping agreement isn’t all that different from what you’d expect to find in any other film or television producer agreement. However, there are a few unique quirks with which you’ll want to get familiar.
Let’s check them out.
This includes the scope of the intellectual property and the scope of the producer’s representation.
The scope of the intellectual property covered by a shopping agreement very simply describes what exactly is being exchanged with the contract.
It may seem like a no-brainer, but an accurate description of a shopping agreement’s scope might just be the most important part of the document. If it’s defined either too narrowly or too broadly, one or both of the parties could be left in a legally vulnerable position, potentially mucking up not only their relationship to one another but their potential relationships with any prospective buyers as well.
Likewise, the scope of the producer’s representation details the services for which the producer is being contracted.
In a well-written shopping agreement sample, the scope of the producer’s representation should lay out a set of procedures that both parties can follow to keep things running smoothly for the duration of the agreement’s term.
Additionally, producers would be wise to pair the scope of their duties with those of the IP owner in order to prevent the IP owner from cutting the producer- a proverbial “middleman”- out of any deals. Doing so might mean including a clause that forbids the IP owner from striking a deal with any buyers with whom the producer had contact related to the intellectual property during the shopping agreement’s term length.
While the term length of any contract is important, it carries just a little extra weight when it comes to shopping agreements.
Remember, for the duration of the term, the intellectual property owner cannot enter into any other deal, at least not in as far as it might involve the contracted IP. Conversely, the producer must make a deal within the duration of the term, if they want to create any value from the shopping agreement.
The length of a shopping agreement’s term, therefore, will go a long way towards determining potential opportunity costs for the IP owner and the appropriate level of urgency for the producer. In that way, term length is a vital factor in calculating the risks associated with a given shopping agreement.
Shopping agreements should include a statement regarding any fees or other financial obligations that the IP owner is or isn’t responsible for regarding reimbursement for the producer’s expenses.
These are often things like legal fees.
In case it wasn’t clear before, no one gets paid when they sign a shopping agreement.
But you might ALL get paid later on.
Even if nothing is guaranteed, it’s a good idea to think through how money might exchange hands in the future. Being conscientious early is better than realizing you were all wrong way too late.
That said, the issue of price or compensation can be tricky in shopping agreements because it could refer to any one of several details within the document.
In the event that a deal is made during the agreement’s term, each party will usually have the contractual right to negotiate on its own behalf separately with new buying party, but additional stipulations may be put in place that affect everyone’s bottom line. For instance, a shopping agreement could include a clause that designates a minimum amount for the which the IP use rights can be sold. If both initial parties agree, a deal cannot go forward unless it breaches that payment threshold.
On a more simplistic level, shopping agreements frequently include clauses that determine agreement renewal prices. If a shopping agreement’s term length runs out without a deal having been made, it’s possible that the producer may want to renew and extend the agreement. Rather than stringing IP owners along indefinitely without income, shopping agreements usually stipulate that they be paid an agreed-upon amount per each renewal.
Basically, this section ensures you won’t violate the rights or the interest of the other party. Both parties acknowledge that there is nothing inhibiting them from fulfilling this contract and sticking to it.
Both parties agree to indemnify the other party and to hold the other party harmless against any damages.
This section may exist under another section depending on the agreement, but it states that if the IP owner, as an example, say a writer, decides to bring someone else on, they have to immediately inform that person of this agreement as well as the producer.
They then will have to be added to the agreement.
The miscellaneous section of a shopping agreement will cover anything else that may not fit comfortably in the other sections. Take a look at our shopping agreement sample to get an idea of what this section normally includes.
It often serves as a closing section to tie up any loose ends.
Shopping agreements are a powerful tool, but they’re not without risks. Whether you’re a producer or an IP owner, carefully consider your circumstances from every angle before deciding to sign a shopping agreement.
If the details of a shopping agreement stand to affect your legal or financial future, it’s highly recommended that you see what an entertainment lawyer thinks before signing.
If you still haven’t downloaded our shopping agreement template, be sure to grab a copy. Or visit our template center to find any other form you might need.
