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Formalizing Relationships PDF Print E-mail
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Ken Dhaliwal   
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A producer is a creator of a new intellectual property. This is a complex process that can easily lead to misunderstandings and competing priorities. The business agreement between partners involved in a production venture must be written down in a clear and concise document that is prepared, or at least reviewed, by your lawyer. This step is crucial: it will prevent subsequent disputes about who is entitled to what, or who was responsible for which aspects of the production. An agreement among producing partners needs to address the following issues:
  • Ownership – Who will own what (such as copyright, development materials, rights to produce sequels, merchandising) and in what percentages?
  • Contribution – What is each party required to contribute (in money, time or materials) to the project and by what dates?
  • Expectations – Are there milestones or goals that each party is expected to achieve by particular dates, such as a deal with a particular distributor?
  • Dispute Resolution – How will disputes be resolved?  Options include prescribed periods for negotiation, mediation or arbitration (perhaps identifying the person or group that will be asked to conduct the mediation or arbitration) and court proceedings.
  • Termination – If the parties elect not to move forward with the project, how will this decision be reached? Does it have to be a mutual decision, or can one partner unilaterally elect to end the relationship?  Who will own the underlying rights and the materials developed by the termination date? Will a partner be entitled to proceed with the project if they find another partner or opportunity and will the other partner have any say in that?

Documenting Relationships

As a general rule, you should document all relationships and arrangements with suppliers, distributors and service providers. When agreements are in writing, all parties understand what is expected of them and what they are entitled to receive in return.  Although it isn’t always practical during the development and production process to draw up formal contracts --  either because there isn’t enough time, or it’s too expensive, or one of the parties doesn’t see the need --  the arrangement should be documented in some way. Even a simple exchange of emails will help avoid subsequent “he said/she said” type of disagreements.

In cases where producers are accessing bank financing or government funds, financiers will often require documentation of the various working relationships in order to conduct their risk assessment of the project, and as a prerequisite for advancing funds.  In circumstances where a production involves one of Canada’s co-production treaties (often referred to as  a “treaty co-production”), formalizing relationships is especially critical: a signed co-production agreement is a required element of the initial application. In addition, Telefilm Canada will review the substance of the co-production agreement and may require certain changes to ensure that the necessary elements of Canadian control are present, including:
  • Involvement of Canadian creative personnel
  • Canadian cast
  • Appropriate level of Canadian revenue-sharing
Continued...
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