The producer of a film has many different responsibilities, with the most important one is financing it. Raising the necessary amount for a budget can involve investors, funds, government grants, and agreements with studios/distributors. One of the deals a producer can sign with a distributor is called the pre-sale agreement. These deals are often used to secure financing, but also allow for the film to reach many foreign territories.
Easy and self-explanatory deal
The deal first requires the producer to complete the film. Once the film has been completed, the distributor will pay the producer the amount as negotiated in the contract and distribute the film in its designated territories. For a producer that has never obtained a pre-sale agreement before this deal may seem easy and self-explanatory. However, this is not always the case. Experienced lawyers come into the picture as there can be clauses in the contract that allow for the distributor to back out of its responsibilities and not pay the producer. For example, if a distributor requires certain actors or directors to be involved in the production, but said individuals drop out, the producer can fail to receive its financing. Therefore, producers should make sure they fully understand the contract, otherwise, they can lose a big-name actor/director, financing, and distribution.
On the other hand, if the agreement is fully met, the producer is sure to receive its financing. This can prove to be a security net for the other investors in the project, as an exact amount of money will surely be paid back. Moreover, if a producer has received loans from a bank, the pre-sale agreement can be used as collateral. In conclusion, a pre-sale agreement is a great way for a producer to secure financing, pay back their other investors/lenders, and distribute their film in foreign territories.